How much consumer e-commerce was conducted in 2005? $143.2 billion, according to comScore Networks. So no matter how much of that came from database-derived e-mail marketing, be it 5 percent, 10 percent or more, retailers have much at stake in boosting the size and monetization of their databases.
Many question e-mail append – using third-party vendors’ opt-in lists (with permission to receive third-party e-mails) – to build their own e-mail databases. The way this works today, the vendor first matches e-mail addresses with your customer name and address data. Then the vendor sends an e-mail or series of e-mails (provided by you) to try to get those individuals to opt into your database.
In this two-part column, we will explore the justification for this approach and (in part two) review suggested best practices.
Data append lessons from a cataloger. The practice of appending more information to customer data goes back decades. For example, when a cataloger with 40 million customer names in its database has to decide whether to send a $5 catalog, she is considering a $200 million expense – per every catalog release. Why does the cataloger need to mail to all 40 million names, you ask?
Catalogers like J.C. Penney don’t mail the thick, two-pound catalogs to every name in their databases. They have Ph.Ds and other experts who analyze the customer list for buying behaviors and hundreds of geo-demographic characteristics from household income to the make, model and age of car. They assign a score (often a propensity to buy or expected purchase amount) to predict the expected response to the catalog. A cut-off score for which the mailing cost can be justified is established, and every name with the same or higher score is mailed a catalog.
Where does the cataloger get all those data points for millions of names on the list? Companies such as Equifax, Acxiom and Claritas sell compiled data (geo, demo, behavioral, attitudinal) on as many as 110 million U.S. households (that’s nearly the entire U.S. consumer base). Catalogers and other direct marketers buy data appends from these companies and refresh them every three to six months.
E-mail relationships. Of course, it would be nice to have e-mail addresses for all those millions of customers. Imagine all the cost savings on postage if the catalog could be half as thick. Now add to that the benefits of higher frequency, more personalized communication; also add the reduced cost of transaction on the Web site, and it becomes clear that direct marketers, who on average have 20 percent to 50 percent of their customers’ e-mail addresses, should spare no expense to seek e-mail addresses for their entire customer database.
The lifetime value of an e-mail relationship justifies the cost of appending the e-mail address and then trying to get them to opt in. The catch, however, is that vendors’ lists are not comprehensive – you’re lucky to get a 30 percent match with any one vendor. We have seen that a good, incentive-driven e-mail campaign to join an opt-in list can garner 10 percent to 40 percent conversion rates.
Yes, the range is wide and depends on your brand, customer satisfaction, etc. So if you negotiate an e-mail append for $1 per name, then the cost of an opt-in e-mail address works out to between $2.50 and $10. If this cost justification works for you, e-mail append can be the fastest way to boost your opt-in e-mail database.
Part 2 of this article will address questions such as:
* How does one deal with CAN-SPAM compliance when using e-mail append to build your e-mail database?
* Could there be a backlash from customers whose addresses you are appending?
* How should you select an e-mail append vendor?
* How many vendors should you use?
* What kinds of offers or incentives should you consider to motivate customers to opt in?
* Does it make sense to do e-mail appends repeatedly? If so, how frequently?
