Kevin Hillstrom: MineThatData

Exploring How Customers Interact With Advertising, Products, Brands, and Channels, using Multichannel Forensics.

February 20, 2008

Multichannel Forensics: An E-Mail Example

Please click on the image to enlarge it.

I recently read a statement about a multichannel brand ... the statement sounded something like this:

"We boast an e-mail marketing file of over 2,000,000 addresses."

What does that really mean? Is it good to boast an e-mail marketing file of over 2,000,000 addresses?

How do I judge the importance of that number?

Ultimately, I want a healthy e-mail marketing file, not a big e-mail marketing file.

I want my e-mail file to exhibit at least two characteristics.
  1. E-Mail recipients click-through content in an e-mail, and visit my website. At least I know these individuals are "active", or "engaged".
  2. If the customer clicks-through to the website, the customer buys something.
Even more important, I want to know the long-term impact of these two activities. For instance, what is the long-term value of a customer who clicks-through an e-mail campaign, visiting a website, but chooses not to purchase anything?

Enter Multichannel Forensics.

The image at the start of this post features the behavior of an e-mail list of 2,000,000 names, but only looks at the names that are "active". In other words, we only look at folks who click-through e-mail campaigns, and those who purchase merchandise. This audience is considerably smaller, around 150,000 names. Your mileage may vary!

The free two-channel Multichannel Forensics spreadsheet can be used to analyze these cases.

In the example in this post, I can measure the five-year value of 1,000 e-mail customers who clicked-through to the website due to an e-mail campaign, but didn't buy anything last year. Here is what 1,000 clickers in 2007 are forecast to do over the next five years:
  • Year 1: 480 Clickers-Only, 120 Purchasers, $30,000 sales.
  • Year 2: 254 Clickers-Only, 118 Purchasers, $31,478 sales.
  • Year 3: 145 Clickers-Only, 90 Purchasers, $24,404 sales.
  • Year 4: 87 Clickers-Only, 63 Purchasers, $17,125 sales.
  • Year 5: 54 Clickers-Only, 42 Purchasers, $11,512 sales.
Notice that there is long-term value in a customer who only clicked on campaigns last year, but didn't purchase anything. However, the value of this "clicker" decreases over time.

See, e-mail marketers view everything in the short-term ... a 22.4% open rate, a 6.3% click-through rate, a 3.9% conversion rate ... everything is measured within forty-eight hours, measured in repeated campaigns. There's no context in this type of measurement, there's just measurement!

What if I told you that each customer who clicked-through an e-mail campaign in 2007, but chose not to purchase anything, was worth $123 sales over the next five years?

Would you re-think the importance of getting your e-mail customer base actively involved in your campaigns? Mind you, they don't have to buy anything over the next forty-eight hours. Instead, they simply have to at least click-through one campaign in the next twelve months.

Multichannel Forensics are good to use when you're trying to make a case to truly invest in a smart e-mail marketing strategy, one that goes beyond 20% off your next order or buy-one-get-one-free, one that goes beyond free shipping, one that actually encourages engagement. Clicks are one way of measuring engagement, and engagement (as demonstrated here) yields tangible, long-term, quantifiable sales and profit.

If you're an e-mail marketer, it is a good time to challenge your e-mail vendor to help you move beyond short-term, campaign-based outcomes of $0.09 per e-mail. Partner with your e-mail vendor, or even your favorite e-mail blogger! Start using Multichannel Forensics (or any other analytical tool that demonstrates the long-term strategic impact of short-term decisions, by no means is Multichannel Forensics the only tool) to validate the long-term benefits of your craft, to get the funding you need to improve your e-mail marketing program.

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