Email Response Rates Pathetically Low
By Ken Magill
Email response rates are pathetic in comparison with other channels, according to a recent report from the Direct Marketing Association.
Email campaigns sent to house files drive an average 0.12 percent response rate—response being defined as the user having taken some sort of action called for in the message, according to the DMA.
In comparison, letter-sized direct mail drives an average 3.4 percent response rate, almost 30 times that of email, according to the DMA. And this is despite direct mail’s average response rate having dropped 25 percent in the last nine years, according to the DMA.
“Even though direct mail is less effective in driving response than it was a decade ago, it still is among the best media for generating overall response,” said Yory Wurmser, the DMA’s director of marketing and media insights.
The only channel with a lower response rate than email is display ads at 0.4 percent, according to the DMA.
Somewhat surprisingly, the highest response rate is delivered by the much-maligned—by consumers, anyway—channel of telemarketing.
Phone calls to customer files achieve an average 12.95 percent response rate, according to the DMA.
However, telephone marketing also had the highest costs: nearly $78 per order or lead for a house list, and $190 for a prospect list, according to the DMA.
And even with such low response rates, email still overwhelmingly outperforms all other direct marketing channels in terms of return on investment.
According to the DMA’s survey, email generates $28.50 for every dollar spent. And while this figure is dramatically lower than the ROI figure the DMA published for email last fall, it’s still comparatively high.
“We found that ROI for email is 4x that of direct mail, so there’s not a systematic bias in the data for direct mail,” wrote Wurmser in an email exchange with The Magill Report.
And as has always been the case, email marketing’s greatest asset—its low costs compared to other channels—is also its biggest curse.
“The double-edged sword with email has always been that the more you send the more revenue you generate,” said Loren McDonald, vice president of industry relations for email service provider Silverpop.
However, as marketers continue cranking up the volume of email they send, they run the risk of driving up their unsubscribe and complaint rates to unacceptable levels, he said.
“Every company has to find that perfect balance,” he said. “At some point you cross a line where the cost to reacquire customers, the number of unsubscribes you get, and the number of spam complaints you get outweigh the added revenue.”
McDonald recommends, among other things, setting up triggered-email programs, such as abandoned-order messages.
“The smarter marketers are continually adding one-to-one behavioral-based email marketing,” he said. “We have a client who has 40 different email messages going out every single day and she doesn’t press the ‘send’ button on a single one.
“The beauty of these emails is that any one of them might be going out to just 100, 1,000 or 10,000 people, but the conversion rates—10, 20, 30, 40 sometimes 50 percent—makes the math work,” McDonald said.
Another issue affecting email response rates is marketers with large percentages of inactive addresses on their files, said McDonald.
“I’ve been hearing lately that a lot of clients have files that are 50, 60 and even 70 percent inactive,” he said. “When you start to get numbers like that, you start to get deliverability problems.”
That debate aside, McDonald recommends focusing more on the most active addresses in the database.
“If you start to focus more on those people who are actually doing things, such as opening, clicking and buying, then you’re dealing with that core group and getting more out of the people who are actually engaged,” he said.