Email Marketing Costs More than You Might Think

Ask any direct mail marketer what the most disruptive force in marketing has been in the past ten years and the answer will undoubtedly be the rise of email. Email has many advantages over direct mail: it’s cheap, easy to send, and allows marketers to easily track results to learn what works and what doesn’t.  Despite that, email marketers would do well not to be seduced by the lure of “free” email.

Unlike direct mail where the postage costs are front and center, blasting 100,000 customers with the same message doesn’t cost much more than blasting 10,000. As a result, it can be tough to resist the temptation to add just one more customer segment to the blast list.  Here’s where it’s important to recognize the real hidden cost of email: the opportunity cost of a customer becoming blind to (or opting out of) your email because the messaging is too frequent or not relevant.

Put another way, consider that the marketers job is to nuture the full potential lifetime value out of each customer. A thoughful, well targeted, and patient email campaign can nudge a customer toward realizing that potential. Get too greedy, however, and some customers will tune out forever. If one in 10000 customers tune out, and the average unrealized lifetime value of those customers is $500, then each email actually costs $0.05 plus about $0.01 for actually sending the email. That’s still cheaper than a catalog, but it’s far from free.

To keep the real cost of email marketing down, ensure that you are sending targeted and relevant messages to each customer segment. You can do this by analyzing the buying affinities of each segment and making sure the offers you send are for products that will interest the reader. If you don’t have the time or resources to crunch the data, don’t be afraid to rely on your intuition. The important thing is to remain disciplined about shielding customers from irrelevant communications.

Tags: clv, Customer Lifetime Value (CLV), email

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This entry was posted on Monday, June 23rd, 2008 at 7:36 pm and is filed under Customer Lifetime Value (CLV), Email Marketing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.