A new survey released by First Insight is entitled Retail Email Overload, however the findings seem to be conflicting with the title. A little over 1,100 people in the US were surveyed, we estimate a 3% margin of error and a confidence level of less than 95% so the findings do need to be seen in this light.
First Insight has been accused previously of not asking the right questions in their surveys and of failing to understand what is important to retailers. With their latest survey they seem confused as to where they stand with email marketing, on first glance at their press release you would be forgiven for believing it was yet another “email marketing is dead” piece. Using phrases like “Barrage of Retail Emails”, “Consumers being hit hard” and “receiving a whopping 13 emails a week” many will focus on the whopping and fail to recognise this is less than 2 messages per day in total for all retail lists subscribed to.
However on reading the statistics in the report we find that on average 79% seem to feel retailers get their cadence about right and open 25% of the emails sent. They state the average recipient is subscribed to just 2.3 retailer email lists, which would indicate there is not as much competition in the inbox as you might have believed.
All this despite publishing in August of last year a report that indicated Millennials, prefer email to social media for offers. Survey results showed fourty-two percent of 18- to 34-year-olds want to hear from retailers by email. Only five percent want social media. If you’re talking about retail sales in particular, email was the preferred mode for hearing about sales for 34 percent of consumers in the 18-to-34 bracket.
The report warns “in the wake of this email marketing cash cow, retailers are unknowingly creating a divide between their brand and their customers” quoting 1 in 4 emails being opened by recipients as proof of this fact.
Despite the report stating that retailers have the worst performing email marketing programs, and that the survey confirms this as a result of recipients stating (“only”)1 in 4 emails are opened, that would in fact translate to a 25% open rate and would be in the top 10 best performing according to the most recently published statistics from Mailchimp.
Recipients average 5.5 messages a week per list they are subscribed to with 79% of email recipients being happy to receive 5 messages a week from each retailer they have subscribed to and the study found 66% said 6 or more messages would be too many. However 8% of respondents felt 10 or more messages per week was acceptable and some even stated they did not receive enough emails from the brands they subscribed to.
This same segment also appears to be the most valuable, they were 73% more likely to state they “like” or “really love” shopping, and 44% more likely to spend more than $500 a year on clothes for themselves.
5 personas were created using research published by two leading academics on the subject of retail habits and consumer behaviour; Dr. Patricia Huddleston and Dr. Stella Minahan.
- Dasher—knows what they want, gets in and out as fast as possible.
- Hunter—always on the look out for a great deal.
- Browser—enjoys browsing stores alone to discover latest trends.
- Therapist—finds shopping to be very therapeutic.
- Socialite—treats shopping as a chance to spend time with friends.
Those happiest with the email channel were also disproportionately represented in the Hunter and Browser categories, the most profitable sectors and most likely to be seduced by an offer despite not previously having intended to make a purchase.
The report did highlight that subscribers would like to see better offers and better targeting and relevance but we do have to wonder about the ‘Email Overload’ title.
First Insight announced earlier this month that it had raised $14M in a round of financing from Updata Partners, a technology growth equity firm. First Insight’s platform InsightSuite consists of ForeSight, InsightTargeting, and Insight Suite for Wholesale. Insight are describing this as the customers voice, one example of customer interaction is through the provisioning of games to consumers and utilising the information gathered. One example is Sold. In Sold! players have the opportunity to manage their own store by selecting the right inventory at the right price and quantity.
The business purports to quantify the chance of success for new products as well as identify areas for potential improvement including ascertaining price points. The business will then advise what cost savings have been achieved as a result of utilising their service.
The process takes 2 to 4 weeks and is primarily driven as we understand it by applying Predictive Analytics based on larger sets of data about the retail industry and the clients sector, This data has been gathered over an 8 year period, this is then being used to define the products that should be marketed tomorrow.
Predictive Analytics are immensely useful for fraud detection, credit scoring, risk assessment, even optimising price points for maximum profits as airlines and hoteliers have found. In marketing however the benefits are a little more limited, cross and up-sell opportunities can be identified well enough, identifying the most profitable customer segment too can benefit from the type of data offered by predictive analytics.
However as a rule marketing is not a hard nor exact science and as such, outcomes often fall way outside the range of expected outcomes. The cost savings analysis offered by First Insight cannot of course account for the Black Swan Events, and in an industry such as retail that they target heavily, that could mean a significant missed revenue opportunity.
So whilst we can see that retailers will likely find success with price optimisation one has to wonder what the costs are of allowing software to define fashion sillhouttes and as Abercrombie & Fitch, maurice and others have said allow an application to decide on colours, patterns and styles for the current and future seasons. No doubt there are wins to be had for retailers utilising the Price Optimization elements of the product, however some other purported features should probably be approached with caution. Unified Price, Promotion and Markdown Optimization (UPPMO) is a hotly contested vertical in retail, Gartner recently released their UPPMO Applications Market Guide
On the subject of their report we are told by Jim Shea, Chief Commercial Officer of First Insight “The communications are not only too frequent but are basically meaningless to consumers. What consumers really want is for retailers to take the time to know them and make recommendations about clothing or products that are in line with their personal taste.”
“Retailers could find that using a lighter touch and taking a more personalized approach with email marketing could inspire more purchases in the end.” There is no evidence given to suggest a lighter touch would drive more sales and only 43 percent of consumers say they would be more likely to open emails from retailers if they knew those emails contained personalized suggestions of products or clothing that aligned with past purchases, rather than promoting products that were generally available or on sale.
Despite the press release downplaying the role of sale and offer pricing, despite the fact 51% of respondents to the survey did in fact say they would pass good offers on to friends.
The 4 page report featuring these and other findings from First Insight’s retail email marketing survey can be found here(registration required).