The real problem with open rates

A report came out from an ESP that discussed ‘industrywide’ declining open rates.   (click here to read article in eMarketer)

Basically this report outlined three growing problems that are contributing to this problem.   One of my favorites was: 

….A second factor is the phenomenon of file aging. The longer names are on mailing lists, the less productive they become. Over time, the less productive e-mail addresses become a larger part of a marketer's list.

What they don’t talk about is why older names become less productive.   I’ll accept some element of churn.  People leave.   But our research indicates that there is a much more controllable problem here….relevance.

I’ve used the American Airlines example plenty of times in this blog because it hits this problem right between the eyes.   I’m Gold.  I’m in the top tier of all their customers. I’m loyal.  And, I could get 5 or more emails a week….I don’t read any of them!  (Download american_airlines_examples.pdf )

You know why?  The emails have nothing to do with me:  Offers for credit cards (no, no and no!), exotic singles vacations (married with 4 kids…if they ever care to ask) and trip specials that never originate in Indianapolis (where I live)

My point is that file aging is a great explanation for why open rates for this ESP are declining into the low 20%’s.  Almost all retailers suffer from the same problem, and it's because they still are using email as a cheaper Mass Marketing Tool instead of a revolutionary Database Marketing tool.   

But the opportunity here is to fix this by being more relevant.  Only talk to your customers when you have something to say.  (if no specials from Indianapolis, then leave me alone) And when you do talk to your customers; talk to them about something they care about.

I watched Jerry McGuire last night (“I liked your memo”), and Jerry had the answer:  Less email, more focus on the customer!

Comments

[Doug Karr]

Chris,

Your response to this is absolutely dead on. Though email is a fairly recent technology, we have over 200 years of data to back up your conclusion... it's called a 'Newspaper'.

Newspapers have seen this identical trend over the last few decades. How are they fighting to maintain it? Through what they call 'Custom Publications'. Take a look in your newspaper this Sunday and you'll find quite a few magazines or tabs that are targeted publications. The problem, of course, is that they are in every newspaper. They target certain folks, but they are blasted to every address - what a waste!

The advantage with email is that you CAN send the right content to the right person at the right time. If you're seeing a decline in open rates and a decline in retention (how long your subscribers stick) your problem is exactly what you define... you're not relevant

Great Post!

[Travel Guy]

Doug- Do you think newspapers could enjoy some of this success if they specifically sent different additions to different addresses? I'm not sure they have the resources/cost efficiency to do so.