Honey, Who Shrunk Our List?

Dec 12, 2006 12:32 AM  By

A clear measure of success in online marketing is the growth of a retailer’s e-mail marketing list. It reflects genuine success in interactive advertising, lead generation, and new converted customers. Given the high propensity for an inhouse list to generate meaningful future sales (at a minimum) or be at the center of broad-based customer relationship management (at its ultimate value), investment in building the customer e-mail list is critical to ecommerce success.

However, given the recent changes in e-mail marketing, it’s not uncommon to experience periods where the list actually shrinks, even in a period of new customer growth.

The harsh reality is that maintaining high levels of in-box delivery, of being a responsible direct marketer, often come at a significant cost to list growth. Simply put, it’s much easier now to get off a list than ever before. What changed in the past 12 months?

Certainly CAN SPAM had a major impact. It set some basic rules with regard to unsubscribe links, required time to react and gave consumers confidence – well at least with brands that they recognized and trusted – that their requests would be honored. We all know about marketers whom consumers do not recognize and respect, but that’s a different issue.

But that was only a start. It was actually the ESP/ISPs (MSN/Hotmail, Yahoo, and AOL) that had the greatest impact – once again to combat those unrecognized and distrusted marketers. First, in response to massive harvesting scams – where scammers ping millions of e-mails with fabricated e-mail addresses hoping for a confirmed delivery — most ISPs strongly recommend immediate removal of hard bounces from e-mail lists. One hard bounce, you’re gone. Retailers should expect an attrition rate of up to 15% per year due to box abandonment.

Next, while consumers have been able to “mark e-mail as spam” for some time, only recently did MSN/Hotmail and AOL really begin to take it seriously. So in the past where marking as spam might benefit the entire Hotmail community by lowering an e-mailer’s reputation; now, in order to maintain the highest levels of delivery, Hotmail and AOL report these addresses back to marketers and essentially insist that they are treated as unsubscribe requests. This trend will likely continue as consumers take the easiest path to cleaning up their inboxes.

What can be done to combat list attrition? To some extent, it’s a fixed cost of e-mail marketing. Consumers will abandon their clogged e-mail boxes. It’s become common place for consumers to maintain a “listed” e-mail for signing up for promotions, making purchases and receiving newsletters; while maintaining an “unlisted” e-mail exclusively for friends and family. When listed addresses become overwhelmed, consumers move on and leave many of their commercial relationships behind.

But, to a greater extent, e-mail marketers can make significant impact on lowering their attrition rates. The three proven tactics are:

  • Manage cadence. While tempting to touch your best customers frequently, saturation occurs sooner than we expect. While every e-mail is an opportunity to generate a sale, it’s also an opportunity for customers to unsubscribe or mark as spam.
  • Manage relevance. E-mails that speak directly to consumers have a higher likelihood of conversion, but also a lower likelihood of attrition.
  • Manage unsubscribers. Cell phone carriers coined the concept of the “save desk” when acquisition costs exploded in the nineties. There is no reason not to try to save your customers. Essentially, turn your unsubscribe page into a save page. Serve an exclusive offer, give the consumer the ability to select either the quantity or nature of her e-mails, worst case pop a quick survey to ask why she’s leaving.

Ultimately, list growth is only partly about list acquisition. The net change is really the metric that drives business growth.

David Rosen is senior vice president of Loyalty Lab (www.loyaltylab.com), a San Francisco-based developer of customer loyalty programs for the retail industry.