Email Marketing for Retailers to Maximize ROI

Despite its struggles in recent years, the retail industry continues to evolve and thrive. In the US, year-over-year retail sales were up 5.8% as of December 2019—led by online retailers, whose sales rose by an impressive 19.2%. Smart retailers know the key to continued success is keeping up with increased consumer expectations around the retail experience.

Modern consumers demand an experience that is convenient, seamless, and personal. They expect that every interaction will be customized to their individual preferences. And while many channels factor into the overall customer experience, none of them can touch email in terms of reach, effectiveness, and ability to drive marketing ROI.

Table of contents

Retail + Email = Opportunity
Missing the Inbox = Missed Opportunity
Factor #1: Sender Reputation
Factor #2: Spam Complaints
Factor #3: List Quality
Factor #4: Customer Engagement
Factor #5: Send Frequency
Factor #6: Blacklists
Factor #7: Whitelists
Factor #8: Email Authentication
A Retail Marketer’s Email Checklist

Retail + Email = Opportunity

Email is everywhere:

• 3.9 billion + Active email users worldwide. (Radicati Group 2019)
• 293.6 billion emails were sent and received each day in 2019 alone. (Statista 2020)
• 6% of consumer mail traffic has increased annually, from 2015 through 2019. (Radicati Group 2019)

Email drives business:

• 68% of millennials say marketing emails influence their purchase decisions. (Fluent 2017)
• 65% of marketers regard their email ROI as “good” or “excellent.” (Statista 2018)
• $42 is the expected ROI for every $1 spent on email marketing. (DMA 2019)

Email is the preferred channel:

• 66% of consumers say they prefer to receive communications from retail brands via email. (Campaign Monitor 2017)
• Highest Ranked: Email is the highest-ranked channel for receiving mobile coupons from retailers. (Statista 2018)

But email marketing’s impact goes beyond just revenue. It helps support retailers’ most important business goals, like increasing lead generation, improving brand awareness, improving data quality, and increasing website traffic. Though email marketing can be one of the most effective tactics for reaching these goals, many retail marketers struggle to run a successful email program.

Missing the Inbox = Missed Opportunity

The stats don’t lie: email can have a major impact on your customer relationships, your sales, and your bottom line—but there’s a catch. Email marketing only works when your messages are actually seen by your customers. That means hitting the inbox every time.

Deliverability is an incredibly important part of a successful email program, but it’s often overlooked in favour of irresistible offers, captivating content, and eye-catching creative. The truth is, without good deliverability, all of those other efforts are wasted.

To understand where your deliverability stands, calculate your inbox placement rate.

Inbox placement rate = ((Total Sent – Bounces) – Spam) / Total Sent

Not to be confused with your delivered rate (essentially your non-bounce rate), inbox placement rate factors out the number of messages that bounced AND the number of messages delivered to spam, showing you what percent of your messages actually reached your customers.

Understanding and tracking your inbox placement rate is the first step for any retail marketer. Without it, you can’t fully understand how your program is performing. In this article, we will walk through nine key factors that contribute to your ability to reach your customers and drive sales with email.

Factor #1: Sender Reputation

Today’s retail shoppers have a lot of choices—and if their experience with one brand falls short, they don’t hesitate to take their business elsewhere. Similarly, mailbox providers face intense pressure to provide a great inbox experience for their mailbox users. This means making sure the messages consumers really want are delivered to the inbox, as well as keeping unsolicited messages and spam out.

Sender reputation is an important factor in these filtering decisions. Every email sender has a sender reputation—typically expressed as a number between 0 and 100—which gives mailbox providers a snapshot of your status as a sender. Just as banks use the credit score to make lending decisions, mailbox providers consider sender reputation when determining whether or not your messages are legitimate. A good reputation will get your messages delivered to the inbox, while a poor reputation will land your messages in the spam folder.

There are many factors that contribute to your sender reputation, but the six most important components are:

• Complaints
• Engagement
• Quality of Subscriber File
• Sending History
• Email Infrastructure
• Message Quality

The graph below—taken from our 2019 Sender Score Benchmark—shows the relationship between reputation and average inbox placement at the top four mailbox providers. Each mailbox provider has a proprietary formula that weighs certain elements differently, but they all produce a similar result: a stronger reputation will earn higher inbox placement and a poor reputation will cause your messages to be blocked from the inbox.

