Kevin Hillstrom: MineThatData

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

January 04, 2007

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.

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