How sunk costs have you playing the wrong email marketing game

By: Jon Kane
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Email marketing, like hitting a fastball, is very difficult. In the major leagues if you are able to hit a pitch once every three times you go up to bat, you’ll be considered one of the greatest to ever play the game. To let that sink in: fail 2 out of 3 times, and you’re still amazing

Most high-performing email marketing campaigns have an absurdly large failure rate—often with more than 80% of recipients ignoring your email entirely. As a result, I have a lot of conversations with B2B marketers around how to make their email campaigns better. How can I bump up that success rate? What’s the silver bullet? Surprisingly, there is one. It exists. You just don’t want to hear it.

The number one, guaranteed way to increase the success of your email campaigns is this: 

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Delete half of your list. Today.

The math is simple. If you send an email to 5000 people, and you get 200 people clicking, you’ve got a click rate of 4%. If you send an email to 2500 people and get the same number of clicks, your click rate doubles: 8%. 

As you read this, you’re likely thinking: I can’t do that. I can’t delete valuable prospect data! I worked hard to get it, it’s worth something, I can’t just throw it away. The sales team will kill me! You’re asking, “What other options do I have?”. You’re looking at this as a scarce resource.

Or, if you’re really smart, you’re saying, “Okay. Which half?”. You’re looking at this as an abundant resource.

To truly understand the reasons behind these two very different trains of thought, we need to look closer at the culture behind the use of email, marketing automation, and CRM systems.

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Why sunk costs matter

When we think of mass email deployment, and the databases that support them, they can be placed at opposite ends of a spectrum. Users associate a very small sunk cost to email, where the opposite is true for contacts within databases (specifically CRM and marketing automation databases). To put it another way, email is seen as abundant, and contacts are seen as scarce. Given that these two mindsets are fundamentally opposed and the two technologies need to work together – friction, conflict and resistance are just around the corner. Let me explain what I mean.

Email has been around since the seventies, and our adoption of it has accelerated significantly, especially over the last 15 years. Everyone now receives a ton of email, and getting emails from brands has been completely normalized. I remember my email address(es) a lot easier than I remember my postal code. B2B marketers have long recognized that email is now one of the few direct channels to capture their buyer’s attention, and many years have been spent tweaking every component of an email. We’ve run tests and optimized everything from the number of characters in the subject line to the optimal number of images. We’ve got it down to a science. 

Unfortunately this means email has a low sunk cost: it’s seen as both cheap, and disposable. 

Cheap for two reasons. One, the immediate costs of sending a bad email have been rendered invisible. Recipients are much more likely to silently block your email address than they are to send an angry reply about your spam. That makes spam more likely. Second, and perhaps most importantly, beyond the initial investment in the technology, email isn’t expensive to send. Sending a million emails costs pretty much the same as sending a hundred. 

By disposable I mean that there’s always another email, always another variable to be tweaked, another audience to be reached. You’ll never reach a point where another email seems like a bad idea, because each email is completely unique, and even the worst ones get some response. Better than nothing, right?

Running parallel beside the explosion in the use of email is the development of modern database systems. CRMs and marketing automation databases started out as glorified online rolodexes, where salespeople simply uploaded their paper records and sporadically updated them when their contacts changed roles or jobs. Even with the huge growth of Salesforce, how we use these databases hasn’t strayed too far from its roots, meaning that it is often seen as a resource to be protected, rather than an evolving asset that can be renewed, and which changes over time. 

Databases (and the contacts within them) have a high sunk cost: they are seen as both expensive, and scarce.

Expensive, again, for two reasons. One, often it takes a substantial effort or investment to get a contact into your database in the first place. For both marketing and sales, the end goal of many campaigns is simply to get more names into your database, which gives them immediate and inherent value. Second, for those contacts who are able to be turned into customers, there is a concrete financial value to the business. And especially in sales, a contact is just a customer that you haven’t had a chance to sell to yet. It’s very easy to associate a monetary value to a contact, so many people do.

Database contacts being scarce is equally difficult to argue with – it is a simple fact that your total addressable market is of a limited size. Any sales team worth their salt wants nothing more than to have the name of every single person within their market (again, because a contact is a customer just waiting to happen), and that, by definition is a finite number. 

 

A mindset switch is required

The connective tissue between databases and email are marketing automation platforms, such as Pardot, Marketo or Hubspot. They have enabled thousands of organizations to reach every person in their rolodex with very little perceived cost. When sunk costs drive the use of marketing technology, it is bad for prospects, bad for marketing, and bad for sales. It’s how we’ve gotten to the point where we’re comfortable failing at such high volumes. To be successful, to drive your B2B marketing to a higher level, you need to change the way you think about both email and databases. You must look beyond sunk costs and focus on the actions that are going to provide the greatest strategic benefit, both for you and your customers. Only then will we see better technology practices.

The low sunk costs of email makes it easy to send more and more. Instead you must preach: what’s the minimum volume of email we can send to get the business results we need? Do we absolutely have to send this email now? Does our audience need to get this email?

The high sunk costs makes your CRM database feel like a scarce, static resource. Instead, think of it as something that changes and ebbs and flows over time. Don’t hold tightly to customer data, let go of the contacts that may have been interested in the past, but aren’t anymore.

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Only talk to people who want to hear from you

When an email campaign with a 20% click through rate is considered a success, we ignore a hard truth: the majority of B2B emails are sent to people who absolutely do not care about what you have to say. 

The key to email marketing success is accepting this and working out a way to identify those who do want to hear from you. Only then can you figure out what they want to hear about and, most importantly, exclude everyone who doesn’t. 

How do you do that? There are a number of different options, depending on the nature of consent you have, and whether or not the individual is active on your digital properties.

email marketing sunk costs

As you can see, there are ultimately three different actions. 

One is to delete the record from your database. Anyone that you have no opt in or communication consent from should be unceremoniously deleted. Or, on second thought, have a ceremony, that could be fun. Burn incense, do a dance, push the delete button.

Second is to either confirm or gain explicit communications consent from the contact. If the contact hasn’t been active, this should be done by notifying them of their removal from your database, unless they confirm their explicit consent to remain. Otherwise the program can be more straightforward: we want to ensure that you’re interested in hearing from us, so we’re reaching out to make sure that you do.

The final option is when you have explicit consent, and you want to get more specific around what they are interested in. This allows you to build from a solitary database segment (folks you know want to hear from you) to multiple segments (folks who want to hear from you about X).

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Choosing which game to play

This all comes down to you making a choice. You can decide, today, that you no longer believe that a 30% success rate is acceptable. You can choose to not play baseball. You can bet that the B2B organizations that will thrive in the future won’t be hitting fastballs. You can instead choose to play a weird version of tennis where rather than hoping for home runs, your campaigns are an ongoing conversation. Your objective is something different and more valuable. It’s to keep the rally between the two of you going. To choose this game is to treat all sunk costs as equal, making the brave choice that is right for your contacts, not the easy choice that is right for your organization.

 

About Brainrider

Brainrider is a B2B marketing and creative agency. We provide content, web, and digital marketing services through a flexible resource model to meet your business’s specific needs. Want to know more? Contact us today.

Jon Kane

Jon Kane

Director of Client Service

Jon has spent his career proving how a deep understanding of customer needs can be combined with creativity and technology to help drive real business results. At Brainrider, a B2B digital marketing agency, he leads a team of B2B marketers dedicated to creating strong client relationships while helping to build their marketing and sales pipeline. Jon’s experience of B2B marketing, web, content and technology allows him to provide key strategic input and guidance to clients of all sizes and in all industries.