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Ken Magill

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Really? Lifetime Value is a Distant No. 4?

1/14/14

By Ken Magill

Apparently the email marketing industry’s engagement propaganda has truly sunk in.

In ExactTarget’s 2014 State of Marketing report last week, “engagement,” or opens and clicks, is cited as marketers’ No. 2 email success metric with 64 percent of those surveyed choosing it. Conversions were No. 1 at 67 percent.

Thing is, engagement was listed above ROI, although not by a lot. Sixty one percent of those surveyed listed ROI as a top success metric.

But just 35 percent pointed to customer lifetime value as a top success metric. So if I’m reading the results correctly, marketers see engagement metrics as vastly more important than customer lifetime value.

Moreover, customer lifetime value wasn’t cited as all that much more important than getting likes, shares and retweets. Twenty eight percent of those surveyed cited social activity as a top success metric, according to ExactTarget.

Certainly there is a correlation between click rates and conversions. But open rates?

To borrow a page from Alchemy Worx CEO Dela Quist’s book, focusing on increasing engagement rates is a fool’s errand.

“Inactivity is normal activity,” said Quist in an interview with The Magill Report in 2012. “Inactivity is the default position for consumers. Highly engaged people are outliers.

“Setting a goal of engagement is almost doomed to failure,” he added. “A strategy that relies on getting open rates higher rarely delivers more revenue. There’s no ROI in removing inactive names.”

So 61 percent of marketers in ExactTarget’s survey rightly see ROI as a top success metric, but 67 percent value metrics that if we do the things necessary to increase them, we slash our email lists and drive ROI down—even though we have driven so-called engagement metrics up.

The online retailer I do business with most is a place called Famous Smoke Shop in Easton, PA. They have an exclusive brand of cigar—which I will not be broadcasting here—that if I play my coupons and order sizes right, I can get down to under $2 a stick.

For those who don’t know, a good cigar can easily cost more than $10.

Everything Famous Smoke does seems to be aimed at increasing the frequency and the average size of my orders, which will increase my lifetime value.

If I spend $150, when the package arrives in the mail there’s a coupon for a certain amount off orders over $200.

If I spend $200, when the package arrives there’s a coupon for a certain amount off orders over $250.

And throughout the online-shopping experience, Famous pushes the occasional killer deal—excuse the pun—in a pop-up window to be added to my cart if I choose.

These guys are all about getting me to spend more and spend more often.

Maybe there’s a non-ecommerce explanation for ExactTarget’s respondents’ placement of engagement metrics so far about lifetime value.

But if we prioritize lifetime value, like Famous Smoke seems to be doing, shouldn’t everything else fall into place?

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