FACT: every time someone unsubscribes from your email program a fairy dies.
OK, so that's not true but it might as well be. Why? Because by and large the cost of an unsubscribe is inflated by emotion and that's led to a best practice that could be costing you millions.
We're talking about preventing unsubscribes. The fear of losing a customer is so strong, this best practice exerts a disproportionate influence over many email programs.
It's also why unsubscribes are responsible for one of the biggest myths in email marketing - namely, if you increase your send frequency and that produces more unsubscribes, then you shouldn't be doing it.
Unless you want to bet money from people ready to buy today against money from people who might never buy; we think you’ll find the following analysis very useful.
Here's what the real client data says
Some of our clients ask us to model the impact to their business of upping their frequency cap. In particular they want to know how much revenue each unsubscribe will potentially cost their business. In basic terms we calculate how much money they would earn from those unsubscribes and compare it to what they would lose by not pursuing a strategy of increased frequency. To illustrate this in more detail we looked at two of our clients - one B2B and one B2C. We analyzed every email and every transaction across an entire year. Both clients were sending different frequencies to different groups, so in any given month customers were receiving anywhere from 1 to 12 emails. We compared the monthly revenue and unsubscribes for those receiving 4 emails versus those receiving 8 emails, as this represents a neat double in frequency. The results are below:
|What happens when you increase your send frequency from 4/mth to 8/mth?|
|Based on actual client data|
|Revenue||آ Subscriber Monthly value (4/mth)||$ 100||$ 7|
|Subscriber Monthly value (8/mth)||$ 300||$ 9|
|آ Additional value||$ 200||$ 2|
|New revenue per month||$ 4,000,000||$ 6,000,000|
|Unsubscribes||آ Monthly unsubscribe volume آ (4/mth)||60||12,000|
|Monthly unsubscribe volume (8/mth)||120||24,000|
|آ Subscribers lost (8/mth-4/mth)||60||12,000|
|Lost value per month||$ 6,000||$ 84,000|
|آ Profit||$ 3,994,000||$ 5,916,000|
|Cost of preventing 1 unsubscribe||$ 66,567||$ 493|
First, let's have a look at the revenue. When B2B customers received twice as many emails in a month, their average purchase increased from $100 to $300. The B2C customers showed an increase of $7 to $9. The revenue increase of doubling frequency is significant.
What about those unsubscribes? The number of unsubscribes per month mirrors the increase in send frequency - it doubles. If one email generates 100 unsubscribes, two will generate 200. What didn't happen was an exponential increase in unsubscribes. So that's no increase per campaign at all.
Preventing 12,000 unsubscribes could be costing you $6m in revenue What usually happens at this point is the increase in unsubscribes is used as the reason why an increase in frequency hasn't worked. We sent more email = more unsubscribes = customers unhappy = stop sending more. And it's not even that the additional revenue is discounted, it just isn't measured. Let's put aside the emotion for one second and look at what the data says.
When frequency is doubled from 4 emails to 8 emails per month, the B2B client gains an additional $4M in revenue per month but loses 60 additional subscribers from their list of 20,000.
The same double in frequency for the B2C client gains them an additional $6M in revenue per month at a loss of an extra 12,000 subscribers from their list of 3,000,000.
How much are those lost subscribers worth?
For the B2B client each lost subscriber is worth $100, which comes to $6,000 in lost revenue versus $4m in additional revenue. And for the B2C client each lost subscriber is worth $7, which equals $84,000 of lost revenue versus $6M in additional revenue. So in effect it costs the B2B client $66,566 to stop each unsubscribe and the B2C client $493 to stop each of theirs. Wow. Now there's something to get emotional about!
But what about all those extra subscribers you're losing? Well, naturally cutting out some of the deadwood and replacing them with fresh new subscribers eager to receive your offers is a great form of list hygiene.
Your list growth rate should already be significantly higher than your unsubscribe rate, as growing your list is one of the most important parts of any effective email marketing strategy. So as well as all that extra revenue you should be increasing your list size every month, too.
And if that's not happening, make it someone's sole responsibility. It's that important! Here are 10 easy tips for a more effective sign up process that will help with the art of organic list growth.
But however you choose to grow you list, we're willing to bet it costs you less than $493 per subscriber!