Targeting high-value online segments via e-mail

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A similarity exists between direct mail and e-mail, in that the customers who spend more receive more touches — catalogs in the case of direct mail and promotional offers for e-mail. This “catalog effect” in e-mail, like direct mail, is in part driven by purchase behaviors: The more orders placed online, the more transactional messages and promotional offers follow. This causes more inbox competition, in much the same way as off-line efforts vie for attention in the physical mailboxes of top spenders.

This coveted group is more likely to be influenced by well-crafted e-mail programs, but they are also more vulnerable to the effects of over-e-mailing. This circular combination will favor more sophisticated e-mail marketers who want to maximize the long-term value of this segment.

Based on Merkle's annual View from the Inbox survey of consumer e-mail attitudes and use, high-value online customers – defined as spending $1,000 or more in online personal purchases over the past year – represent only 15% of those who receive permission e-mail. But they receive promotional e-mail from 69% more companies than subscribers in lower spend categories. This equates to an additional 10 companies a month. Based on findings that show how e-mail influences purchase behavior, these additional contacts have the potential to drive further purchases for this group.

This influence increases with the level of Internet purchases. Overall, nearly half — 47% — of permission e-mail recipients cite that well-executed e-mail programs influence their decision to do business with those companies, both online and off-line. This percentage increases in tandem with online spend, up to 59% for those with an annual Internet spend of $1,000 or more.

While these high-value subscribers receive more permission e-mail when compared to lower-spend groups, the number of companies in their inbox “inner circle” — that is, companies that send permission-based e-mail that is of interest and opened regularly — is only slightly higher than average.

Overall, permission e-mail subscribers have about 10 companies they regularly engage with, whereas the number increases to 11.5 for the highest spenders. Marketers reaching this group face more inbox competition through an increased volume of e-mail, since ten additional companies, on average, send them e-mail.  This increased volume is compounded by the group's limited capacity or appetite for expanded engagement, reflected in the marginal increase of their Inner Circle.

But repercussions of message overload vary by channel. Unlike direct mail, where opting out of catalogs is seldom permanent, an opt-out in e-mail is more likely to be permanent due to regulations. Not surprisingly, the number-one reason this high-value segment opts out of e-mail is because a company sends too frequently — 80% of the high value  group cite frequency as a reason to opt out vs. an overall average of 73%.  Marketers putting effort into contact strategy, premium content and offers will strike a balance between short-term revenue generation and long-term subscriber value.
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