January 28, 2011

Making the Business Case for Permission

by Kelly Lorenz, Marketing Strategist at Bronto

InboxI could sit here and write until my fingers turn blue about the importance of permission, respecting subscribers and so forth; but the likelihood is that you are either sold on permission-based marketing or you're not. So what's the point of this post? I'm looking to tackle the main argument of non-permission-based marketers square on its head - it makes you money more easily than permission practices - to help convince the undecided and newbies.

Not too long ago I worked with a client that utilized a large number of tactics to collect email addresses including e-appends*. The directive from upper management was to collect as many potential customers as possible as quickly as possible. I attempted to explain the pitfalls of e-appends to all levels of management to no avail. So instead, I had the eCommerce Manager separate out the lists by source to monitor performance. We grouped each source by expected performance (explicit opt-in through e-append).

What we saw was the following:

  • The e-append list had enormous bounce and complaint rates (no surprise) and produced $25k in revenue**. All told, the ROI (Return on Investment) was 5:1. Not too shabby. Now, keep in mind that this list held the largest number of contacts to build perspective in performance.
  • The borderline permission lists (pre-checked co-registration, pre-checked checkout box) did better with $66k in revenue. The ROI for these lists combined was 11:1. Getting better.
  • The cream of the crop, the pure opt-ins (website and Facebook sign-ups) was the smallest list, but the results spoke for themselves: $53k in revenue and an ROI of 32:1.

So you may look at those revenue numbers alone and say that the borderline permission lists actually did the best, however keep in mind that this list was significantly larger than the pure opt-in list. If we were to look at the open, click and conversion rates, the pure opt-ins won hands down.

Even though they saw the difference in performance, the executive team still wanted to mail the e-appends because they felt $25k was a strong enough pull to continue. What happened next should be no surprise to deliverability experts. Over the next few months this client saw the revenue numbers and performance of all campaigns and lists drop. Why? Mail was no longer getting into inboxes due to the high numbers of bounces and complaints. Even the pure opt-ins weren't responding at the same rates. What was previously $144k per send was now $100k, if lucky, and had a compelling offer -- an offer which ate into the bottom line.

Ultimately we had to stop working with this client based on their list management practices - see asterisk #1 - , but last I heard they were still practicing e-appends.

The moral of the story is yes, you can make money through non-permission-based practices, but over time they will end up costing you more than you've gained. Do you have any list management stories you've learned from? Please share!

Kelly Lorenz
Email Marketing Strategist at Bronto
@KNLorenz

*Bronto clients please note that we do not allow you to send to e-appended addresses per our Permission Marketing Policies.

**Please note that the numbers in this post are direct ratios of the actual revenue numbers, but are not the actual numbers for privacy purposes.

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Kelly Lorenz, Marketing Strategist at Bronto

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