I signed up to attend CES this year, which unleashed a torrent of emails encouraging me to visit booths, attend events, and check out new products. While most of these emails were fine, a few stood out in their awfulness.
I could go off on a tangent on how, even with an amazing product, marketing is a critical function. Good marketing should be seen as a requirement, especially when you’re marketing to the press and media covering the largest consumer electronics show on the globe. Furthermore, sales reps (and even sales VPs) shouldn’t be blasting marketing or event emails, and definitely shouldn’t be sending emails to press and media.
So, just for reference, if you’re blasting out a pre-event email and trying to drum up traffic at your booth or interest in your product, here’s what NOT to do.
(Note:  Below is the entire email, and I’ve obfuscated the name and booth number to prevent embarrassment.)
XXXX will be in booth #XXXX. We look forward to meeting you!
I recently read an article about the money wasted purchasing contact names to build marketing databases (sadly, I can’t remember where), and it really hit home with me. At my current company, the previous Marketing VP was a huge proponent of buying massive, industry-specific marketing lists with the sole purpose of “building up our database.” Ah yes, the goal of all marketers…
However, as I read the article and fumed about the wasted money (between 50¢ and $2 per name for nearly 25,000 contacts), I had little more than gut feel to really know whether or not the lists did indeed provide marketing value. As a good quant marketer, I decided to throw together a spreadsheet to determine if the purchase of B2B retail and e-commerce lists was worth the price.
A million stories, but no value? (Creative Commons: Alexander Kesselaar)
Background
We purchased two types of lists: large, industry-specific databases from a list broker (between 700 and 9,000 contacts each), and smaller, campaign-specific lists from Jigsaw (between 150 and 1,000 contacts, targeted by job title, industry, and/or company name). For the larger lists, the list “universe” contained anywhere from 10,000 to over 1 million total contacts and we purchased a smaller, randomly-selected chunk.
Caveats: I looked at the purchased list data aggregated over the course of two years of email marketing, not on individual campaigns. Therefore, the individual campaign results for these may vary. The comparison numbers for targeted, non-purchased lists are for single campaigns.
Skimming 5% Off of the Top
First, I was curious to see how many of the 25,000 contacts contained invalid email addresses (not bounces, but simply bad emails) – essentially how much money was wasted out of the gate due to stale or incorrect information. It was just over 1,000 contacts, or around 4.3%.
After one list generated a 20% bounce rate (invalids, mailbox full, spam filter, etc.), our list broker gave two benchmarks against which to compare this (and I quote…):
“The stated average delivery rate is 80%-95% so that’s within the norm.”
“In today’s economy, a 20% bounce rate is not bad at all.”
Most list brokers will replace the invalid contacts with new ones, but looking at my results those replacements contained double the percentage of invalid contacts as the original lists, averaging close to 9% (albeit on a much smaller total). So not only is there a >4% shrinkage on the original list, it gets worse on the replacements.
Surprisingly, Jigsaw had a higher rate of invalid email addresses than the larger lists at 5.6%. Given the Jigsaw model, where users enter a contact’s details to earn points to “buy” other contacts, I’ve always naively expected the data to be cleaner and more complete. However, since Jigsaw doesn’t seem to validate the data, users are almost incented to enter bogus data.
But overall, our 4.3% average was relatively low, so I guess it’s to be expected and I can’t/won’t complain.
Actual Activity
Since we primarily run email campaigns to generate leads, I looked at two metrics: any activity at all (web visit or email open) and sent-to-click-through rates. I used activity rate to give the lists the benefit of the doubt, assuming that the only way a contact would have visited our website was if they saw an unopened email and googled our name or just visited out of curiosity.
Of the eight large purchased lists, the best activity rate was 17% on a list of just under 1,000 contacts. The average, however, was only 5.5%. For the Jigsaw lists, the activity rate was a bit lower at 5.1%. Again, I’ve always been under the impression that the Jigsaw contacts were more robust, but this is strike two.
Click-throughs
The click-through rate was surprising. Generally my email campaigns have a relatively good CTR, usually 10 – 50%, given the targeted nature of the content and the effective subject-to-content connection. If I can get someone to open an email, there’s a good chance that they will click through. Even better, my sent-to-click ratio runs in the 3 – 8% range.
The overall sent-to-click ratio for purchased lists was horrible, with just a 1.3% hit rate. Large lists were below 1%, with a few having zeroclicks across a half-dozen campaigns. Jigsaw was much better, with a 2.6% sent-to-click ratio and approaching my results with non-purchased lists.