You can get a good idea of your sender reputation using Sender Score, a free tool that mirrors the reputation formulas used by mailbox providers. For more insight on how reputation can impact deliverability, check out the 2019 Sender Score Benchmark.

Factor #2: Spam Complaints

No one likes complaints. In the retail world, customer complaints and negative product reviews can hurt sales and damage your brand’s overall image. When it comes to your email program, complaints can be just as damaging. Spam complaints from your email subscribers impact not only your relationship with the individual customer but also your brand’s image as a sender.

Spam complaints are a significant factor in your sender reputation. While a single complaint may not have much of an impact, they can be devastating in large numbers. Complaints will begin to impact your sending reputation if your complaint rate (the number of complaints divided by the total number of emails delivered) reaches just 0.1%. The following graph from the 2019 Sender Score Benchmark shows the correlation between complaint rate and sender reputation.

Sometimes complaints are unavoidable. Subscribers will occasionally hit the “Spam” button because it’s easier than unsubscribing from your email program. But spam complaints also provide important insights into how your customers view your email communications. Whatever the case, it’s important to keep an eye on your complaint rate and deal with complaints appropriately.

Dealing with Complaints

In order to avoid damage to your sender reputation—and as a result, your deliverability—it’s crucial to have a strategy in place to immediately handle complaints when they occur. One of the best ways to do this is by using feedback loops.

Feedback loops provide a way to identify subscribers who complain about an email they receive via the “This is Junk/Spam” button. Each mailbox provider has its own feedback loop service. For more information on feedback loops and how to sign up for them, check out this blog post that covers standard feedback loop services and this one that explains Gmail’s unique offering.

Any subscriber who submits a spam complaint should immediately be removed from your email list. The next step is to identify why they complained

— but the answer may not be an easy one. Subscribers can complain for any number of reasons at various points in the customer lifecycle. If complaints happen early in the subscriber relationship, it could be that they didn’t intend to sign up for your email program, or don’t remember doing so. Complaints from longer-term subscribers could be a sign that your content is not valuable or relevant enough—or that you have a problem with send frequency. If a certain message generates an unusual number of spam complaints, review the content for any potential issues before continuing the campaign.

Factor #3: List Quality

Every retail brand hopes to build a huge base of fiercely loyal and highly engaged customers—and part of that is having a robust email list to engage with your marketing campaigns. The truth is, quality is much more important than quantity when it comes to your email list. List quality is the second major factor mailbox providers assess when deciding whether to direct your marketing messages to the inox or the spam folder.

So, while a list of 1 million or more email subscribers is impressive, it’s no guarantee of success. If a significant percentage of those subscribers are disengaged—or worse yet, invalid addresses —your messages are likely to land in the spam folder.

Maintaining a high-quality email list requires identifying and removing “bad” addresses on a regular basis. But what exactly constitutes a bad address? There are actually three different types you should be aware of: unknown users, spam traps, and inactive subscribers

Spam Traps

Spam traps are email addresses that are created for the purpose of identifying senders with poor list hygiene and data collection practices. In other words, they aren’t real email addresses and don’t belong to real users.

There are two types of spam traps:

Recycled spam trap: These addresses once belonged to real people, but were abandoned at some point and later converted into spam traps. Recycled spam traps identify legitimate senders with weak list hygiene and data quality practices, because they will only ever receive email from senders who fail to properly purge their list of unknown users (described above).

Pristine spam trap: These addresses never belonged to real people and are created solely to catch bad mailers. Many spam trap operators will hide their spam trap email addresses on websites, so they are only visible to harvester robots. When senders harvest email addresses from websites rather than acquiring them through legitimate means, they risk gathering pristine spam traps. Any email sent to these addresses is a clear indicator of poor data collection practices.

Just a few spam traps in your email list can sink your reputation. The graph below, from the 2019 Sender Score Benchmark, shows the relationship between the number of spam traps in a list and its impact on sender reputation—and ultimately, deliverability.

