Retailers shift their ad spending from TV, radio and print ads to digital ads.
Retailers keep pouring on the e-mail, but delivery, open and click-through rates lag.
Even though other initiatives such as pay-per-click advertising and social networking are gaining status in retail marketing circles, merchants still clearly love e-mail.
E-mail remains one of the best one-on-one marketing tools retailers can use to attract and retain customers and Internet Retailer’s latest monthly survey finds that merchants are expanding both the size and scope of their e-mail programs. But in spite of their enthusiasm for the medium, most need improvement in such basic areas as open rates, click-throughs and conversions.
Of the 302 merchants taking part in the survey, 94.5% are building bigger opt-in lists and 64.7% are conducting more e-mail campaigns than a year ago.
Almost two-thirds of all retailers-65.2%-will increase the size of their opt-in e-mail lists between 10.1% and 40% this year, while 4% expect to grow their file between 40.1% and 50% and 22.4% by more than 50%. Only 8.4% say their list will expand by less than 10%.
Given the established nature of e-mail marketing, most retailers already maintain large e-mail address files. Only 28.8% of merchants in the survey maintain an opt-in list of fewer than 5,000 names, compared with 22.6% with a list of 5,001 to 30,000 names, 14.4% with 30,001 to 100,000 names, 19.9% with 101,000 to 750,000 names, and 2.1% with 750,000 to 1 million name. 12.2% maintain more than 1 million names in their e-mail lists.
But the Internet Retailer survey also reveals that many merchants still have flaws in their e-mail marketing programs-potentially bigger problems that may result in fewer readers and customers. Clearly bigger isn’t always better. The survey was e-mailed in early April to all subscribers of IRNewsLink, the magazine’s e-newsletter, and all responses were collected and analyzed by Vovici Corp. (formerly WebSurveyor), which has partnered with Internet Retailer in a series of surveys on the e-retailing industry.
E-mail marketing consultants and service providers consider a delivery rate of about 80% to 85% and an open rate of 35% to be an effective e-mail campaign. But the latest Internet Retailer survey reveals that only 40.2% of all merchants are delivering between 90.1% and 100% of their e-mail messages, with 19.1% delivering 80.1% to 90%. By that measure, only 59.3% of respondents have acceptable e-mail delivery rates.
Not hitting home
16.3% report a delivery rate of 50% to 55%; while 9.6% report between 55.1% and 70%, and 14.8% between 70.1% and 80%. “The fact that more merchants aren’t reporting better delivery rates tells me they aren’t doing the right mix of list management and data analysis to figure out why more messages aren’t getting through,” says Jordan Ayan, CEO of SubscriberMail LLC, an e-mail services provider. “If I had to grade the web retailing market on how effectively they are using e-mail, most merchants would only get a C on their report card.”
Effective e-mail open and click-through rates are determined in large measure by how astute retail marketing managers are in creating campaigns and promotions, including attention-grabbing subject lines and personalized messages, that motivate readers to open the message, and then be persuaded to click through to the web site to make a purchase. But the latest Internet Retailer survey finds that only 24.2% of web merchants have an e-mail open rate greater than 25%, compared with 12.8% with open rates of 19.1% to 25%; 13.5% between 15.1% and 19%; 17.4% from 5.1% to 15%; and 11.4% between 1% and 5%. 20.8% don’t know or say their open rate is less than 1%.
Along with moderate open rates, only 17.1% reported e-mail click-through rates of 15.1% or more while 51.8% report click-through rates of 2.51% to 15%, 10.3% fewer than 2.5% and 20.8% that don’t know. “With only average or below average open and click-through rates, retailers are clearly missing a key opportunity,” Ayan says. “Messages aren’t getting through and the ones that are may not be registering with shoppers.”
Web retailers certainly are aware of their top e-mail marketing priority: making sales. The Internet Retailer survey finds that 47.8% of merchants list increasing web sales as their main objective, followed by 17.2% who see customer retention as the top goal and 12.7% who use e-mail to attract new shoppers, 19.7% who want more multi-channel customers or higher tickets and conversions and 2.7% that don’t know.
Using what works
To make their e-mail campaigns more effective, web merchants are adopting specific practices. 79.1% feature the company name prominently in the “from” line of the message, 63.7% believe they are creating the right mix of graphics and content to attract customers, 64% keep key points of content high up in the body of the message and 62% pay strict attention to the overall size of their messages and promotions.
While the survey indicates that retail marketing managers are working to improve the effectiveness of their campaigns, many aren’t paying close enough attention to conversion rates. In fact, 29.5% of respondents to the survey don’t know their conversion rates from e-mails. Only 4.5% of retailers have a conversion rate from e-mails of more than 10% while 27.9% have conversion rates under 1% and another 25.4% have conversion rates of 1.1% to 4%. 12.7% have conversion rates of 4.1% to 10%.
A low sales conversion rate is a key indicator that merchants need to adjust their approach to e-mail marketing. Today only 56.6% of retailers segment their e-mail lists, compared with 43.4% that don’t, according to the survey. But retailers can use segmented e-mail lists that identify recipients by demographics such as age, sex, annual income and past purchase histories to generate more effective campaigns.
For example, Fossil Inc. is now segmenting its e-mail list, defining particular shopper categories and demographics and using the information to develop more personalized campaigns. As a result, the average campaign is generating bigger orders, says Fossil vice president of e-commerce John DeCaprio. The average order now has about 1.5 items in the shopping cart at checkout compared with a previous average of about one. Better analysis and list management of e-mail also was a contributing factor for Fossil, a watch, apparel and accessories manufacturer with six e-commerce sites, to grow its web sales by 20% in 2006 to around $43 million.