Email Marketing: How to Prevent, Manage Dormant Lists

Email marketing remains critical for many ecommerce merchants. But for those merchants with established ecommerce sites — and older email lists — maintaining healthy email open rates and click-through rates can be a challenge.

We spoke recently with an email-marketing expert on how, exactly, to prevent a list from becoming dormant and, if it does, how to entice subscribers to reengage. He is Ross Kramer, co-founder and CEO of Listrak, the pioneering email service provider.

Practical eCommerce: Let’s assume a retailer has a list of 20,000 customers that have opted in to its email list. Say 15,000 of those are over five years old and they hardly ever open an email anymore. In that scenario, what should a retailer do?

Ross Kramer: “Well, the first thing the retailer should do is a Google search on ’email acquisition strategies.’ Because if its list is 20,000 strong and 15,000 of those are over five years old, then the retailer really needs a paddling because it has not focused on acquisition strategies.

“However, if they find themselves in this case where they’ve got a lot of old addresses, then they need to understand a couple of things. One, are these address causing me deliverability problems? That’s the first thing to understand. Once you take a close look at that, it’s important to say, ‘Okay, of these 15,000 dormant addresses, where do these guys live?’ Is it Yahoo!? Gmail? Hotmail? MSN Live? Comcast? Each ISP [Internet service provider] is going to treat your dormant addresses a bit differently. We’re going to assume that all of these 15,000 addresses are deliverable and that they’re not bouncing. If any of these are bouncing back, you want to remove them right away.

“I’ve got a very similar case study that we presented at the Etail show this year. One of our clients, Birkenstock Central, had 16,000 inactive subscribers — we had seen no orders and no opens for six months. We sent a series of three emails to all the inactives that essentially said, ‘Hey, do you want to continue receiving email from BirkenstockCentral.com or do you no longer wish to receive email?’ Of the people that clicked through — out of 16,000 we only got a few hundred clicks — 51 percent of those people said, ‘No, take me off the list,’ 37 percent said, ‘Yes, keep me on the list,’ and 12 percent actually clicked the link to go out to the website. So, we only got 211 subscribers to say “Yes, please keep me on the list,’ which meant that 15,789 were removed.

“Overall, I think what each retailer has to ask is, ‘How is my deliverability at each ISP?’ If your deliverability is okay at each ISP, then you’re probably not having deliverability problems. Many of the ISPs are looking at new metrics to determine inbox placement and they’re now looking at recipient actions. In the early days, ISPs looked at content. They looked at words like ‘Viagra’ or ‘mortgage’ or something similar and if you used those words in the subject line, automatically the ISPs considered it to be spam. Then we moved into the email 2.0 version — and AOL was the first to do this — with the use of the ‘This is Spam’ button and then all the other ISPs followed suit. From that, the ISPs started to use two new metrics.

“First, they started to introduce the concept of ‘reputation’ by introducing the ‘This is Spam’ button. Second, they started to look at bounces. We’re now in the 3.0 era where ISPs are now looking at inbox activity from the recipient side and looking at all the recipients clicking on your links. The ISPs analyze whether the recipients are adding your address to the address book, enabling images, and opening the message. So, these ISPs — specifically we’re talking about Gmail, Yahoo!, Hotmail, MSN — are starting to look at these engagement metrics and that’s where inactives can really hurt you, but you need to be looking at your metrics by ISP specifically.”

PEC: And those metrics aren’t published anywhere, presumably?

Kramer: “Correct. But Chad White at Responsys — the email marketing firm — just released a new document, “Email Engagement and Deliverability Study” that could help clarify. Deliverability has always been part art, part science. But the science it involved is, if you’re having deliverability issues at a particular ISP, you want to take into account email activity. One of the tactics that we recommend employing is to send best offers into those inactive subscribers. Before removing them, you want to send the best content to those subscribers.

“We did a discount ladder test for Birkenstock Central, where we actually segmented the Birkenstock Central list into about 11 different cohorts based on days since last purchased. The concept of the discount ladder test was to see what was the lowest offer, the lowest percentage offer we could send to each cohort in order for them to respond. We found that when you look at people that hadn’t purchased in three years, you absolutely had to send those people a 20 percent off offer.

“So, my recommendation is if you’ve got some great offers, such as 20 percent off — we see some other retailers trying to engage their inactives with 30 percent off — send those best offers to those folks that are most disengaged to try to get them to be reengaged before making the decision to cut them out of your file.”

