Calculating the Cost of Increased E-Mail Frequency
How overmailing an e-mail list can come with a significant negative financial and deliverability outcome.
How overmailing an e-mail list can come with a significant negative financial and deliverability outcome.
The good news: email has emerged as the marketing channel that generates the highest ROI (define) for most companies.
The bad news: as a result, “send more email” is a frequent mandate from the executive suite to the marketing staff when more short-term revenue’s needed.
Ah, if life were only so simple: revenue on demand from email, just like turning on a garden hose. Increasing frequency does work, of course. Whether you go from 2 to 4 times per month or 6 to 12, you’re likely to see a strong increase in revenue. But you’re also likely to pay a high price for the increased revenue.
Impact of Increased Frequency
Frequency bedevils both postal and email marketers. Overmailing in both channels can potentially fatigue a list so much that recipients stop responding. Yet postal overmailing doesn’t put the delivery channel at risk.
E-mailing too often, on the other hand, can generate so many additional unsubscribes and spam complaints that you end up trading increased short-term revenue for a loss in long-term revenue, as well as increased list shrinkage and potential damage to your brand and email reputation. Any additional revenue, leads, downloads, trials, or other desired actions you generate could easily be gobbled up by the higher costs of replacing lost customers or prospects.
This doesn’t mean you can’t safely step up frequency. In fact, many companies may be undermailing to their current lists. But you first need the right data and strategy to send more relevant, targeted messages at the right frequency for each customer segment.
Case Study: First, the Good and So-So News
A multichannel retailer more than doubled its monthly mailings in an effort to increase revenue. Mailings to its general list went from an average 5 per month (slightly more than once per week) to 12 per month (roughly three times a week).
The increased frequency produced 38 percent more revenue than the five-times-per-month program. OK so far. But calculating the two approaches based on average revenue per email delivered (ARED), the 5-times frequency outpulled 12-times at 18 cents compared to 10 cents per email delivered.
Over a year, if email delivered, clicks, opens, and conversions remain steady, the company would take in an additional $2.2 million by sending more than twice as many email messages. Music to management’s ears! Yet the additional revenue comes with an expensive catch.
Now, the Potential Bad News
That $2.2 million top-line revenue looks good, but let’s calculate the costs, including hidden ones:
Whipping out the calculator, the negative financial impact totals $2.5 million. So in this scenario, by dramatically increasing frequency the company increases annual revenue by $2.2 million but at a potential “replacement” cost of $2.5 million.
Whether this example and the costs are in line with your own company’s or not, the facts are clear: overmailing to your email list can have a significant negative financial and deliverability outcome.
In our next column, we’ll provide a formula for you to make your own calculations, diving more deeply into the deliverability effect and alternatives to simply emailing more frequently to your entire list.
Until next time, keep on deliverin’.