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How Shrinking the E-mail File Can Improve ROI

  |  October 13, 2010   |  Comments

Got e-mail subscribers who have not opened your messages in a long time? Don't be afraid to cut them loose. Here's why.

Clearing the dead wood from your e-mail marketing file has been recommended anew these days for everything from reducing churn to lowering costs to improving the new engagement metrics used for inbox placement and deliverability. Logically, it makes sense. More active subscribers are more likely to respond. Emotionally, however, many marketers are hesitant - or even loathe - to do it because reducing file size is so opposite our desire to reach the largest number of people with every campaign.

Perhaps some recent experiences will help you make the case for your own program. Surprisingly, clearing off non-active addresses has also actually improved response, as well.

That boost in response is not just on the rate off a smaller base, but is also on absolute response and revenue per subscriber. Why does this happen? By focusing on the needs of active subscribers, marketers improve relevancy and lower frequency and start to segment the file with tighter subscriber profiles. We talk a lot about relevancy in e-mail marketing, but the only way to improve it – and boost response – is to create stronger subscriber experiences.

E-mail marketing – like all direct marketing – starts and ends with the quality of your file. Permission is a part of that, but it's just the starting point. We must earn the right to the inbox with the value of every message we send. Most messages, unfortunately, don't have high value to many subscribers.

Thus, even permission files end up with anywhere from 25 to 65 percent of their file being inactive, or dead wood. These are subscribers who, despite giving permission at some point, have not opened, clicked, or converted from e-mail in the past year, or more. For a long time, it was widely believed to be reasonable to keep all those "dead" addresses on your file, as it didn't cost much to e-mail them, and having a larger denominator made complaint rates and other deliverability metrics seem lower. Plus, we marketers are ever hopeful. While the subscriber hasn't responded to e-mail in a long time, we still believe that it could be today's message that rouses them to profitable response! Of course, very few of these sleepers ever wake up.

However, the ISPs and mailbox providers like Yahoo, Hotmail, and Gmail have long been suspicious of marketers who keep such non-responsive data on the file, believing that we are trying to game the system and escape penalties of higher complaint rates. So, in the past six months, all three of these global providers have introduced new metrics as well as new inbox management tools that help them see subscriber-level activity. MSN/Hotmail was the first to announce the use of activity measures to block senders from a particular subscriber's inbox (I wrote about this in early September).

All of this attention on engagement and subscriber activity puts a brighter spotlight on "win back" campaigns, where an e-mail message is sent with the express purpose of earning some sort of response. Most marketers do this campaign way too late in the lifecycle. It's very difficult to use e-mail to recapture the attention of someone who has been ignoring your messages for six months or more. At the two year mark, it's extremely unlikely to be successful. This is evidenced by the very low response rates marketers earn on such programs – regardless of the creative approach. I've never seen anyone earn even 1 percent on a campaign to 12-month or higher non-responders. Of course, if you have a million people in that segment, winning back 1 percent could be a large number of subscribers, and worth the effort.

Better, I recommend sending the campaign earlier in the cycle. In fact, consider incorporating a win back in your calendar every quarter. Take the subscribers who have not opened, clicked, or converted via e-mail in the past 90 days and encourage them to interact. You don't necessarily need them to purchase, you just need them to indicate that they are still interested in your e-mail program. Any click will do.

As in any campaign, respect your subscribers, be honest about the offer in the subject line and offer, keep the message and tone in line with your brand, and test a couple of alternatives, especially subject lines. Segment and customize the messages as much as you can to make them more relevant. For example:

  • A publisher tested several approaches and found that "We hate spam, too. Change your e-mail settings now" in the subject line was the best way to encourage 90-day non-active readers to adjust frequency and title choices. Typically, I find that clarity trumps clever in a subject line - just say clearly what the message is about.
  • An online service found that disposing of non-actives after just 30 days (after a reminder that if they didn't click to confirm they would be taken off the list) improved not just the response rate, but also the overall response of the program. This is an aggressive list-cleansing approach, but is a strong differentiation point for the company's advertisers.
  • A retailer incorporated a campaign to six-month inactive subscribers inviting them to vote for the next catalog cover. The engaging campaign consistently earns 25 percent click-through rates. By focusing on the click (the action needed to prove that the subscriber is not truly dead), the campaign earns a very high response rate, and while subscribers are on the website, many take advantage of specials offered on the landing page, too.
  • A retailer tested the effect of a win-back campaign vs. lowering frequency to six-month inactive accounts. Lowering frequency is a commonly used tactic to respect non-responding subscribers' level of interest, but of course, does nothing to actually engage them. The win-back was the clear winner, earning 10 percent response rates and $900,000 in revenue, vs. the 2 percent response rate and $150,000 in revenue from the segment with lower frequency.

Creative does matter, so take some time and consider some cool ways to reach out. Test new approaches and focus on subject lines, too. Be sure that your brand impact is high in order to claim whatever loyalty you have built over time. Ignore this important segment at your own peril – you may not only be leaving revenue on the table, but you will also soon find your sender reputation and inbox placement taking a hit.

Let us know how you have successfully reengaged subscribers in the comments section below.

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ABOUT THE AUTHOR

Stephanie Miller

Stephanie Miller is a relentless customer advocate and a champion for marketers creating memorable online experiences. A digital marketing expert, she helps responsible data-driven marketers connect with the people, resources, and ideas they need to optimize response and revenue. She speaks and writes regularly and leads many industry initiatives as VP, Member Relations and Chief Listening Officer at the Direct Marketing Association (www.the-dma.org). Feedback and column ideas most welcome, to smiller AT the-dma DOT org or @stephanieSAM.

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