Why you should avoid being like this company and always practice tactics that include permission if you want to increase your lifetime value of an email address.
I spoke at an association conference recently and had the opportunity to sit in a on a few of the other presentations. One of them struck a chord, not just with me but with the other attendees.
The presenter was a young marketer who works for a niche business-to-business publishing company (online and print). Their "list first" focus had taken them from 25,000 new email addresses a year to 100,000 without buying or renting email lists.
Everyone in their organization, including editors and support staff, is charged with helping to grow the list; everyone in the marketing department is required to bring in one new list a month. So how do they do it?
Some of the ideas were very creative:
At one point someone raised their hand and asked, "What about opt-in?" The answer was that they didn't practice opt-in email marketing. They never get or even try to get an opt-in. Their database is built on opt-outs, email addresses they've gathered from various sources without getting the recipients' permission to send them email.
My thoughts? I don't agree with the practices listed above; I'm strongly opposed to any acquisition tactic that doesn't include permission (read: anything that isn't opt-in).
This organization is using risky tactics to grow their list. They're taking a business risk and, in terms of higher list growth, it appears to be paying off for them. But what about the long term? And, even in the short term, is the risk worth it?
They have calculated the lifetime value of an email address at $25. That's not bad. But when I looked at their website, the lowest-priced product I found was $787 a year. Most of their subscriptions were $2,000 a year or more. This suggests that very few of the email addresses on their list are actually converting to paid subscribers. Would they have a higher lifetime value if they focused on getting highly qualified names, rather than just any name?
True to the presenter's statement, they do not appear to offer any type of opt-in on their website. There are free trials of subscription products, but there's no free email newsletter to give you a feel for the information they provide. No way to engage with them without entering a path to pay.
When I was listening to the presentation, I couldn't help but think about another company that was a member of this association in years past. They too took an aggressive opt-out approach to list growth. That all ended when they were blacklisted by Spamhaus.
In order to be removed from the blacklist, Spamhaus mandated that they send an opt-in offer to all the people in their database and stop mailing to anyone who did not respond affirmatively. Roughly 15 percent (which is actually pretty good) opted to continue receiving email from them - and they had to jettison the remaining 85 percent of their list. Spamhaus also mandated that all future acquisition was to be done via opt-in - or they risked being blacklisted again.
I spoke to this organization shortly after the list purge. They were still stinging from the Spamhaus reprimand. They had seen their revenue drop significantly, which suggests that some of the opt-out names were indeed buying. But the spam complaints that came with their aggressive acquisition strategy had derailed their success.
Moral of the story: opt-out email acquisition policies are riskier than opt-in.
If the company that presented at the conference decided they would spend a little to get new email addresses, focused their efforts on places where their target audience congregates, and used opt-in tactics like a free newsletter sign-up on their website, co-registration, or LinkedIn advertising, would their lifetime value of an email address increase? It's likely it would. Would they be decreasing their risk of future blacklisting issues? Definitely.
Until next time,
Image on home page via Shutterstock.
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Jeanne Jennings is a recognized expert in the email marketing industry and managing director of digital marketing for Digital Prism Advisors. She has more than 20 years of experience in the email and online marketing and product development world. Jeanne's direct-response approach to digital strategy, tactics, and creative direction helps organizations make their online marketing initiatives more effective and more profitable. Digital Prism Advisors helps established businesses unlock significant growth and revenue opportunities in the digital marketplace; our clients learn to develop and implement successful digital strategies, leveraging data and technology to better meet bottom line goals. Want to learn more? Check out Jeanne's blog and Digital Prisim Advisors.
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