Email Benchmark Report Q3 2016: Mind the Gap

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The phrase “mind the gap” should resonate well with email marketers in 2016. As consumers become more comfortable making purchases on mobile devices, the gap between mobile and desktop click-to-open (CTO) rates continues to shrink. In a similar vein, consumers are so comfortable shopping on smartphones that the gap between smartphone and desktop purchases is also getting smaller.

But not all gaps in email marketing are closing. Consumers have become so indifferent to non-personalized, irrelevant marketing emails that the gap between response rate (opens) and engagement (clicks) is widening. This finding indicates a need for marketers to do more to incentivize consumers to engage with their emails after the initial open.

Based on Yes Lifecycle Marketing data from almost 7 billion emails sent in Q3 of 2016 using Yesmail360, this report outlines three major gaps that marketers must pay close attention to in order to drive more engagement and ultimately conversions from email marketing campaigns as the holiday season approaches:

1. The gap between subscriber response and engagement

2. The gap between mobile and desktop click and CTO rates

3. The gap among smartphone, desktop and tablet purchases

Q3 Benchmarks MIND THE GAP

Open rates (the percentage of delivered emails that were opened) have remained consistent over the last three years. However, click rates (the percentage of delivered emails that were clicked) and CTO rates (the percentage of opened emails that were clicked) continue to plummet.

• Unique click rate has declined 15 percent YoY, 17 percent from 2014 and 25 percent from 2013

• CTO rate has declined 12 percent YoY, 12 percent from 2014 and 20 percent from 2013

These findings indicate a growing gap between response and engagement. Customers are responding to (a.k.a. opening) emails almost as frequently as they always have, but they’re not given much of an incentive to engage and convert.

Overall Open and CTO Rates

Q32013

Q32014

Q32015

Q32016

16%

15%

14%

13%

12%

11%

10%

9%

8%

Overall Unique Click Rate

Q32013

Q32014

Q32015

Q32016

2.0%

1.9%

1.8%

1.7%

1.6%

1.5%

1.4%

1.3%

1.2%

14.3%

9.9%

15.3%

12.3%

15.1%

11.3%

14.8%

11.3%

1.4%

1.9%

1.7% 1.7%

Open Rate CTO Rate Unique Click Rate

Between Subscriber Response and Engagement

1. The Gap



When broken down by industry, hospitality and travel, technology, financial services and retail have lower than average CTO rates and average open rates. Subscribers are opening these emails as frequently as they open marketing emails from other industries, but they’re less inclined to engage via a click. This gap is most pronounced within the financial services industry, likely because much of these communications tend to be informational. Banks send emails to alert subscribers of balance updates or overdraft warnings, for example, which often do not include a call-to-action.

Industry Breakdown

Industry Open Rate Click Rate Click to Open Rate

Automotive 11.1% 1.3% 8.7%

B2B 9.1% 1.0% 8.7%

Client Services 12.9% 2.8% 13.8%

CPG 13.7% 1.9% 8.9%

Entertainment 13.5% 2.0% 10.8%

Financial Services 30.3% 2.9% 7.3%

Hospitality/Travel 14.8% 1.4% 6.3%

Publishing 14.2% 3.3% 15.8%

Retail/Wholesale 13.4% 1.6% 8.7%

Technology 16.3% 1.6% 6.6%



It is likely that industries such as hospitality/travel and retail (particularly luxury) generate high open rates but low CTO because the promoted products or services are aspirational rather than frequent purchases. Subscribers might open an email with an offer for a flight to Hawaii because they are genuinely interested in the trip, but they might fail to engage because timing isn’t right or their budgets don’t allow for them to take action.

Retailers and hospitality brands looking to increase engagement should consider offering deals informed by a subscriber’s email activity. A subscriber who has clicked through emails about flights to Hawaii, for example, should be targeted with specific communications about that flight. The brand could alert her when the price increases by a certain percentage, or tie it into an upcoming holiday.

