What's The Best Email Contact Strategy For Retail?
Jan 05, 2007
I just came across an interesting post on Kevin Hillstrom's blog. This is his dilemma:
You are the marketer at a multichannel retailer. You decide to survey your customers about your email practices, because pundits suggest that customers are now in control over your marketing activities.
Your customers surprise you. Instead of the one email campaign you send them each week, customers overwhelmingly tell you they want a monthly email, and maybe three additional campaigns for major sales events.
You eagerly set up a three month test, to understand the financial impact of the strategy your customers advocate. The results below are extrapolated to represent an entire year of campaigns.
Email test results, annualized to total house file:
| Average List Size = 100,000 | 52 emails per year | 15 emails per year |
| Average Open Rate | 20.00% | 25.00% |
| Average Click-Through | 30.00% | 33.00% |
| Average Conversion Rate | 3.50% | 3.80% |
| Purchase Rate | 0.21% | 0.31% |
| Average Order Size | $230 | $235 |
| Sales per email | $0.48 | $0.74 |
| Total Net Sales | $2,511,600 | $1,105,088 |
| Gross Margin | $1,255,800 | $552,544 |
| Less Marketing Cost | $15,600 | $4,500 |
| Less Pick/Pack/Ship | $376,740 | $165,763 |
| Variable Operating Profit | $863,460 | $382,281 |
Pundits want you to let customers take charge of your marketing activities. In this case, you survey your customers, and they tell you they want fifteen email campaigns a year. You test the strategy, and find out it will cost you nearly a half-million dollars of profit.
Let's assume that your CFO demands that you generate profit increases, not decreases. Let's assume you do not have the capabilities to tailor the email strategy to the individual email address.
What do you do? Do you listen to your customer, and convince your CFO that the customer is right, and the shareholders/owners are wrong? Or, do you ignore the feedback of your customers? I'm going to guess that you aim to please your CFO.
I'd be interested to read your comments on this!