A new forecast from Forrester Research credits greater online spending by Canadians, lower shipping costs and more selection for the spending increase.
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Other key findings from the survey include the following:
- E-mail is as or more effective than other forms of marketing retail web sites, but the measure of effectiveness is not necessarily online sales. E-mail appears to be seen by e-retailers as an extremely effective way of maintaining a relationship with their web-based customers. A striking 49% of respondents say e-mail marketing is more effective than other forms of marketing of web sites; only 27% say it`s less effective.
- E-Mail marketing is not a significant web sales generator for most e-retailers. The perception of e-retailers that e-mail marketing is highly effective would seem to indicate that their e-mail marketing programs contribute a high percentage of their online sales. Curiously, the respondents to the survey say otherwise. Fully 57% report that e-mail marketing accounts for less than 10% of their online sales, while just under 10% say it accounts for 25% of web sales. By comparison, about one-third of all respondents to last month`s Internet Retailer survey on search engine marketing attributed 30% or more of their web sales to SEM.
- Will more e-mailing improve online sales? E-mail`s contribution to online sales does increase fairly significantly for e-retailers who mail much more frequently than most. For example, online merchants who blast more than one e-mail a week to their customers attribute more of their sales to e-mail marketing. Fully 56% of this group report that e-mail marketing generates between 10% and 25% of their web-based retail sales. That percentage response declines steadily for e-retailing groups which mail less frequently and drops all the way down to 15% for online merchants which e-mail their customers less than once a month. These results, however, are not compelling enough to contradict the overall perception that e-mailing appears to be more effective in maintaining relationships with customers through communication than it is a direct generator of sales, and they suggest that more frequent e-mail marketing probably will not achieve for e-retailers the sales generation they get from SEM.
- The perceived effectiveness of e-mail marketing may be related to its cost. In addition to e-mail`s effectiveness in enhancing customer relationships, another factor may well explain the dichotomy between the high overall effectiveness rating given to e-mail marketing and its perceived low sales generating potential: it`s cheap to undertake. E-retailers can spend thousands on SEM, but e-mails can be sent out for next to nothing. In fact, 71% of respondents say they spend less than 10% of the marketing budgets of their e-retail business on e-mail marketing.
- Higher e-mailing frequency is linked to higher response rates. Nearly 45% of respondents report that they send promotional e-mails out at the rate of only one per month or less. Yet, e-retailers who blast promotional messages more frequently than that also report much higher response rates (percentage of e-mail messages that are clicked on by recipients) than less frequent mailers. For example, nearly 40% of e-retailers who send out more than one e-mail promotion per week report response rates of 5% or more. By comparison, only 18% of online merchants who use e-mail marketing less than once a month hit response rates of 5% or higher. However, the most effective e-mailing frequency may be two to three times per month. Exactly half of survey respondents in that group say they experience e-mail response rates of 5% or higher.
- Higher response rates also mean higher conversion rates. E-retailers who mail more frequently and thereby achieve higher response rates also report higher conversion rates (the percentage of opened e-mail promotions that generate a sale). Nearly 75% of respondents who report response rates of less than 1% also report conversion rates of under 2%. Conversely, more than 70% of e-retailers who report response rates in excess of 3% to their e-mail campaigns also report conversion rates of 3% or higher. Thus, while other marketing methods may generate more overall web sales, the key to maximizing the sales potential of e-mail marketing appears to be doing it more frequently.
- l Response rates are increasing, not declining. It might stand to reason that the growth in both legitimate and illegal e-mail marketing is leading to a general deterioration in response rates to e-mail programs. According to respondents to the survey, the opposite is true. Almost 45% of respondents to the survey say the response rates to their e-mail marketing campaigns are climbing; only 16% report a downward trend. The rest say response rates are holding steady. Furthermore, the trend in improving response rates is evident across all e-mail frequency groupings--from the more than weekly to the less than monthly.
- Most e-retailers mail strictly to in-house e-mail lists. The low cost of e-mail marketing is in part the result that e-retailers rarely rent lists from outside brokers or list owners, preferring instead to mail exclusively to the in-house e-mail lists consisting of their own customers. An overwhelming majority (88%) of respondents say they do not use outside lists in the e-mail marketing of their retail web sites, and this percentage did not vary significantly according to the size of the respondent`s online business. The renting of lists that takes place in the b2b marketing world appears not to be a factor in the retail e-commerce industry.
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