In today’s consumer climate there’s a strong need and desire for brands to be in regular communication with their customers. Direct to consumer (DTC) sales have disrupted traditional brand/retailer models in grooming, beauty, footwear, and many other spaces – grabbing up to 30% market share in some categories. Built on recurring or subscription revenue models, these brands seek to maximize customer lifetime value through a series of regular, repeat purchases.
The Problems With Email
Most of this customer communication happens through email. Brand marketers have become adept at modeling the ideal customer journey, and tailoring email communications to align with each phase. These communications are further augmented with personalized content based on a customer’s particular profile or preferences. The best part? The incremental cost of each communication is basically $0.
However, all this email leads to problems. As consumers get an increasing volume of email from all the brands they interact with, their capacity to pay attention decreases. Today the average consumer receives over 80 emails per day. It’s no wonder then that 2% is considered an excellent response rate for email campaigns.
The other problem is that this deluge of emails prompts many consumers to unsubscribe—even from brands they like and intend to purchase from again.
While unsubscribe rates generally remain low, the retail industry typically sees around 0.2% – 0.3%, they present a problem for companies who are repeatedly emailing to their customer base. Each subsequent email prompts additional unsubscribes leading to a large number of customers who are effectively cut off from communications.
Consider the following example: A new DTC company is growing rapidly at 80% YTY, emails their customer base twice a week, and sees standard unsubscribe rates. Assuming they start with a small number of contacts (1000), by the end of 5 years over 40% of their database will be inaccessible.
|Year 1||Year 2||Year 3||Year 4||Year 5|
While there’s an expanding pool of customers to engage, more and more of them will be unreachable. This becomes a considerable risk for companies whose livelihood depends on repeat purchases from engaged customers.
A New (Old) Way Forward
This “unsubscriber dilemma” poses a challenge for brands. Should they keep up consistent email communication, knowing that it will create a growing pool of customers they can’t reach? Or, should they send fewer emails, keeping a communication channel open to a larger percentage of their customers while risking engagement and repeat purchases?
The good news is that of course this isn’t a binary choice. Email isn’t and shouldn’t be the only channel that companies can use. Many brands are finding new success with an old channel: direct mail. Direct mail has historically been a high-performing channel, and marketers who use it today, report that it outperforms other communication channels. As digital channels become more and more saturated, mail ends up being almost a novelty, and highly engaging—especially for younger consumers.
When DTC brand ThirdLove first began experimenting with direct mail, they tested several several segments to see which one would be most responsive. Surprisingly, it was their email unsubscribers who performed the best. The high response rate from this segment showed that these consumers were happy to engage with the brand, they simply wanted to receive less email.
Building a Better Communication Strategy
The lesson from ThirdLove and other brands who have leveraged direct mail as a part of their customer communication strategy is that consumers are perfectly happy to have ongoing interactions with the brands they value. They are not, however, always interested in yet another email. Without much incremental cost, companies can augment their customer campaigns across multiple channels. They can keep customers engaged and drive repeat purchases without aggressively growing their unsubscribers. And they can use direct mail capabilities to keep communications ongoing with those who do unsubscribe.