For some generic comparison, Jupiter Research reported in 2006 that untargeted broadcast emails (with no personalization or segmentation) generated an average CTR of 9.5%. Yes, this is CTR, not my sent-to-close ratio.
Worth the Money?
At this company, I’ve been able to drive an average lead gen cost-per-lead of around $20 across all marketing: email, events, and advertising. For email alone, it’s a bit higher at about $35 per lead. This includes purchased, rented, and organic contacts.
Looking at the price of the purchased lists over the total number of actual leads generated, the cost-per-lead is about $105, or 3x my overall average for email. Add to that the cost of increased spam scores and lost goodwill from unwanted emails, and even the cost of marketing automation (for which ours, Marketo, is priced partially on the size of your contact database).
Bottom line: This analysis convinces me that list purchases are a poor marketing and business decision, and I never should have listened to the previous Marketing VP. I guess this is just another reason why he’s no longer here… 😉
Most email marketing advice takes a negative approach to the unsubscribe link, offering ways to reduce, eliminate, or talk your way out of prospects removing themselves from your marketing lists. However, there are cases when the opposite is, in fact, the better course of action or the required focus of a campaign. Let me explain…
The draft of our very effective email unsubscribe offer.
At my current company, I’ve been able to drive a huge amount of leads with some of our more compelling offers, especially the Behavioral Analytics For Dummies book, which has generated over 6,000 leads in just nine months. That may sound like a good thing, but that volume of leads – combined with leads from other campaigns – can overwhelm a sales team very quickly. With that many leads, our sales development and field sales reps spend more and more time on leads who were only interested in the offer, not our products. As lead volumes increase, so, obviously, does time wasted on uninterested leads.
Do you need a push?
This is where the magical unsubscribe offer originated. Since my campaigns had been very successful, I began to think that maybe the emails, calls-to-action, and content were too interesting. I was crushing my lead gen KPIs, but was overwhelming our team and needed a way to separate the proverbial (and valuable) wheat from the uninterested chaff.
While I toyed around with various messages to incent interested leads to act, it became clear that that was the wrong approach. Every email blast tries to incent interested leads to act, but essentially ignores the uninterested leads until the footer of the email. Working with my #1 marketing guru, John Love, we decided to focus the message on helping people to unsubscribe!
To begin, our subject line was, “You’ve responded, but are you really interested?†We offered the unsubscribe link as the very first call-to-action of the email: “If you’re really interested, we’d like to help you take the next step. For the rest of you, you can easily opt-out of these messages by clicking here.â€
Then, we offered a few qualifying questions that allowed those curious but unsure to decide before moving on, with #5 being asking if they were too busy to improve their business. Again, we almost pushed people away with the subsequent sentence: ” If you answered yes to #5, then click here to be removed from our list and we won’t bother you any more. Our solution is not for everyone, and if you’re not spending a lot of time trying to better understand your customers, and are happy with the insights you’re getting, then please carry on.”
Partial list of email unsubscribe rates by industry (Source: The Sign-Up.to 2010 UK Email Marketing Benchmark Report)
Thank you for unsubscribing!
The results: Over 150 unsubs on just under 2,000 contacts, or a 7.5% unsubscribe rate! For perspective, my unsubscribe rate has been extremely low compared with some recent B2B benchmarks that list 0.6% as typical for IT solutions, or this estimate of 0.2 – 0.75% unsubs on lists to which you “communicate regularly.â€
For comparison, my previous 2010 high volume of unsubs for a single campaign was 15 on a targeted list of 3,000 contacts – a more-typical 0.5%. However my rate is usually much, much lower, with just four or five total unsubs on campaigns that hit over 5,000 very targeted contacts.
Success in the form of failure
Overall, this was a huge success. On the “chaff†side, not only did we cut out a significant amount of wasted follow-up time, we also avoided damaging our brand by essentially spamming people who were not at all interested in our products or sales pitches.
On the “wheat” side, our marketing automation tool allowed us to pinpoint leads who opened the email but did not unsubscribe. I interpreted them as being somewhat interested, but not immediate. Those who actually clicked on the “real†call to action were immediately called by a sales rep, since they were obviously very interested.
A lot of marketing consultants talk about firing your bad customers, which makes a lot of sense. In this case, I took that concept, moved it upstream and fired our poor leads. I’m sure someone out there is thinking that I probably made it too easy for some potential business to slam the door on us. Probably. But the leads that demonstrated proactive interest are those that our sales reps are going to have an easier time engaging.
Bottom line: As a sales rep once told me, “The next best thing to winning is losing quickly.†By getting those uninterested leads out of our system, we did exactly that!
