Could a Company See a 15 Percent Drop in Stock Value Due to Email?120 views
Major brands can see stock values fall if their email programs aren’t delivering the way they should. What can marketers do to prevent this from happening?
Last week Zulily’s share price dropped 15 percent. The reason, according to their chairman Mark Vadon, was email delivery issues. And this week, Return Path released a study showing that consistent inbox placement is proving hard to obtain.
So what’s going on there? Why do reputable businesses let their delivery drop so badly that it undermines their business performance? How can they take their eyes off the ball that badly?
Many email people look at this situation and dismiss it as simple incompetence or misdirection. Either they didn’t care, didn’t know what they were doing, or they were asleep at the wheel. No way should they have let it get this bad, they say. Others suggest that this is just an excuse, a convenient scapegoat for deeper issues.
While I can’t completely discount the latter explanation, I’ve seen this happen before on a number of occasions with very different companies. Not the stock price drop necessarily, but a reputable company with a solid email program suddenly hitting campaign-killing delivery problems – ones that have a significant financial impact. The problem, oddly enough, is caused and compounded by email’s effectiveness.
Here’s what happens. The company builds an email marketing program. Email is so effective that even if they don’t do a great job the program becomes a key revenue generator. But then things start to go wrong.
The specific cause can vary. Sometimes they don’t continue their list acquisition strategies. Sometimes they’re experiencing an overall downturn in business. Sometimes they make a bad policy decision such as buying lists, using email append, or poor co-reg. Whichever way it happens, their list growth and their revenue numbers from email slow or downturn.
And this is when they make the big mistake. What needs to happen next is lifting off the pedal a little, figuring out where the problem lies, and addressing the underlying cause. If they’ve done something bad to their list (and this is the most common cause in my experience), there are a number of indicators, including falling open and response rates, delayed delivery at some ISPs, minor or temporary blocks, and rising opt-out and complaint numbers. The solution is usually to stop doing whatever is causing the problem and potentially cleaning up what they’ve already done.
The problem though is that email is so effective, and such a huge revenue driver, that they feel unable to do that. Instead they keep going or worse, pressing harder on the pedal by emailing more people more often. This results in diminishing returns and a downward spiral. The more aggressively they push their list for revenue, the worse the response rates. Until eventually they hit a serious problem that cannot be ignored.
This can be an SBL (Spamhaus Block List) listing, a permanent block at a big ISP, or just delivery delays so substantial that emails are timing out before delivery. Whatever the cause, they are now forced to take stock and fix the issue.
I can’t say precisely what was going on at Zulily but it’s clear from the eDatasource tracking information that they’re still having issues at outlook.com and Yahoo, and this is after they’ve worked to fix the problem.
Image courtesy of eDatasource.
How do you avoid this?
1. Understand the Problem
It’s not your content, timing, ESP, ISP, or that Spamhaus are un-American commerce haters. It’s your list. How do I know this? Because it’s always the list. It is so often the list that delivery people have joked for years about getting T-shirts that read: “It’s your list stupid.”
All too often companies value their list so highly that they spend inordinate amounts of time trying to find any other cause to blame. Of course verify that nothing has broken in your infrastructure, but beyond that, it’s going to be the list.
The only remaining questions are what’s wrong with your list? Is the fault in your collection, hygiene, or maintenance processes and how bad is the damage?
2. Take Action Sooner Rather Than Later
These problems don’t fix themselves. You can’t just ignore them and hope they’ll get better. Instead they get progressively worse.
Furthermore, no matter how painful it seems, fixing it sooner will be less painful than fixing it later. When you see the warning signs investigate and take corrective action. Waiting it out or trying to squeeze more revenue without fixing the problem will lead you to a dark place — just ask Zulily.
Until next time.