The Very Real Risks of Aggressive List Growth Tactics

We all want a big email marketing list, but we also want to respect subscriber interests, protect the assets of our email program and maintain a solid foundation for revenue growth.  There is a bit of a high wire balancing act sometimes when our organizational goals include having *both* a large and active file.

At this month’s meeting of the eec’s List Growth & Engagement Roundtable, a group of industry practitioners discussed a common – and often uncomfortable – situation of email marketers everywhere.  The boss says in that big, growly voice, “Get me a big file of email subscribers – now!”  Yet, the types of tactics that grow a list aggressively can have real risks for response, loyalty and inbox deliverability – which puts your entire program in danger.  No level of growling will change that result.  Here are some ideas from the group about how to approach this somewhat tricky balancing act.   

“I remember a million member push program from one of our clients that was successful in building a big file, but created inbox deliverability and sender reputation problems for many, many months,” says Nancy Harris, Sr. Manager of Deliverability at Fishbowl.  A restaurant wanted to get one million subscribers in their restaurant e-club (a loyalty program).  The promotion was intended to encourage current members to invite lots of friends in order to win a big cash prize. The new member would receive a free meal for joining the program.  “It worked on one level,” Nancy says.  “It was successful in reaching a lot of people and they did reach their goal of one million subscribers.. 
 
“The problem was that the list quality was terrible.  We immediately saw blocking and blacklisting due to unknown users (bounces) and complaints, which took us more than a few months to correct.   Not only did this client have ongoing inbox deliverability issues, but there were also questions about the quality of the people who became new members.  They were not really interested in dining at this restaurant regularly, or receiving ongoing email communications from them.”
 
If that restaurant did the math, they may find that this program was successful in the short term. It cost them some number of tens of thousands of dollars to set up and run the promo and they got a million new members.  Remember, too, that email is a lot cheaper to send than printed postcards – and it’s very efficient in terms of time to market, so this ROI was returned quickly. The cost per new member was very small.    Short term, that could make sense.  However, long term, they destroyed their sender reputation and did not receive revenue from the majority of the new members – these people were not committed to the restaurant and did not frequently dine there.
 
This business cycle issue haunts many an email marketing decision, says Stephanie Miller of Return Path.   “Short term, you can broadcast to your file and you earn revenue.  Long term, however, you may see serious consequences, all of which have a real cost.”
 
Consider these factors in determining the cost of the new subscriber acquired through a sweeps or promotion like the million member push described above:

  1. Depressing your sender reputation due to high complaints (which limits your email marketing opportunity for all subscribers by limiting access to the inbox) – this could be a drop in inbox placement of 10% – 50% of your file every time you mail;
  2. Churning your file – people who leave by complaints, unsubscribe or filtering – and need to be replaced at some cost per subscriber;
  3. Lower loyalty of good customers by bothering them with irrelevant promotions – the cost of this could be a penny a person or it might be higher depending on the type of brand relationship you need for your business;
  4. Losing the opportunity for future email marketing because they unsubscribed, complained or are just ignoring you from now on.

“When you calculate the true cost of the aggressive list growth program, factor in these costs as well.  And then make a business decision based on long term customer value and satisfaction,” Stephanie says.
 
“We run into this balancing dilemma when we suggest a list hygiene or list cleansing audit,” says ExactTarget‘s Nate Romance who is also co-chair of the Roundtable.  Most clients see value in doing a re-engage and send a win back campaign to the portion of the file which is non-active, Nate says.  “However, many will opt for reduced frequency as opposed to suppression of those subscribers who have not responded in a long time. That allows them to keep a big number for list size.”
 
Nate says that when he starts to discuss these issues with marketers, some see the value in keeping “dead” or “nearly dead” records on the file because with a baseline of zero, any interaction will be a rise in response.  However, usually it takes more than just continued hammering at the inbox door, he says.  “Sometimes sending the best of the best offer that month rather than weekly will increase response rates,” he recommends.  The rest of the group agreed, however, that dialing back frequency has not ever significantly improved response rates.  “The risk to your sender reputation is real when you keep non responsive records on the file,” adds Stephanie of Return Path.  “I never think that risk is worth the small chance that a couple people will respond at some future point.”
 
Nancy from Fishbowl adds that a similar practice is common when marketers try to build a list quickly – they sacrifice quality for quantity.  “I see a lot of what I call ‘deceptive list building,’” she says.  This is when a marketer does a sweeps or promotion with vague email permission just to build the file quickly.  “That lack of express consent can be a problem for deliverability and response rates and has a real cost for determining the value of such a venture.”
 
Such practices often are not well measured, and so it’s hard to determine the impact – good or bad.  “When someone gets more aggressive they might do campaigns that are intended to build the list quickly and then they don’t track by source so that we can’t always associate the promotions with complaints and response (or lack of),” Nate from ExactTarget says.  “I always recommend that we tag these folks or track source so that in six months we can check the quality of the list and the real success of the campaign.” 
 
“It’s so interesting that we marketers are good at thinking about LTV of a subscriber when we pay for them – as in a media buy or PPC search campaign,” Stephanie adds. “But when we acquire email subscribers through these “organic’ measures, we don’t always track by lifetime value, we track by the initial sign up.” 
 
Nancy agrees.  “The value of someone when they are new to the file may be different than the same person six months down the road.  We often see that there comes a point, especially for smaller files, that the file stabilizes at a certain number because of loss. New subscribers come in at a steady pace, but subscribers are also lost due to list aging and fatigue,” she says. 
 
That is a very good argument for making sure that list growth is
an ongoing commitment, and not a onetime promotion. 
 
What are you doing to consistently grow your email file with active subscribers? Do some of these points resonate? Please comment below, or join the eec List Growth & Engagement Roundtable to participate in future discussions like this.

– Stephanie Miller
Vice Chair, eec
VP, Global Market Development, Return Path