+1% Delivery = How Much More Money?

Discussion in 'Mail Chat' started by roundabout, Jul 10, 2011.

  1. roundabout

    roundabout VIP

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    Very good article, all math based, and worth a read.
    ...
    Why Obsess Over Email Deliverability? Its Effect on ROI

    June 27, 2011 by Marco Marini

    Your email delivery rate has a direct impact on your email marketing ROI. The difference between an 88% delivery rate and an 89% delivery rate is far more than a measly 1%. It’s money in your pocket. Well, not in your pocket. Here’s why it matters…and how hard it can be.

    The bottom-line benefit to improving email deliverability
    Any incremental increase in your email delivery rate has a direct impact on your bottom line. Consider the following scenario for a hypothetical B2C business with an 82% email deliverability rate:

    • ABC’s current delivery rate is 82%
    • Their average conversion rate is 3%
    • They have 500,000 names on their in-house email list
    • With a delivery rate of 82%, only 410,000 people get the emails
    • That means 90,000 people do not get promotional emails from ABC
    • At a conversion rate of 3%, that’s 2,700 people not buying from ABC
    • If an average sale is $50, that’s $135,000 in revenue ABC misses out on due to poor email deliverability

    Furthermore, consider a 1% improvement in their email deliverability rate: Evaluating their program and making improvements to increase their email delivery to 83% potentially equals $7,500.

    Imagine, 1% = $7,500. Times that by say, four emails per year, and that’s $30,000.

    Does that number get your attention? If not, let me try and sum it up even more succinctly:

    Improving your delivery rate = more emails get delivered = more opens = more click throughs = more conversions = greater email marketing ROI.

    Many in email marketing fail to appreciate the impact deliverability has on the bottom line, i.e. the money. It’s easy to overlook. Email marketing has the best ROI per dollar spent compared to every other marketing channel. So why worry if your delivery seems “good enough,” right?

    But “good enough” is the enemy of great. A lower deliverability rate can mean you’re leaving money on the table ($30,000 per year if you consider our example above). And you can do great things for your email marketing ROI—and ultimately your company’s overall financial health—by doing everything possible to maximize your email delivery rate.

    Improving email deliverability can be a challenge
    However, it’s not as if you can sit down one day and make it all better. You will earn that email marketing ROI. Even organizations that follow email marketing best practices can be challenged getting to the inbox, with 30% of the emails they send ending up in a spam folder or—worse yet—getting completely blocked, according to a Pivotal Veracity benchmark study of 1.2 million emails done in June 2009.

    That’s because improving email deliverability is a highly specialized and ongoing process. It’s a balancing act involving business practices, technical practices and management of the email ecosystem both inside and outside of your organization.

    Start with your ESP
    Like your incremental improvements in email deliverability, however, you can make small steps in learning—and implementing—the email deliverability best practices that will improve the performance of your program.

    An important step to start with, interestingly, is your ESP. Some ESPs will offer you a higher email deliverability rate than others. Find an email marketing vendor (like ClickMail Marketing) or consultant who can help you evaluate the delivery rate of your current email service provider compared to the rate you might get with another provider.

    Source:
    http://blog.deliverability.com/2011/06/why-obsess-over-email-deliverability-its-effect-on-roi.html
     
  2. JohnFarrell

    JohnFarrell VIP

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    That's why I try to squeeze everything I can out and use my resources efficiently as possible.
     
  3. DoldGigga

    DoldGigga VIP

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    Hypothetically speaking, there is a company called XYZ that pays you $50 each time you sign up a person to join their WTF club...and if you sign up just 3 people per day you make $150 - but here's where it gets even better XYZ will pay you $25 for each new WTF member that your "downline" signs up. If the 3 people you signed up get just 3 more people to join each day, you will get and additional $225 each day! WOW! JUST 3 PEOPLE! IMAGINE IF YOU SIGNED UP 5!!

    So how do you get started? Contact me and PM me your WTF membership deposit...or hire a LOL consultant to make sure you maximize the your WTF potential by boosting it up to 83% or more!

    I do love hypothetical numbers. They always make sense.
     
  4. roundabout

    roundabout VIP

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    The VALUE of the hypothetical isn't important, the point is that when dealing with large volume, every percentage point you miss delivery to is BIG $.
     
  5. Bubbles

    Bubbles VIP

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    It's a huge difference actually. That 1% extra are all the harder to reach inboxes in your list that you can't hit with bad IP's or even average IP's etc. These are where all your conversion$ are.
     
  6. PepeLePew

    PepeLePew VIP

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    If you are trying to squeeze every dollar out of your list:
    - Mail from more IPs
    - Make sure you don't have any traps in your list (you should be fine if you harvested the list yourself from double opt-in), otherwise if you have purchased the list, make sure that you scrub it well (ImpressionWise works well) and is a good first start.
    - You need a smart mailing system that will know to stop mailing to a domain and wait once it receives a "Max hourly reached" or any other messages.
    - Work on getting your IPs/server whitelisted, if not already.
    - Get a notification service that will tell you when your IPs get listed (It's worth the money if you're a mailer...don't be cheap!)
    There are a lot of other things that I can add to that list, but I'll just keep the list short.

