Best E-Mail Contact Strategy? You Decide
You are the marketer at a multichannel retailer. You decide to survey your customers about your e-mail practices, because pundits suggest that customers are now in control over your marketing activities.
Your customers surprise you. Instead of the one e-mail campaign you send them each week, customers overwhelmingly tell you they want a monthly e-mail, and maybe three additional campaigns for major sales events.
You eagerly set up a three month test, to understand the financial impact of the strategy your customers advocate. The results below are extrapolated to represent an entire year of campaigns.
E-Mail Test Results, Annualized To Total Housefile | ||
52 E-Mails | 15 E-Mails | |
Per Year | Per Year | |
Average List Size = 100,000 | ||
Average Open Rate | 20.00% | 25.00% |
Average Click-Through | 30.00% | 33.00% |
Average Conversion Rate | 3.50% | 3.80% |
Purchase Rate | 0.21% | 0.31% |
Average Order Size | $230 | $235 |
Sales per E-Mail | $0.48 | $0.74 |
Total Net Sales | $2,511,600 | $1,105,088 |
Gross Margin | $1,255,800 | $552,544 |
Less Marketing Cost | $15,600 | $4,500 |
Less Pick/Pack/Ship | $376,740 | $165,763 |
Variable Operating Profit | $863,460 | $382,281 |
Pundits want you to let customers take charge of your marketing activities. In this case, you survey your customers, and they tell you they want fifteen e-mail campaigns a year. You test the strategy, and find out it will cost you nearly a half-million dollars of profit.
Let's assume that your CFO demands that you generate profit increases, not decreases. Let's assume you do not have the capabilities to tailor the e-mail strategy to the individual e-mail address.
What do you do? Do you listen to your customer, and convince your CFO that the customer is right, and the shareholders/owners are wrong? Or, do you ignore the feedback of your customers? I'm going to guess that you aim to please your CFO.
Labels: click-thru rate, contact strategy, Database Marketing, e-mail, open rate, Profit