E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
Online retailers look to social and mobile tactics to boost e-mail results, but largely tune out video.
Online retailers plan to send more e-mail marketing messages this year even though click-through and conversion rates remain steady for most merchants, suggest results of Internet Retailer's latest survey.
Of the 56 chain retailers, catalog companies, web-only merchants and consumer brand manufacturers that responded to the March survey, 65.5% said they plan to increase their e-mail marketing this year. But many appear to be waiting for prime shopping periods, such as back-to-school and the holidays, to step up their e-mail campaigns. Only 33.9% said they sent more marketing e-mail in March than a year earlier; most respondents, 53.6%, conduct between one and three e-mail campaigns per month.
As retailers do send more e-mail later in the year, the survey suggests they will get increasingly creative with tactics related to mobile commerce and social media. Retailers no doubt hope those innovations will provide a lift to a mature marketing channel, in which measures of success are largely holding steady.
One in five respondents, 20.4%, said their e-mail conversion rates were slightly or significantly up from last year, with 68.5% reporting steady rates, and the rest saying those rates decreased. E-mail conversion rates do not exceed 4% for nearly 63% of respondents, with 25% saying their conversation rates are no more than 0.5%. Overall, more than half of respondents, 53.6%, said they earned no more than 10% of their online sales from e-mail marketing. 5.4% reported earning more than 25% of online sales via e-mail marketing, and nearly a third, 32.1%, said they did not know how much they earned.
Meanwhile, just more than a quarter of respondents, or 28.6%, said their e-mail open rates had slightly or significantly increased since last year; 16.1% reported slight or significant decreases. E-mail click-through rates increased slightly or significantly for 26.8% of respondents, and decreased slightly or significantly for 12.5%.
Moving to mobile
A significant number of merchants will seek to squeeze more revenue from e-mail marketing this year by making it easier for consumers to access messages from their mobile phones. For the first time in its e-mail marketing survey, Internet Retailer asked respondents if they had optimized e-mails for display on mobile devices. 17.9% of respondents—not quite one in five—said they had. Most of those who had, 70%, said they merely tweaked the size of existing e-mails to better fit mobile phone screens. The rest of those optimizing for mobile, however, said they had gone through the trouble of creating separate e-mails designed for the relatively narrow width of smartphone screens.
"We're beginning to see nascent efforts by retailers to deploy not only mobile applications, but more aggressively use SMS [text messaging] as an opt-in point for e-mail marketing messages," says David Daniels, a former e-mail marketing analyst at Forrester Research Inc. who is now CEO of The Relevancy Group, a marketing consulting firm.
However, just because consumers seem to be flocking to ever more sophisticated mobile devices and tablet computers doesn't mean retailers should recklessly force their e-mail marketing efforts into the mobile space, cautions Laura Saati, vice president of retail practice for e-mail marketing services provider e-Dialog Inc. "They need to understand their consumer demographics and customer habits to be sure investing in the mobile channel is right for their business," she says. "They need to look at their e-mail database to identify if they have a large number of consumers viewing e-mail on smartphones."
Beyond such due diligence, aggressively acquiring e-mail addresses at every opportunity is another key to successful e-mail marketing, experts say. 44.6% of survey respondents said they are trying to boost the effectiveness of their campaigns by collecting e-mail addresses at every point of consumer contact, including inside bricks-and-mortar stores, during call center interactions and via social networks.
Other tactics also are proving important to significant numbers of online retailers. Well over a third of respondents, 39.3%, said they send e-mail marketing messages that are based on specific consumer behaviors or events; retailers can send e-mails to consumers who leave items in shopping carts without making a purchase, or send e-mails based on holidays and sporting events, for example. The same percentage of respondents said they increasingly segment their e-mail lists so that they are sending more relevant messages. "Segmentation—specifically click-through-based segmentation—is imperative to ensure that retailers understand which subscribers are engaged and which are lapsing, potentially because they changed their e-mail address," Daniels says.
The same percentage, 39.3%, also said they personalized e-mails, such as by addressing customers by first name. Nearly a third, 32.1%, said they market through transactional e-mails, such as order confirmations, touting related products and other offers.
Some retailers are tying e-mail messages to social networks or are including content generated by other consumers. Of the retailers who responded to the survey, 32.1% add links in e-mails that consumers can use to share the messages on social networks, 25% include forward-to-friend links, and 21.4% include reviews from other customers.
"Consumers love transparency, and with the emergence of social media we are seeing them turn to each other for marketing more than ever before," says Saati of e-Dialog. "Prior to making purchases many consumers will now conduct their own research, which relies heavily on consumer reviews. By including these reviews in e-mail messages marketers can bring that conversation to the inbox."
Retailers also are paying attention to the balance of pictures and words in e-mail marketing messages, the results suggest, with 41.1% of respondents saying they work to improve the effectiveness of their e-mails by adjusting the mix of graphics and content.
But only 7.1% of respondents said they are adding more videos to e-mails. The low percentage likely stems from technical challenges, experts say. For instance, many Internet service providers still block video e-mails, fearing they represent spam or could include harmful viruses.