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State of Retailing Online 2007

E-mail marketing to house files is delivering higher response rates and lower costs per order than other channels, according to a Shop.org study released last week.

Yet, the average company’s spending on the channel wouldn’t be enough to cover many companies’ coffee expenses.

E-mail is delivering sales at an average cost per order of less than $7, according to two surveys conducted by Forrester Research on Shop.org’s behalf to create the State of Retailing Online 2007 report. This is compared to $71.89 for banner ads, $26.75 for paid search and $17.47 for affiliate programs.

Ninety one percent of those surveyed said they use e-mail to a house list as a marketing tactic while 88% of them said it has increased as a priority in 2007, according to Shop.org.

Moreover, the average click-through and order-conversion rates of e-mail are an astounding 11% and 6%, respectively, according to the study.

Yet, average spending on e-mail marketing to house files was $311,196, or 10% of companies’ online marketing budgets.

The lack of spending is no doubt due in part to the role that spam plays in the marketplace. Retailers must be careful not to mail their files too frequently, or people will report them to their Internet service providers as spammers and opt out of future mailings.

As a result, most marketers send e-mail to their customers once a week, with the average marketer saying they send 64 messages to their customers a year, according to the survey.

While spending and frequency of mailings are relatively low, marketers have apparently made serious progress building their e-mail house files.

The average house list in 2006 was 2.4 million names, compared to 1.6 million the year before, according to Shop.org.

The most popular types of e-mail sent were purchase and shipment confirmations, with 87% and 81% of those surveyed saying they send them, according to Shop.org.

However, the most popular and effective e-mails are those that tout online-only promotions, with 71% of those surveyed saying they use the tactic and 66% rating it as “very effective.”

The type of messaging rated as second most popular and effective by the companies surveyed was segmented e-mail to groups of customers based on stated preferences or purchase data, with 63% saying they use the tactic and 60% rating it as very effective.

However, e-mail customized based on customer behavior or purchase data got relatively low marks with 28% of those surveyed saying they employ the tactic and 24% rating it as very effective.

Not surprisingly, another top e-mail promotion is new-product announcements with 73% of those surveyed saying they use it and 51% rating it as very effective.

One of the lowest-rated types of e-mails were those following shopping cart abandonment, with 17% saying they use it and 13% rating it very effective.

Other messages getting low marks were those promoting partners, with 29% of those surveyed saying they use the tactic and 9% rating the tactic as very effective.

According to Shop.org, 170 companies responded to the first survey and 100 companies completed responses to the second, and 50 gave partial responses.

Source: DirectMag

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