Inactive Subscribers

Inactive subscribers are disengaged email users who have not taken any action on your emails (opens, clicks, etc.) within a certain amount of time. Having subscribers who are not responsive or interested in your program does not make your program stronger.

In fact, it will have a negative impact on your performance measures, by diluting important KPIs like open rate, click rate, etc. In addition, mailbox providers have placed a greater emphasis on subscriber engagement in recent years, so they will filter mail when they identify a lack of engagement from your customers.

Take Control of Your Email List

• Quarantine new data as its own segment, rather than immediately adding it to your subscriber population.
• Send a welcome message to new subscribers and immediately remove any email addresses that bounce.
• Make it easy for customers to update their information by including a link to your preference centre in every message.
• Send only to subscribers who are acquired legitimately, following permission-based best practices. Avoid buying or renting lists.
• Email your list regularly to quickly identify unknown users and monitor inactive subscribers.
• Monitor the age of your data and the engagement of your subscribers. Create a re-engagement campaign to either win back or remove subscribers whose interest and engagement drops off.

A Unique Challenge for Retailers

Maintaining a clean list is especially difficult for retailers because point-of-sale email acquisition has many potential pitfalls. When employees collect emails from customers at checkout, or your website requires customers to enter their email before completing a purchase, bad addresses may be added to your list.

Many of these are the result of typing errors—the clerk misheard or the customer was typing too fast. In other cases, customers may not want to give you their email address but are required to do so in order to continue filling out an online form. As an alternative to providing their personal email, customers might instead give you a fake email address.

However it lands in your list, a misspelt email is a missed customer and a fake email has the potential to damage your sender reputation. To improve your data quality, maximize the customer experience, and ultimately protect your deliverability, consider utilizing an email verification solution. By automatically validating every email address in real-time at the point of collection—and periodically scouring your entire list for invalid addresses— these tools help you to quickly and easily eliminate bad addresses before they have a chance to harm your reputation, your campaign performance, or your customer relationships.

Unknown Users

Unknown users are email addresses that do not exist or are no longer in use. It could be that the address was valid in the past, but was abandoned. Or perhaps the address was simply entered incorrectly. Whatever the case, when the email is sent to an unknown user, the mailbox provider will return what is called a bounce code to notify the sender that the address is invalid.

Any addresses identified as unknown users should immediately be removed from your email list. Continuing to send to unknown users will damage your sender reputation, and having a large number of unknown users in your email list puts you at risk of being blacklisted—something we’ll discuss later in this article.

Factor #4: Customer Engagement

As a retail marketer, you probably spend a lot of time thinking about how to increase engagement between your customers and your brand—by enticing them to visit your website, interact with your social media accounts, visit your stores, and make more purchases. Specific to your email marketing program, you probably track the number of engagement-related metrics like open rate, click-through rate, and conversion rate.

Mailbox providers also consider engagement as part of their filtering decisions, but their definition of engagement is based on how an email recipient interacts with their mailbox and the messages they receive. Do they ever access this particular mailbox? Do they read and take action on messages from your brand, or do they ignore your content? Worse yet, do they actively complain about your messages?

We’ve used mailbox providers’ definition of engagement to define four categories of relative engagement:

1. Engaged User: This is a user that is highly engaged with their inbox, and also specifically with messages from your brand. You know the type—they can’t stand to have an unread email in their inbox. When new mail arrives, they are almost compelled to open it and subsequently they have near-constant activity in their mailbox.
2. Loyal User: This user is highly engaged with messages from your brand (and maybe a few others), but overall they are picky about the email they read. As a result, email from certain senders gets opened immediately, but other messages may stay unread for days.
3. Potential User: This is the opposite of a loyal user. These are the people who interact with messages from brands that are similar to yours— but not with your specific brand. At least, not yet.
4. Disinterested User: This user isn’t really engaged with any of the emails they receive. They may go in and move things around or delete messages, but they don’t read many

Continuing to email subscribers who are not engaged with your program will not only hurt your engagement metrics, it will also impact your reputation and eventually your deliverability. Understanding these different levels of engagement can help to ensure that you’re focusing on people who want to hear from you—and not risking spam complaints from people who don’t. The good news is, there are plenty of ways to improve engagement among your subscribers. Following are four tactics to help you increase and maintain subscriber engagement

Focus on the new subscriber experience

As the old saying goes, you only have one chance to make a first impression. For retail marketers, the easiest time to get customers engaged with your brand is at the beginning of the relationship. Someone who chooses to receive your email is actively expressing interest in your brand and your products. Take advantage of this enthusiasm—start engaging them right away.

