The e-retailer reports a $126 million net loss, stemming from a $640 million year-over-year increase in spending in the quarter on technology and content ...
Retailers are sending more e-mails, and consumers are growing cranky. Are retailers testing enough?
U.S. retailers and wholesalers will send 158 billion marketing e-mails this year, a number likely to grow 63% to 258 billion in 2013, Forrester Research Inc. predicts. At the same time, consumers are growing weary of the number of marketing e-mails they receive: 77% of online consumers say they receive too many, Forrester says.
This should be a clear warning to retailers: Don’t inundate customers with e-mails. But nearly half of retailers are not paying heed and pushing forward with more, according to the latest Internet Retailer survey. 48.9% of respondents to the survey have increased the number of monthly e-mail campaigns they send.
“Retailers are trying to keep up with the competition-and as the competition sends out more e-mails, they send out more e-mails,” says Julie M. Katz, an analyst who specializes in e-mail marketing at Forrester Research. “Marketers feel like if they do not send an e-mail out on a Tuesday but their competitors do, they are missing out on business. So now they feel they need to send an e-mail out every day of the week to touch their customers before their competitors do.”
According to Internet Retailer’s survey of 174 web-only retailers, chain retailers, catalogers and consumer brand manufacturers, 55.7% send 1 to 3 e-mail marketing campaigns every month. 20.7% send 4 to 5, 12.1% send 6 to 8, 5.7% send 9 to 10, 3.4% send 11 to 15, 0.6% send 16 to 20 and 1.7% send more than 20.
“Sending more e-mail is going to backfire. Consumers are annoyed with the volume of e-mail messages they receive, and they’re starting to move to other communications channels,” Katz says. “In 2007, 90% of U.S. adults used e-mail at least weekly; this year so far, the number is down to 83%. These people are turning to text messaging and messaging within social networks to communicate; as a result, they are not seeing marketing e-mails as much.”
There’s a cure to the problem of too many e-mails, and it’s one for which a great many consultants and analysts have maintained a constant drumbeat for years. The answer, they say, is segmentation.
55.2% of retailers segment their e-mail marketing lists, the survey says, but 44.8% do not.
“That is an alarming number. Combine that with the number of marketers increasing their e-mail volume and that’s a problem,” says Chad White, director of retail insights at the Email Experience Council, the Direct Marketing Association’s organization for e-mail marketers. “As volume in general goes up, retailers have to segment more to be more relevant and bring volume down.”
Consumers are becoming more sophisticated about e-mail-their expectations are rising in terms of relevancy and their tolerance of high volumes of e-mail is shrinking, White says. “Consumers are raising the bar,” he adds, “and segmentation is a key tactic retailers can use to keep their volume in check while also delivering really targeted messages likely to convert.”
The 55.2% of survey respondents who do segment their e-mail lists break down as follows: 31.6% slice their lists into 2 to 4 segments, 13.8% into 5 to 7, 5.7% into 8 to 10, 0.6% into 11 to 15, 0.6% into 16 to 20 and 4% into more than 20.
To help reduce e-mail volume and target customers with more relevant messages, retailers need not carve out numerous segments to be successful, experts say. Some very basic segmentation can do the trick.
“A few simple differentiations in the messages you send out can increase your clicks and conversions tremendously. Simple segmenting can be folks who clicked through versus those who did not, or folks who clicked on a product category like shirts versus pants,” Katz says. “You can keep going more granular, but when you get very granular, your returns only go up slightly. So if you’re not doing any segmentation today, I would say you get more bang for your buck if you do very basic segmentation. The best way to figure this out is through testing.”
Taking the test
However, 52.9% of retailers do not test their e-mail campaigns, according to the Internet Retailer survey of IRNewsLink e-newsletter readers conducted last month with e-mail marketing and survey firm Knowledge Marketing. Even the most basic of testing can result in significant increases in click-throughs and conversions, experts say.
“It’s a shame more marketers aren’t testing; hopefully they will wake up. Marketers have made changes like altering the wording of a call to action or changing a link to a button and received a 5% or more increase in conversion,” White says. “If you are not testing, you are missing out. It also makes it really difficult to argue for more money to do more advanced things like segmentation. Testing is the first step on the road to making more dramatic changes.”
32.2% of survey respondents who do test e-mail marketing campaigns test two versions. 11.5% test three and 2.3% test four. Also, 46% test e-mail subject lines.
“Any e-mail service provider worth their salt provides some basic testing capabilities,” Katz says. “By testing you can understand which tactics are more effective than the rest, and then increase your returns. How much money is the half of retailers that are not testing leaving on the table? Lots.”
Vouching for products
Retailers may be able to earn more of that money via what may be the beginnings of a trend in e-mail marketing: the inclusion of customer reviews. E-retailing leaders for years have featured reviews on their sites, and in recent years have been strategically placing them in their e-mail marketing campaigns.
Today, 19% of retailers feature customer reviews in some of their marketing e-mails, the survey says. What’s more, of those who do not, 21.3% plan to add them within the next six months.
“You can get such a huge lift by sharing customer reviews within a message,” Katz says. “This goes along with the trend toward social computing overall. People trust and value the advice of their peers more than the opinions of marketers. Showing peer advice in an e-mail message highlights that the product the marketer chose for the message is valuable.”