Are mass email campaigns actually losing you money? Beware the unsubscriber

In the age of overflowing inboxes, Alex Lehwaldt says relevance is the key to keeping customers engaged. Here, Lehwaldt lays out a comprehensive guide to kickstarting your email game.

Alexander Lehwaldt 150 BWOne of the first things I noticed when opening my email inbox recently was an offer for discounted wine. It wasn’t the first time I’d received such an offer from that company, although I’ve never bought wine from it. The thing is, wine isn’t the only thing that company sells – in fact, it’s not even its core product. The company does have other products that I’d be genuinely interested in, but after the 10th wine promotion in my inbox that did not result in action on my end, I unsubscribed from all the company’s emails, dealing collateral damage and accepting the fact that I might miss out on other interesting offers in the future.

It’s a constant dilemma when trying to manage my digital life. If I’m subscribed to too many email lists, my inbox becomes a pain to manage. At the same time, I don’t want to miss out on a great offer that I might receive in the future. What if I miss out on something amazing? FOMO at its best!

This situation is optimal for neither side, as consumers must deal with a huge amount of emails to separate the relevant from the irrelevant. If they decide to unsubscribe, the company loses the ability to communicate to them by email and drive value in the future – a privilege that in most cases is gone forever.

 

A promotion? Let everyone know!

Communicating with customers has never been easier. Large companies have marketing automation systems that send out a huge amounts of emails every single day. Small businesses can use tools such as MailChimp to create mailing lists, mock up campaigns and send it to customers in a matter of minutes.

The result of this evolution is that the costs and side effects of sending out email campaigns are often treated as an afterthought. A regular mindset we see is to span the net as wide as possible.

It makes sense from a short-term perspective – reaching millions of customers is just a click of a button away. The email is in the customer’s inbox pretty much instantly and incremental cost is minimal.

Including as many customers as possible even brings down the per-customer cost of a campaign, as the fixed costs are distributed across more recipients. So why not send the campaign to every single customer in the hope of squeezing some incremental behaviour out of them?

But let’s think about the downsides. For an email campaign to have some kind of effect on the reader, it obviously needs to be paid attention to in the first place. Nowadays, just getting someone to read an email, let alone act on it, is surprisingly difficult.

 

Entering hostile territory: a customer’s inbox

We’re living in times of email oversaturation, with 111 billion emails sent daily. If we assume that 2.85 billion people have an email account, this comes down to 39 emails that consumers receive on average, every single day.

Managing such an influx of emails becomes a daily task that is a blend of art and science. There seem to be a few common themes in how people handle their emails:

  1. Defending the inbox by subscribing to as few email lists as possible and unsubscribing from undesired ones straight away, only leaving room for those that are most desired and relevant. It might be comparably hard to reach people who employ this defensive approach, but by getting them to accept emails from a certain brand as a constant contributor to their inbox, they are way more likely to read and engage with their content.
  2. Ruthlessly deleting new emails where the value does not instantly become apparent. Most ‘ruthless deleters’ have developed sophisticated procedures to separate relevant from irrelevant content – whether an email is deleted largely depends on the sender and subject line.
  3. Navigating the chaos. Of course, not everyone is committed to keeping their inbox clean. But it’s obvious what happens if an email ends up in such a mailbox. It is just one of many, lost in an endless sea of competitor offers, invoices, personal conversations and questionable business propositions from people posing as overseas royalty.

 

The importance of relevance, targeting and frequency

The more customers must deal with increasing email volumes, the less space there is for content that is not tailored to their specific preferences.

No matter whether your customer defends their inbox or tries to navigate the chaos – there’s one common theme that applies. If you want someone to engage with your email and act upon it, relevance matters a lot. If you don’t create relevant, targeted content, only your subject lines will be read. And if your content stays irrelevant for too long, your customers will unsubscribe.

The frequency in which you send emails is another key factor. In fact, overly-frequent communication is constantly cited as one of the top two reasons for people to unsubscribe from email lists, along with irrelevant content.