1. Send a confirmation: Confirmation—or opt-in—emails not only help spark engagement, they also serve as a way to maintain a clean list. By sending a confirmation email, you are able to verify that the address belongs to an active user and ensure you have permission to continue emailing them.
2. Welcome campaigns: Welcome messages can come in many varieties, but the purpose is the same—showcase the value of your email program. Whether it’s a simple “Thank you for subscribing” message or a multi-part series highlighting different aspects of your program, these initial messages are a great opportunity to start off strong.

Test everything

By everything, we mean everything. The beauty of email is that it allows you to test and optimize each and every element of your campaign. (If you’re looking for a place to begin your tests, here are 50 ideas to get you started.)

As you test, make sure to keep these four rules in mind to ensure your test results are legitimate:

1. Test one element at a time. While your eventual goal is to have a completely optimized email, trying to test multiple elements simultaneously won’t allow you to accurately measure the impact of each variable.
2. Send your tests at the same time. Similarly, it’s important to send all of your test segments at the same time, to ensure that timing variations don’t skew your results. The obvious exception to this rule is if you’re running a test of different send times.
3. Use a statistically significant sample size. By using a sample size calculator, you can determine the correct number of subscribers for your test, you can ensure that your results provide a true reflection of subscriber behaviour across your entire list.
4. Allow your test time to run. Early results can be misleading. Ideally, you should wait 48 to 72 hours before you determine the “winner” and send it to the rest of your list.

Before your start, read through our All About A/B Testing guide to learn how to run a test and analyze your results.

Segment your list and create targeted campaigns

No two subscribers are exactly the same. They like different things and buy different things, so they deserve a different experience, unique to them. By segmenting your list and tailoring messages to each group, you can create more personal, engaging experiences that will keep your customers coming back for more.

There are many variables that can be used to segment your list. Demographic factors, past purchase behaviors, geography, and source of email acquisition are among the most common segmentation factors. As your program becomes more sophisticated, you can create even more robust segmentation strategies and identify which variables result in the most effective targeting.

Once you have your segments, create targeted campaigns for each group. These targeted campaigns can be as simple as sending local updates based on the geographical location, or sending a message with suggestions based on a recent purchase. But don’t forget to run tests on each variation of your campaign before sending to an entire segment.

Re-engage or remove

As we’ve discussed, poor engagement can hurt your sender reputation and your deliverability. Even worse, inactive subscribers may be spam traps in disguise. When a subscriber simply isn’t engaged with your email program, it may be time to let them go.

Before you say good-bye, there is one final effort that may allow you to rebuild your relationship with an unengaged subscriber—a re-engagement campaign (sometimes called a win-back campaign). The focus of this campaign is to let subscribers know that they will be removed from your email list—with all its benefits— unless they give some indication that they are still interested.

Win-back campaigns are pretty common among retail brands, and they can be relatively successful at bringing subscribers back into the fold. But more importantly, they can help to keep your list clean and protect your all-important sender reputation

Factor #5: Send Frequency

Since every email has the potential to drive sales, sending as much email as possible seems like a logical way to boost ROI—right? Unfortunately, that’s not quite how it works. Finding the right sending frequency requires some tricky calculations, and there’s a delicate balance between over-mailing and under- mailing.

Today’s consumers receive more email than ever before, which creates quite a challenge for retailer marketers. When you send too much email, you risk subscriber overload. Customers may start to ignore you—or, if they become annoyed, you may see higher unsubscribes and spam complaints. Send too little email and your customer may overlook your messages in their bulging inbox, or forget about your brand altogether.

