- Specifically, these retailers act as though expected sales revenue will increase as the number of outbound promotional customer emails increases, without any boundary or penalty for over-contacting their customers.
- These retailers also treat customers as largely fungible; in short, every customer gets the same contact policy, measured by the number of direct emails they are eligible to receive each week. I didn’t get the impression that these retailers actually believe that customers are fungible, only that in practice, there is no differentiation across customers given their historical behavior or any measurable performance data.
- Finally, there are broadly-held and deeply-rooted perceptions amongst these retailers’ brand and product managers that any change in business as usual will dilute sales revenue and can’t be tolerated.
Here is the way we’ve seen sales revenue dynamics actually work when augmented by measurable evidence from customer behavior. The first expectation (which is not usually supported by actual performance) is that sales revenue will increase as you continue to increase the number of contacts per customer per week. Some retailers place an upper bound on the number of contacts per customer per week, and others also place a floor on the minimum number of contacts for some classes of high-value customers. Nonetheless, the widely-held practice is that since the variable cost of an email is virtually zero, you may as well send as many emails as you can, to maximize total contacts and to reduce the average fixed costs of email communications.
Working with one of the country’s largest apparel retailers, we found that there are very real costs to over-contacting customers. Short-run revenue losses can result from contact fatigue, by reducing the customer’s interest in opening or clicking through the email to a landing or promotional page. Long-run revenue losses can result from opt-out activity. Some enterprising retailers have introduced “opt-down”, which actively asks the customer to receive at least one email per week, but not to leave the retailer entirely. (Why don’t they ask this of every customer?)