If your emails contribute to the complications of your customers’ digital lives instead of providing value, they are going to unsubscribe.

 

Low engagement is an opportunity cost

This leads us to some of the most under-appreciated items when assessing the impact of email campaign – low engagement and unsubscribe rates.

Low engagement is challenging to capture and measure appropriately. Unsubscribes are usually not paid much attention to as long as they don’t get ridiculously high. But why is it important actively analyse them and act upon the insights?

Email campaigns are meant to incentivise some form of short- or long-term behaviour – they could be very tangible metrics such as an extra purchase, incremental spend, increase in net promoter score (NPS) or less tangible things like increased loyalty or brand awareness. When customers unsubscribe from all your email communication, you are losing the ability to drive behaviour in future campaigns.

Will someone miss a relevant promotion and not buy from you because they’ve received too many emails and unsubscribed? Will a customer not remember you when making future purchasing decisions because your content wasn’t tailored to what they like?

What incremental behaviour could you have driven with a customer in the future? What is this behaviour worth to you? Aim to define, quantify and include this opportunity cost as part of your ROI calculations.

As a prerequisite for the assessment you should establish which customers are engaged with your campaigns (i.e. frequently acting on the content) and which ones are not. You can then determine how much potential value you are losing through unsubscribes by comparing engaged with non-engaged customers and utilising the difference in their key metrics, such as spend and tenure.

 

In our illustrative calculation, a hypothetical company is racking up opportunity cost of almost $2 million in one year through unsubscribes by sending bi-weekly mass email campaigns to its customer base.

Unsub calculation illustration

Seventy-thousand non-engaged customers are on the mailing list, who spend $300 per annum less than their engaged counterparts and stay with the company for two years less. Almost 10% of them unsubscribe over the course of a year (100 campaigns). Adding the assumption that 50% of them could have been converted to engaged customers with more relevant, personalised communications results in almost $2 million in direct opportunity cost over a year.

 

Don’t let mass campaigns spoil your customer value

Improving customer engagement and relevance is a long and challenging journey, but one that’s ultimately worth it. Here are a few hints on what you can do to improve your email campaigns:

 

Start simple, then keep testing and improving

Understanding your customer’s preferences and finding the right way to act upon them is a long-term effort and can be quite overwhelming at first. Start by performing simple tests to get initial insights. You can run A/B tests to try out variations of your content, experiment with frequency or send versions of emails to customers of different value and see how they perform respectively. Over time your segmentation can become more sophisticated and tailored to specific types of customers and their preferences.

Shift from a campaign perspective to a customer perspective.

This one might seem obvious, but in reality, the effects of a campaign on customer experience are often not more than an afterthought. Aim to fully understand the perspective of your customers and how your campaigns will affect them.

Who are your customers? What are the products or services they are interested in? Are there differences in how they got on your email list? Are there certain life stages they are going through?

Also aim to understand what makes people leave your email list. How long were they on the email list? Have they purchased from you? If yes, how much and how often? What was the email they received when they unsubscribed? Did they provide a reason?

Machine learning can be a great tool to determine which factors contribute to customer behaviour and help segment or flag certain types of customers, so they can be treated accordingly.

Take the long view

Establishing and growing your list of subscribers took lots of time and effort, and people who unsubscribe are usually gone forever. Every campaign and every single email you’re sending out will affect customers’ actions, the perception of your company and how likely it is for someone to stay loyal or not.

Your email list is a proxy for the relationships you have with your customers. Therefore, it is important take a long-term view and carefully manage your interactions. A good start is to establish unsubscribes as part of your email ROI calculation and treat them a real cost, if you’re not doing so already.

Ultimately, you’ll have to find the right balance between the desired short-term effects and long-term costs. Getting it right is no simple task, but your customers will thank you by paying more attention to your content and engaging with your brand. An effect that – in the long run – is worth more than any sales campaign.

 

Alex Lehwaldt is senior consultant at Ellipsis & Company

 

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