Neither of those situations is ideal. To find your frequency sweet spot, you need to test.

Frequency testing can be daunting, but the results are worth the effort. First, determine your hypothesis. Perhaps you believe that you can increase sales and revenue by increasing the cadence of your emails, or that decreasing frequency will result in lower churn and more revenue long term. Next, perform an A/B split test by changing frequency for a small segment of your list. Then sit back and let your test run. Monitor for changes in unsubscribes, complaint rates, open rates, click rates, and conversions, and adjust accordingly. There are also some more advanced techniques you can apply to optimize your sending strategy.

1. Segmented cadence: When marketers experiment with send frequency, they tend to change the cadence for all of their subscribers at once (after testing, of course). This can lead to suboptimal results, as subscriber preferences and tolerance for email volume can vary significantly. Instead, consider personalizing send frequency for more targeted groups—for example, one frequency for your most engaged subscribers, another for moderately engaged subscribers, and a third for those who haven’t opened or engaged with your email in a certain amount of time.
2. Custom send order: The order in which you send to subscribers can be an important factor in improving deliverability. As we’ve discussed, mailbox providers consider engagement in their filtering decisions. By sending to more engaged subscribers first, you may be able to increase your inbox placement. The basic theory is that the engagement signals provided by messages sent to highly engaged customers will boost the reputation of the content, sending domain, and IP address, helping to get later messages to less engaged subscribers delivered to the inbox.
3. Custom send time: For years, marketers have struggled to find the “best time” to send an email. Unfortunately, this is another area where subscriber preferences and behaviours can vary dramatically. By keeping track of email opens and analyzing the data, it’s possible to identify patterns in open times that will allow you to segment your list and target send times based on when each subscriber group is likely to be active in their inbox—thereby increasing the likelihood of an open or click.

Factor #6: Blacklists

A blacklist is a list of domains and IP addresses that are “known” sources of spam. Landing on a blacklist is usually the result of the many spammy behaviors we’ve highlighted in this article. If you’re a legitimate sender and follow best practices for email marketing, you may never have to worry about landing on a blacklist. For example:

• Acquire email addresses by legitimate means. Avoid buying and renting email lists.
• Sign up for feedback loops and remove any subscribers who submit spam complaints from your list.
• Promptly remove any email address that returns a bounce code.
• Remove inactive subscribers who don’t respond to re- engagement attempts, as these have the potential to become recycled spam traps.

You can use a blacklist monitoring system to find out whether your IP addresses and sending domains appear on any blacklists. If you do find yourself on a blacklist, there are steps you can take to rectify the situation.

1. First, put your email campaigns on hold until you can figure out what’s going on.
2. Contact the blacklist where you’ve been listed for information. If you’ve been put on one of the major blacklists (like Spamhaus or Spamcop), they have a clear process for getting yourself delisted, and they are typically able to tell you why you were blacklisted.
3. Follow the steps that are outlined for removal. You’ll typically need to provide information about your list acquisition sources, list management practices, and sending practices.
4. Work with your email service provider or deliverability consultant, who have experience and relationships with blacklist services and can help manage your removal.

Getting removed from a blacklist will take some effort and the result may not be immediate — removal often requires several days, and sometimes the process can extend two weeks or more. For more information on blacklists, check out Blacklist Basics, which identifies the top blacklists retail marketers need to know.

Factor #7: Whitelists

In contrast to blacklists, a whitelist is a list of domains and IP addresses that are recognized for safe, strong sending practices and reputable email programs. Mailbox providers use whitelists to influence their filtering decisions. The benefits of being on a whitelist vary, but they typically include preferential treatment—such as less stringent spam filtering—which can lead to higher inbox placement rates

Some mailbox providers like Yahoo and AOL have their own whitelisting services. You can apply for placement on their whitelists to bypass some—but not all—of their spam filtering algorithms.

In addition to whitelist services for specific mailbox providers, some deliverability companies offer a whitelist service that provides enhanced benefits across multiple mailbox providers. It’s our Certification program, which allows brands to certify both their IP addresses and sending domains.

