By DANA MATTIOLI
Retailers have started to wear out their welcome in customers’ email inboxes, forcing stores to rethink their spam strategies.
Last year, the nation’s top 100 retailers by e-commerce revenue sent recipients an average of 177 emails apiece, up 87% from 2007, according to research by marketing-technology company Responsys Inc. Some of the most aggressive emailers—including Neiman Marcus Group Inc.—sent each recipient more than 500 emails apiece in 2011, Responsys said.
Amid signs that the sheer volume of email is starting to turn customers off, some retailers have begun pulling back, reducing their mailings and fine-tuning their marketing tactics.
Retailers are pouring more email than ever into their customers’ inboxes, and they’re starting to wear out their welcome. Dana Mattioli has details on The News Hub.
“You get into this mind-set that the more emails you send, the more sales you generate,” said Bud Konheim, chief executive of fashion retailer Nicole Miller Inc. “But that can really start to annoy people.”
Last May, Nicole Miller—which says emails generate most of its online sales—cut back on the volume of email it sends from about three mailings a week to just one, and is trying to better tailor the messages.
Other companies are taking similar measures. J.C. Penney Co. cut back the number of mailings it sends from one a day to an average of three a week, according to a spokeswoman. The move came after Penney’s new chief executive, Ron Johnson, criticized the retailer’s excessive email-sending in January, shortly after he took the top job.
Chains are facing pressure to boost their online sales, which accounted for 9% of total retail sales in the U.S. in 2011, according to Forrester Research, and are growing at more than twice the speed of brick-and-mortar sales. Retailers are also competing against online flash-sale sites such as Gilt Groupe, which announce limited-time online sales via email. Daily-deal sites like Groupon Inc. are also contributing to the deluge.
What’s more, the emails seem to work, with many retailers claiming they are one of the biggest—and least costly—drivers of online traffic and sales.
But there are signs of customer burnout. A study of its retail clients by email marketing firm Harte-Hanks found that since 2007, the rates at which recipients open retail emails and click on links have declined. In the first six months of 2007, consumers opened 19% of the retail emails they received and clicked through to the website 3.9% of the time. By the first half of 2011, those numbers shrank to 12.5% and 2.8%, respectively.
Some retailers are finding that sending fewer emails can pay off. Since cutting back its volume, Nicole Miller has seen the rate at which customers “unsubscribe”—or request to stop receiving emails—drop, and the percentage of recipients who open the emails has grown from 15% to 40%, according to Andrea Marron, director of digital strategy at the company. Meanwhile, the percentage of online sales that began with an email has grown to 17% from 10%.
Emails have also become more sophisticated, with many retailers now mining customer-purchase behavior to learn specific interests and habits.
Some are also using browser cookies to track consumers’ shopping habits on their websites. Privacy researcher Christopher Soghoian says these cookies can be problematic because retailers typically don’t tell consumers how the data collected with those cookies are later used to target them.
Videogame retailer Gamestop Corp. has split its customer base into two groups: general and rewards members. Over the last year, it has halved the number of emails it sends to general subscribers who may not be regular shoppers, focusing instead on its rewards program, which tends to include active game players who want frequent updates on consoles, game launches and other information targeted to their purchase history, said Chief Marketing Officer Mike Hogan.
Members of the rewards program typically open more than 30% of the Gamestop emails they get, compared with less than 10% for general subscribers, Mr. Hogan added.
Consumers voluntarily provide a lot of the information retailers use to target them, such as their name, gender and where they live. Other information, such as the average amount of money they spend per visit and what brands they buy, can be collected through loyalty programs or online accounts users create when completing an online order.
Neiman Marcus, which sent 534 emails to subscribers last year, a 30% increase from 2007, said the percentage of customers who “unsubscribe” hasn’t grown. Email is one of the biggest drivers of online sales for the luxury department store, said Aaron Shockey, vice president of digital marketing.
In 2010, Neiman began using customer data to tailor its emails. It uses online purchase history, in-store purchase history linked to its credit card, and online cookies that track behavior on its website to learn what brands, categories and types of deals customers favor. It can then target email about a Marc Jacobs launch to customers who tend to buy Marc Jacobs purses, for instance.
Open rates and click through rates have increased by 10% to 20% since the chain started customizing its emails, Mr. Shockey said. “We keep a close eye on unsubscribe rates,” he added. “If they were to climb, we would investigate.”
Write to Dana Mattioli at dana.mattioli@wsj.com
A version of this article appeared Mar. 10, 2012, on page B1 in some U.S. editions of The Wall Street Journal, with the headline: Stores Smarten Up Amid Spam Flood.Copyright 2012 Dow Jones & Company, Inc. All Rights ReservedThis copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visitwww.djreprints.com
