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Calculating the Cost of Increased E-Mail Frequency, Part 2

  |  June 21, 2006   |  Comments

Is more better? A basic formula for frequency calculations, the impact on deliverability, and alternatives to simply sending to your entire list more often.

Is more better? E-mailing your subscriber base more frequently can help boost sales, revenue, customer loyalty, and word-of-mouth exposure. Or, it could cost money and customers, as we outlined in part one, as well as damage email deliverability. The outcome depends on how well you manage increased frequency and both its positive and negative consequences.

Four key drivers can turn your email financials from black to red if you increase frequency without adequately planning for:

  • Additional lost subscribers

  • Cost to reacquire these customers

  • Potential lost revenue

  • Higher spam complaint rate that triggers ISP blocks

In this column, we'll provide a basic formula for your own frequency calculations, delve deeper into the impact on deliverability, and explore alternatives to simply sending to your entire list more often.

Marketers, Start Your Calculators

If you've already accelerated your email program's sending frequency, use this set of equations to determine whether the increase helps or harms your bottom line:

  1. Determine the "before" and "after" frequency (how many individual messages or campaigns you send per month to your entire list, excluding any targeted or transactional messages, and the number you increase to or plan to send on the new schedule).

  2. Calculate the following costs and figures for a month of messages:

    • Lost subscribers (average, using results from a month of messages): Hard bounces + addresses associated with spam complaints + unsubscribes = lost subscribers

    • Message distribution costs: (CPM x number of subscribers x number of messages) + accreditation fees + deliverability monitoring + labor/agency/ESP fees = message distribution costs

    • Creative costs: Labor/agency fees + image purchase = creative costs

    • Reacquisition costs: Your cost to acquire a prospective customer's email address

    • Potential lost revenue: Use average annual revenue per subscriber/customer. If you don't know this figure, divide your email program's annualized revenues by the average number of subscribers for the year. Because the people who unsubscribe or file a spam complaint were likely your least valuable customers, you should probably reduce the annual revenue lost by some factor, such as 50 percent.

  3. Plug those numbers into this equation: Annual distribution costs + annual creative costs + (annual lost subscribers x reacquisition costs) + (annual lost subscribers x potential lost revenue) = annual lost/gained revenues

Perhaps You Should Send More Often

So far, we've assumed increasing email frequency could be a negative if you send more often than subscribers expect or want. But if you mail only a few times per month, you could be leaving money on the table. In that case, sending a few more email messages could actually do more good than harm.

Use these factors to forecast the impact of sending more frequently:

  • Bounces. Increased frequency should have only a modest impact on bounces. It's driven most by timing: when email is sent during the month. So assume an increase in monthly bounces of perhaps 10 to 20 percent.

  • Unsubscribes. Our analysis shows mailing more often doesn't necessarily increase the percentage of unsubscribes resulting from each mailing. Instead, you'd see the impact in the cumulative effect over several mailings. For example, doubling mailings would double the number of unsubscribes per month.

  • Spam complaints. Increased mailings drive a growth in spam complaints per message or campaign. We don't have an exact ratio, but it's reasonable to expect your spam complaint rate will double if you double frequency.

The Deliverability Effect

In addition to the obvious effect on the bottom line, overmailing can slap down an email deliverability rate.

One of the biggest complaints email recipients had during the holiday 2005 shopping season was receiving much more email than they expected when they opted in.

What do people do with all that unwanted email? They either deleted it (68 percent) or unsubscribed (30 percent), according to a Return Path survey. A full third of respondents said in addition to other steps, they reported the excess as spam. This is where real deliverability danger lies.

As noted above, you can expect more spam complaints when you increase frequency. This higher volume could be the tipping point that triggers ISP blocks on your sending IP and kicks you off ISP whitelists or third-party accreditation or reputation lists.

Further, you're more likely to be reported as a spammer on collaborative peer-to-peer antispam lists, such as Cloudmark. That can get you on blacklists, which further reduces deliverability.

Finally, unhappy respondents who don't actually report you to their ISPs will set blocks or filters within their own email programs to make you go away.

Relevance Is Key

The mistake most marketers make when they beef up their frequency is they just mail more offers to all the same people on their list.

Instead, start at the beginning of the relationship with your customer or subscriber and use a set of best practices, such as these:

  • Optimize the opt-in page to collect relevant data in addition to name and address: product interests, gender, how often they want to receive email, and so forth. To avoid overwhelming new customer with data demands right at opt-in, add an option to fill out a customer profile in an emailed confirmation message or in a follow-up to a product purchase.

  • Segment mailing lists into relevant categories.

  • Improve creative to make the content more attractive and visible, both in the preview pane and in the open view with images blocked.

  • Combine lifecycle messaging, which triggers messages at appropriate points in the customer's relationship with you, with dynamic content that reflects a recipient's previous purchases, contents, or interests.

  • Identify segments according to responsiveness. Your most responsive segment will probably respond favorably to increased frequency, while the fatigued segment will most likely generate more complaints.

  • Step up monitoring of spam complaints, blocks, and blacklisting. Address any issues immediately.

These best practices can help you move your email program to the next level, making you more valuable to your subscribers and improving your ROI (define) without damaging your list integrity or customer relationships.

Until next time, keep on deliverin'.

Want more email marketing information? ClickZ E-Mail Reference is an archive of all our email columns, organized by topic.

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ABOUT THE AUTHOR

Kirill Popov and Loren McDonald

As director of ISP relations and delivery, Kirill Popov creates and enforces strict usage and anti-spam policies, maintains ISP and community relations, and oversees all abuse and policy investigations and inquiries for EmailLabs clients. Kirill works with clients on best practices, content, design, and list hygiene to minimize potential delivery issues. He's a registered member of the SpamCon foundation and representsEmailLabs on AIM's Council for Responsible E-Mail.

Loren McDonald is vice president of marketing at e-mail marketing automation company EmailLabs, overseeing corporate marketing activities and client consulting services. He has 20 years experience in marketing, consulting and strategic planning. Earlier, Loren was founder and president of Intevation, an e-marketing services firm specializing in e-mail and SEM. He's held executive marketing positions at companies including USWeb/CKS (marchFIRST), NetStruxr, and Arthur Andersen.

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