In order to offer Certification to our clients, Validity partners major mailbox providers around the world to define best practices for email senders. Becoming Certified through Validity requires brands to comply with some very strict requirements, but setting these high standards allow us to offer many benefits, including:

• Measurable increase in inbox placement at top mailbox providers like AOL, Yahoo, Microsoft, Comcast, Cox, Cloudmark, Yandex, Mail.ru, Orange, and more
• Reduced filtering and preferential inbox placement at major mailbox providers and spam filtering agencies
• Key reputation insights into SRD rates, blacklisting status, spam complaints, and spam trap hits
• Real-time, actionable alerts on performance changes and access to professional assistance

On average, Validity’s Certified senders see inbox placement rates that are 10 percent higher at top mailbox providers than similar, non- Certified senders.

Factor #8: Email Authentication

Marketers are typically focused on building customer relationships and driving revenue, rather than nitty-gritty issues like email security. That’s a job for your IT team—right? In reality, securing your email program through authentication should be top-of-mind for retail marketers, because if your brand is the target of a phishing or spoofing attack, your email ROI and your relationships with your customers will suffer.

These threats are very real for retailers. According to Check Point Research’s 2018 Security Report, one in three retailers have already been hit by a cyber attack. An attack on your email program could have farreaching effects, including:

• Loss of brand trust: 20% of shoppers say they would not return to a retailer that was a victim of a cyber attack.
• Reduced deliverability: Being the target of a cyber attack can impact many of the factors we’ve already discussed—like spam complaints and subscriber engagement. Any of these can lead to a drop in deliverability.
• Decreased email ROI: The combination of decreased deliverability and loss of trust among your customers can lead to a substantial loss in revenue from email.

Fortunately, there are several steps you can take to not only protect your email program from phishing and spoofing.

1. Authenticate with SPF. SPF (Sender Policy Framework) is an email authentication protocol that allows the owner of a domain to specify which mail servers they use to send mail from that domain.
2. Authenticate with DKIM. DKIM (DomainKeys Identified Mail) is a protocol that allows an organization to take responsibility for transmitting a message in a way that can be verified by the mailbox provider. This verification is made possible through cryptographic authentication.
3. Publish a DMARC policy. DMARC (Domain-based Message Authentication, Reporting & Conformance) is an email authentication protocol that ensures legitimate email is properly authenticating against established DKIM and SPF standards, and that fraudulent activity appearing to come from domains under the organization’s control (active sending domains, non-sending domains, and defensively registered domains) is blocked.

Although DMARC is the most complex of these authentication protocols, it is also the newest and most secure. It allows retail marketers to see who is sending email under your name, block phishing attacks before they reach your customers, and see which of your messages are not passing authentication and why.

A Retail Marketer’s Email Checklist

After nearly 50 years, email isn’t going anywhere— despite the many headlines proclaiming its demise! Across generations, consumers express an overwhelming preference for email over all other channels when it comes to interacting with brands.

Retail marketers face many challenges in building and running a successful email marketing program, but the benefits are more than worthwhile. Email provides greater reach, better effectiveness, and higher ROI than any other channel. It has the potential to improve your customer relationships, your sales, and your bottom line—but first, you have to make sure you’re reaching the inbox consistently.

This article includes a lot of information and tips to help you get there—but we know it’s a lot to process. Here’s a quick checklist to help you remember the key factors in achieving and maintaining great deliverability

• Get to know your sender reputation. A tool like Sender Score can help.
• Take steps to minimize spam complaints and sign up for feedback loops so you’ll know when complaints occur.
• Make list hygiene a priority. Keep your list clear of unknown users, spam traps, and inactive subscribers.
• Take advantage of an email verification solution to improve your data quality.
• Improve subscriber engagement with a strong onboarding program, targeted campaigns, and extensive testing.
• Beware of blacklists, and take the proper steps for removal if you find your brand blacklisted.
• Find the right send frequency for your subscribers—and remember, it may not be the same for everyone.
• Take advantage of the benefits offered by whitelists.
• Authenticate your email program with SPF, DKIM, and DMARC

Source: validity