The Sweet Spot in Email Marketing

Xi (Alan) Zhang, V. Kumar, and Koray Cosguner
Key Takeaways
What? Marketers often struggle with how much email marketing is enough.

So what? New research investigates whether this question boils down to a single number. The authors find that it pays to proceed with caution.

Now what? Design your email marketing campaign with the customer in mind. Don’t sacrifice your long-term relationship with your customers for email metrics that don’t tell the whole story.
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​Email marketing is ubiquitous; Ascend2’s 2015 survey study shows that 82% of B2B and B2C companies use email as part of their marketing strategy. However, customer complaints of too many emails are also widespread. Therefore, sending the right number of emails can not only help customers become or stay more engaged but also generate profitability. Unfortunately, finding that magic number can be challenging, and marketers seeking guidance face a bewildering variety of advice ranging from the anecdotal to the indecipherable. Recent research published in the Journal of Marketing Research​ addresses this conundrum by investigating the following question: What is the right number of emails to send to different customers over time?
  
Researchers Xi (Alan) Zhang, V. Kumar, and Koray Cosguner’s article “Dynamically Managing a Profitable Email Marketing Program​” develops an empirical framework using advanced statistical methods that can help firms overcome the challenges in developing effective email marketing programs. More importantly, the paper creates an actionable management tool in the form of a decision support system to guide firms about how to target different customers over time. 

Challenges in Designing Effective Email Marketing Policies

Firms face multiple challenges in designing effective email marketing policies. First, customers who are active in opening emails may not be active in purchasing from the firm, or vice versa. For example, frequent buyers may not open emails because they already know the firm and its offerings quite well. On the other hand, infrequent buyers might be quite responsive because they are seeking information related to the firm. Using metrics based on customer purchase (i.e., profitability) rather than email responsiveness is key when designing email marketing policies. 

Second, customers are sensitive to the large number of emails that receive, so sending them the right number is vital to an email marketing campaign’s success. Because responsiveness to email marketing and purchase varies among customers, email contact policies should be customized at the customer level. Furthermore, a customer’s email and purchase responsiveness might change over time. Thus, finding the right number of emails to send should not only be customer specific, but also change over time for the same customer.

Third, email marketing can shift the relationship level of the firm and its customers, which can have long-term impacts. For example, customers responding to emails may start purchasing more from the firm; conversely, customers overwhelmed by emails may become annoyed and stop purchasing. 
In short, a firm’s email contact policy should change across customers and over time, and its effectiveness should be measured based on long-term firm profitability. How can marketers navigate these shifting sands effectively?

Findings from the Empirical Study

Working with an anonymous firm, Zhang, Kumar, and Cosguner made several discoveries. First, in contrast to conventional wisdom, email-active customers are not necessarily active in purchases, and email-inactive customers may still be relatively active in their purchase behaviors. Thus, using metrics based on email responsiveness, such as open rates, to measure the effectiveness of email marketing campaigns may be short-sighted. 

Second, they found that the firm’s email contact policy has nonlinear short- and long-term effects on customers’ purchase and email open behaviors as well as firm profitability. In the short term, sending more emails increases customers’ purchase levels up to a point, but after this threshold, sending more emails can decrease purchase levels. In the long term, the firm’s email contact policy might help (1) convert low-engagement customers (in purchases) to medium-engagement customers and (2) keep medium-engagement customers at that level. However, firms should tread carefully with high-engagement customers: sending emails to these customers may cause them to move to lower engagement levels.

Findings from the Decision Support System 

The authors find that the firm in the study should target its customers by sending 5 to 14 emails per month, based on their past behaviors and relationship levels with the firm. In addition, they find profitability benefits. On average, the firm needs to send 7 emails per month, and deviating from that might cause the firm to leave a significant amount of profit on the table. For example, sending 4 (10) emails per month might cause the firm to lose 32% (16%) of its lifetime profit.

The authors caution that their results are based on a single firm and that more research is needed to generalize these results further. However, the implications that emerge can help marketers as they plan their email campaigns. First, email campaigns should be strategically directed toward customers who will make the most difference—in this study, low- and medium-engagement customers, but not high-engagement customers. Second, although this study shows that sending too few emails is worse than sending too many, hitting the sweet spot should always be the goal. Third, managers need to reevaluate campaigns frequently, because not only do customers come and go, but a single customer can change in engagement as time passes.​

Article Citation

Xi (Alan) Zhang, V. Kumar, and Koray Cosguner (2017) Dynamically Managing a Profitable Email Marketing Program. Journal of Marketing Research: December 2017, Vol. 54, No. 6, pp. 851-866.

 
ABOUT THE AUTHOR:
Xi (Alan) Zhang, V. Kumar, and Koray Cosguner
Xi (Alan) Zhang was formerly Assistant Professor of Marketing, College of Business and Innovation, University of Toledo, and is currently Data Scientist, Rodan + Fields (email: xzhang@rodanandfields.com). V. Kumar (VK) is the Regents’ Professor, Richard and Susan Lenny Distinguished Chair & Professor of Marketing, Executive Director of Center for Excellence in Brand & Customer Management, and Director of the Ph.D. Program in Marketing at J. Mack Robinson College of Business, Georgia State University. VK has also been honored as the Chang Jiang Scholar, Huazhong University of Science and Technology, China; Fellow, Hagler Institute for Advanced Study, Texas A&M University; and Senior Fellow, Indian School of Business (email: vk@gsu.edu). Koray Cosguner is Assistant Professor of Marketing, J. Mack Robinson College of Business, Georgia State University (email: kcosguner@gsu.edu).

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