A retailer I've worked with which has 900 stores and is very active with email campaigns recently did a great study. It took a group of 105,000 customers in its loyalty club database, divided them into three groups of 35,000, and marketed to the three groups differently, as shown in the chart below (click to see a larger version). Thanks to the loyalty program, it was able to see all subsequent purchases by these customers.
Direct mail has a higher response rate than email. But note that direct mail costs about 100 times as much. Meanwhile, the data collected by the retailer allowed it to calculate its off-email multiplier (a simple matter of dividing the percentage of online sales by the percentage of in-store sales generated by email-only marketing). It is 3.76. In other words, for every email shopping cart sale, this retailer gets 3.76 other, typically non-tracked sales due to the email.
There are a couple of things I have a problem with that logic.
- The logic takes every single transaction from either mail or email used with a loyalty card as 100% because of the way they were marketed. My guess, there's plenty of transactions that happened regardless of the marketing
- The direct mail and email made nearly $135,000 more than just the email alone. This well covers the 100 X multiplier of the direct mail and made more profit. So why is email and direct mail together not king?
Now don't get me wrong, I like email, but it is a tough channel these days with many businesses flooding the inbox of the customers. Savvy customers have a separate inbox for businesses because they don't trust they won't get spammed.
Just don't discount direct mail in this day and age. These days your message has a lot less competition in that channel.