Value of an Email: Marketing’s Rosetta Stone, Part 1
The value of an email keeps popping up in marketing circles these days. Why? Because direct marketers are trying to justify how important it is for store associates to collect customers’ email addresses. Sounds mundane, but it’s critical. If you have a customer’s email address, you can better understand and market to them with increasing sophistication and accuracy.
Email addresses are like a marketer’s Rosetta Stone; they're the most important data point within the identity system itself and provide a means to reach every different customer on their own terms. Emails are usually easy to understand in e-commerce, like the email address of an Amazon Prime account or Gmail as the key identifier in Google world. People gave up on usernames a long time ago; they can’t remember them half the time.
When people create an account on a website, they use their email address. Retailers can tokenize that email address across digital channels to become part of the enormous identity system out there. It can be primitive — we can just blast emails — or you can leverage email along with an associate profile to send very targeted and personalized customer communications.
Hurdles, Payoffs and Opportunity Lost
Direct marketers are getting resistance from store personnel, who see asking for an email as extra work that slows down the transaction and customer experience. They don’t see the potential benefits of capturing customer data.
They run a store where people open doors and come to shop. They might recognize a few customers, but they don’t have intelligence on them, so they can’t see the full view of the relationship. It’s not the same as really knowing your customers.
But the fact is a lot of people say yes to email requests. Our clients often get an 80 percent capture rate; 50 percent is now considered on the low side. Even retailers that see themselves as a transient business — e.g., dealing with younger customers and others considered too busy to reach via email — are buckling down to try to treat their customers differently. With an email, they can recognize them and treat them like customers. And customers who identify themselves are more valuable.
The point of sale (POS) is the most significant source of email capture. Here's a not-uncommon scenario where we helped one retailer: A $1 billion, 1,200-store retailer’s business is 95 percent offline. The retailer's e-commerce business has been growing, but rounding up, its only 5 percent of total revenue. They have gone from a near zero email capture rate in stores to 50 percent capture rate, and the database has exploded with marketable names. It’s been significant enough to challenge the constraints of this legacy retailer with traditional P&L channel categories. Suddenly, the head of catalog is fighting for more money to keep up with database growth since she can barely afford to mail to her 12-month active buyer list. It was time for management to shake off the old P&L chains and grab this opportunity to create incremental revenue like it had not seen in a long time — maybe ever. Fortunately, the company saw the light.
Why do retailers want to capture emails? So they can treat their customers like customers. When they do it successfully, the database grows, and they can accurately gauge customer numbers to identify net new, activated, reactivated, and lapsed. That’s gold. However, if you can no longer afford to keep up with database growth, therefore culling the herd in both catalog and email with return on ad spend (ROAS), you’re inadvertently growing your inactive and lapsed customer base. Furthermore, you’re overlooking an invaluable marketing asset: revenue per Customer, as shown in this actual client chart.
Revenue per customer (RPC) vs. days since the transaction where an email address was captured is a critical metric that’s lacking from most retailers’ P&Ls. The closest you might see are some notes in a 10k. The most sophisticated metric retailers ever use is net new buyers vs. existing buyers, but only as a footnote. This is an opportunity lost.
In part two of this two-part series, I'll look at improving the customer view, reaching the super household, and thinking before you e-blast.
Augie MacCurrach is the CEO of Customer Portfolios, a marketing technology leader that uses insight and analytics to increase customer value. You can follow Customer Portfolios @CustPortfolios on Twitter.
Related story: Putting — and Keeping — the Customer in the Center, Part 2