Many companies are focused on growing their e-mail list, and rightfully so. But if you could improve the return on investment of your e-mail marketing program by pruning your list, would you?
First, I'd like to clarify that I'm not referring to "cleansing" bounces or unsubscribes from your list. Your e-mail vendor/software should do that for you. I'm saying that a large percentage of subscribers in your list don't open or click any of your e-mail campaigns. So is it worth keeping them in your list?
Many companies don't effectively track statistics of their e-mail lists, so you may be surprised to find out how few members of your e-mail list actually take action on messages you send to them. According to MailChimp, e-mail open rates average at about 25%. But that data is only based on a single campaign. How do you know what percent of your list takes action over time?
I've been a MailChimp customer now for a number of months and am increasingly impressed with the analytical information they provide on e-mail lists and campaigns.
MailChimp uses "Member Ratings" to rate each subscriber in your mailing list. The 5-star rating system uses a rating for "member" (subscriber) activity and is a quick visual measure of how engaged your subscribers are.
- 1 Star- negative rating, this person has unsubscribe and re-subscribed, or soft bounced in the past
- 2 Star- no activity, never opened or clicked, most likely a new member
- 3 Star- this recipient has started opening or clicking your campaigns, limited activity
- 4 Star- this recipient has started opening or clicking your campaigns, a little more activity
- 5 Star- this recipient has started opening or clicking your campaigns, lots of activity
Why would you want to remove subscribers from your list?
If you're working with a vendor to send email, you must limit abuse complaints to an extremely low number. A client of mine was sending e-mail to a list they had been building since the late '90s, and when we brought the campaigns to MailChimp there were a relatively high number of spam abuse complaints when we sent the mailings. We needed to reduce the abuse complaints or risk MailChimp pulling the plug on our e-mail program.
Pruning also lowers the cost of mailing. If you aren't sending to those that don't open or click, your list size is smaller and you pay for a smaller subscription plan (or a per e-mail fee, whichever plan you have). In turn, you'll generate a better return on your investment.
The pruning process
Here's how we went about pruning our list, how we completely eliminated abuse complaints and improved the performance of our client's e-mail campaigns.
Create a "best customer" segment
Because your marketing department might be uneasy (to say the least) about deleting names from your list, start by creating an audience segment in MailChimp. When you're ready to send your next campaign, add all subscribers with a 3-star and above rating to a new audience segment. By doing this, you'll be sending the campaign to only customers that have opened or clicked prior campaigns.
You'll be amazed -- and perhaps alarmed -- that you'll reduce your list size dramatically by doing this. In some cases, your new audience segment might be 20-40% the size of your complete list. Send a few campaigns to this audience segment and measure the results. For comparison purposes, you may also want to create an audience segment of only 2-star subscribers so you can compare results.
Caveat: The 2-star subscriber
The 2-star subscriber must be treated with care. While some subscribers with a 2-star rating might have never opened an e-mail from you in years, there also may be 2-star subscribers in your list that are brand new subscribers who have only received one or two mailings.
To solve this issue, create a new list and route all new subscribers to that list. Alternatively, MailChimp will also let you create an audience segment of 2-star subscribers that have recently joined your list.
Prune the list with confidence
Download a backup copy of your complete list, then delete all subscribers with 1-star and 2-star ratings. Note that if you don't have a seperate list set up for new subscribers, be careful to only delete subscribers that have a long history of not opening your e-mails. This will reduce your list size dramatically and ultimately decrease the cost of sending campaigns.
Note that you'll need to repeat this process of segmentation and pruning periodically since some subscribers may naturally become disinterested or fall out of the purchase cycle for your product or service. I always recommend downloading a backup copy so you never actually delete subscribers that you prune from the list -- rather, they are stored in your list backup file.
Our client, mentioned above, has been sending out e-mail marketing campaigns since 1998 and has been slowly building the list over time. We decided to prune their list using the above technique and saw the following results.
- Their initial list size was cut by 69%, saving them $75 per month in fees.
- Open rate was well over twice the industry average and their list average.
- Click rate is 45% higher than the industry average and their list average.
- Bounces are almost non-existent.
- There have been no abuse complaints.
- There have been only a handful of unsubscribes, and only one 4-star or 5-star subscriber has unsubscribed.
Our next step is to segment the most recent 2-star subscribers and send them a special discount to encourage them to visit our client's site and purchase.