    Bottom line, you need to spend $ to increase delivery. Just like a car, if you want to make it faster (turbo, nitrous, etc..), it cost $$$.
     
  7. PushSend

    PushSend VIP

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    All good points, but what about diversifying by using multiple platforms? Pulling your opener/clickers and running them with an ESP? Just because platform #1 is great at GI, maybe it sucks on TLD and vice versa for platform #2. And, if you aren't mailing ALL of it, GI and TLD, you should be. The extra 1% we're talking about here can come from any number of the above suggestions but as with ALL emailing it really is not a single thing but a combination of things that will help you achieve this "extra" 1%. The only thing that remains consistent is that it DOES take $ to make $.
     
  8. DoldGigga

    DoldGigga VIP

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    I don't think anyone is going to argue that the more recipients you actually reach, the better your revenues will be; I'm just mocking the tone of the article since it isn't really telling us anything we don't know, and it is using totally made-up numbers. Playing with percentages is a great way to obfuscate reality...

    Going from 0% to 1% is an "infinity %" increase.

    Going from 1% to 2% is a 200% increase.

    88 to 89% is a bit under a 1.14% increase.

    Because going by numbers like these you can easily overstate the value of "delivering emails" while ignoring things like additional FBL complaints, bounces, screamers and all importantly the base volume you are dealing with in the first place.

    Not following this logic. 100% delivery rate is not possible when pushing high volume, even with an ESP...but that doesn't mean that the people you ARE reaching are not potential conversions. It's not like there is some mythical 1% barrier that we're all trying to breach to get a 100% or better increase in conversions. Damn, now I'm talking in made-up numbers...
     
  9. airin

    airin Member

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    You have to be hitting large volume and solid eCPMs for this to make a big difference and be worth investing additional resources to attain.

    EXAMPLE
    List size = 10,000,000
    Avg CPM = $1.00
    1% of 10mm = 100,000
    Sending 100k @ $1/CPM = $100
    $100 x365 days = $36,500 per year

    If it costs you $20k/ year to get and maintainthe extra 1% delivery, it's probably worth it.
     
  10. roundabout

    roundabout VIP

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    So for 100k new names, you are projecting a $1 CPM, or $100.

    vs.

    So for 90K names (close to your 100k) they are projecting a... $1500 CPM???

    Am I doing my math right? 90,000 extra emails earning $135,000 = $1500 CPM?

    /DoldGiggaCorrectArticleIsFlawed
     
  11. airin

    airin Member

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    $135,000/ 90,000 sent = $1.50 per mail sent x 1,000 = $1,500 CPM.

    You did the math right. I would say those #s are definitely *hypothetical*

    To get a 3% conversion on delivered mail and not clickthroughs is extremely high for a $50 sale. For *us* a 3% conversion with a $50 payout would solid off the click...
     
  12. DoldGigga

    DoldGigga VIP

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    I'd say the article is highly misleading and the numbers in the article are very, very bad. It's a plug for ClickMail, but I'll expand on their hypothetical numbers:

    List Size - 500,000
    Delivery Rate - 82%

    410,000 delivered per drop.
    Average conversion rate 3%.

    Notice that he DOES NOT mention the all-important CTR. They equate CTR to delivery which means 100% of the emails delivered result in a click, and then 3% of those clicks turn into sales.

    So ABC mails 500K and delivers 410,000, of which 100% click thru and 3% of those clicks turn into sales at $50 a pop.

    12,300 sales * $50 = $615,000 revenue per 500K drop = ($615K / 500) $1,230 eCPM :trytofly:

    -----------------------------------------------------------------
    Using the same as above, but at 89% (+1% delivery) would be:
    -----------------------------------------------------------------
    500,000 * .89 = 445,000 delivered (35,000 more)
    445,000 * .03 = 13,350 sales * $50 = $667,500 revenue per 500K drop = ($667,500 / 500) $1,335 eCPM

    Net increase = $52,500 = (52,500 / 615K) 8.53% revenue increase

    If you knew your delivery rate is 89% you could just add 40K to your list to achieve the same effect as "improving deliverability by 1%".

    If an extra 90,000 received email, that would be 100% delivery rate not an extra 1%.

    The reality is that the net revenue increase on 1% additional delivery when your delivery rate is already 80% or better is minimal, and it is debatable whether or not you would gain anything by expending the time and resources to improve it. It's called diminishing returns and the higher your delivery % the greater the effect of these diminishing returns.

    The article fails because:

    - It does not specify a CTR and assumes 100% CTR with 3% conversion rate.
    - Its unrealistic stats drastically overstate the value of a mere 1% increase in delivered emails.
    - It attempts to state that the reason the company "loses" sales is exclusively due to undelivered emails and not market conditions or people who were simply not interested in buying at that time.
    - The guy who wrote it probably believes global warming is real.
     
    Last edited: Jul 11, 2011

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