PEC:: Following-up on the concept of the ISPs monitoring metrics — such as Gmail monitoring open rates, click-through rates, image downloads, that sort of thing — are you finding that, Gmail’s case, leaving dormant subscribers on a list could affect the deliverability of those that are engaged?

Kramer: “It definitely could. What I don’t want to do, in a leadership position in the email industry, is to say that it always does. If you are measuring your inbox placement at a place like Gmail, and Gmail is clearly an under-performer relative to other ISPs, then you probably can deduce that you got junked at Gmail, that your campaign hit the junk mailbox at Gmail. You want to be looking at this, and if you see that you’ve got a consistent pattern at Gmail, one of the things could be that your inactives aren’t helping you there, among other things.

“The one thing that you definitely want to be looking at is how many bounces you are sending to Gmail. If you’re sending any bounces, get rid of those bounces right away. Also — and this probably goes beyond the scope of today’s podcast — Gmail has implemented something called a ‘List-Unsubscribe’ header that if anybody clicks the ‘This is Spam’ button and if you’ve got that ‘List-Unsubscribe’ header in place, it will trigger an unsubscribe versus just a report of spam. So, there are some things you can do there.”

PEC: In other words, a retailer needs to be proactive on managing dormant subscribers. Don’t get to the point in our crazy example of 15,000 out of 20,000 are dormant. Is that it?

Kramer: “Exactly. You said retailers use email as a way of driving revenue. Our typical Listrak customers are seeing email revenue account for 20 to 30 percent of their overall pie of revenue — using natural search, paid search, affiliates, maybe they’ve got some direct mail or things like that that they’re using to drive traffic. If email is not driving at least 20 percent of your traffic, then you’re not doing a good job of acquiring new email addresses.

“To acquire email addresses, we’re seeing some great results running sweepstakes. A lot of smaller retailers get scared away from sweepstakes. There are legal ramifications, although once you look into it and you do a little bit of homework, you’ll realize if you keep your prize less than 50 bucks and you borrow some standard language that’s out there in terms of official rules and have your legal team run past it, it’s something that you can absolutely add into your strategy of acquiring new addresses. If it didn’t work so well, the big guys like Neiman Marcus, Bloomingdale’s, Macy’s, and Nordstrom would not run them everyday. Those guys run sweeps everyday and acquire thousands of new subscribers. If you’re a small merchant, you should be doing the same thing.

“The other thing that we’re seeing that’s working really well is the implementation of a DHTML popup after a certain amount of time on site. If you want some examples, go to BirkenstockCentral.com or Swell.com — two Listrak clients — and check out what we’re doing there. Essentially, we’re waiting for a few seconds of inactivity, then we’re popping the DHTML popup asking somebody to sign up. We’re also dropping a cookie so that the thing doesn’t constantly pop up and annoy people. For Birkenstock Central, we tripled the amount of new subscribers per day as a result of putting that popup in place and the revenue is following that rate.

“Generally, we see about 20 percent list atrophy each year, 20 percent of people unsubscribing. And I wish I had a better statistic for how many people go dormant each year. It’s really going to depend on the brand. But your ESP should be able to tell you how many people are going dormant each quarter. You want to be implementing sweepstakes, popups, in-store email capture, mobile capture, texting to a short code to get mobile sign-ups, even implementing QR codes, to be really acquiring email addresses at every touch point.

“Make sure that you’re adding new people to your list all the time. Those new people are going to be clicking through and they’re going to be opening your emails and they’re going to be enabling images at Gmail, all of which is going to point to positive reputation out at Gmail. By having a positive offensive strategy, Gmail is going to see, ‘Hey, this retailer actually has a lot of engaged people. Sure, they’ve got some unengaged people, but they’ve got a lot of engaged people as well.’ That’s going to count positively towards your reputation and ensure that you’ve got inbox placement there.”

PEC: Anything else for our readers, who are mainly smaller ecommerce merchants?

Kramer: “Yes. To reiterate one thing, understand and segment your list by inactivity. Beyond that, understand which discounts you have to give to those levels of inactivity for subscribers to become reengaged and continue to run those types of campaigns everyday. We’ve seen in some studies unengaged subscribers will receive different subject lines than engaged subscribers. So, unengaged subscribers could get subject lines with the words like ‘We want you back’ or ‘We miss you,’ things like that. That would be one piece of encouragement.

“Finally, for all the retailers that are in holiday mode, you are about to receive a windfall of new subscribers, and it’s going to be important to understand how to market to those folks. We see large unsubscribe numbers coming back after the holiday because of the large amount of Christmas purchases or holiday purchases. Understand how you want to be messaging to those people post-holiday and start to think about your post-holiday campaigns.”