One brand within this industry setting an excellent example is Southwest Airlines. The airline recently revived the decade-old ‘Wanna get away?’ tagline, and has incorporated this theme into marketing emails. The emails successfully entice engagement by offering unbeatable deals in the subject line for flights the subscriber has recently searched within his or her price range (which the brand knows based on previous purchases). The emails also create a sense of urgency by alerting the user of price changes.

Technology brands, such as those selling software, also witness a large engagement gap. This is likely due to many of the emails containing updates that do not require a specific action. However, this does not mean that technology brands should accept low engagement rates; instead, they can send emails with compelling content about relevant topics (i.e. useful tips on how to use the technology) to encourage subscribers to engage.

Given the sheer volume of marketing emails consumers receive, it is more challenging for marketers to entice consumers to engage with email than it is to motivate them to open. Open rates have remained somewhat consistent YoY and are likely to continue this pattern. It’s the declining CTO rate that is causing the engagement gap. To shrink it, marketers must provide relevant, personalized emails with engaging content at the right time.

Industry Breakdown



The best day of the week for engagement in Q3

Recommendations: Consumers are less likely to engage with your emails than ever before. To overcome these odds, ensure that your emails are relevant, timely and personalized. Aside from deploying emails on the days that your audience tends to respond best, consider other engagement techniques:

• Always personalize emails by name - consumers consider it a given

• Use purchase and browse history to inform email content and offers

• Consider the frequency with which consumers open emails and adjust the volume and timing of your campaigns accordingly

• Make use of holidays and events to develop uniquely relevant promotions for your audience and generate a sense of urgency

• Create a sense of excitement about the brand through informative and engaging content

Keep in mind that while engagement rates were higher on Fridays this quarter, brands must develop email schedules that are best for their unique industry and audience. Given the high engagement rates on Fridays and high conversion rates on Saturdays, some brands might be smart to promote weekend deals on Fridays as consumers are likely to buy on Saturdays.

Monday Tuesday Wednesday Thursday Friday Saturday Sunday

15.6%

13.5%

2%

10.6%

3.6%

14%

13.1%

1.7%

9.1%

3.1%

13.8%

13.4%

1.8%

9.8%

2.1%

15.8%

13.3%

1.8%

9.6%

2.3%

19.3%

16.6%

2.9%

12.4%

2.2%

11.3%

13.5%

1.7%

8.5%

4.5%

10.3%

13.1%

1.6%

8.5%

3.3%

Emails Sent

Open Rate

Click Rate

CTO Rate

Conv. Rate

One way for marketers to improve engagement rates is by deploying emails at the right time. While the best day of the week to send marketing emails will vary from brand to brand, from industry to industry, and from quarter to quarter, Q3 data indicates that emails sent on Friday drive the highest engagement while those sent on Saturday convert most effectively. By comparison, Thursdays held the top engagement spot in Q2 of 2016.



In Q3 of last year, desktop CTO was 31 percent higher than mobile CTO and in Q3 of 2014, the difference was 80 percent. With desktop CTO just 4.4 percent higher than mobile, the rate at which this gap is shrinking is astonishing.

The data also shows a consistent rise in mobile CTO rate as well as the proportion of mobile clicks to desktop clicks since 2013:

• Mobile clicks have risen 56 percent over three years and 17 percent YoY

• Mobile CTO is also steadily rising

• Desktop CTO is on a steep decline and is now only 4.4 percent higher than mobile CTO

Between Mobile and Desktop Clicks and CTO

2. The Gap

Mobile vs. Desktop CTO

Q32013

Q32014

Q32015

Q32016

24%

22%

20%

18%

16%

14%

12%

10%

8%

10.9%12.2%

13.7%

22.2% 21.8%

18.0%

13.3%

12.7%

Mobile CTO Desktop CTO


Retail, for instance, has closed the gap between mobile and desktop CTO. The industry has made a conscious effort over the past several years to improve the overall mobile experience – from responsive emails to user-friendly mobile e-commerce sites. As a result, consumers are more easily making purchases after they open a marketing email on their mobile device.

While desktop CTO still holds a slight lead over mobile CTO, there are industries that have closed the gap completely. Entertainment and travel, for instance lend themselves better to mobile, but for others (financial services or B2B), the use of mobile is not quite as obvious. Regardless, marketers must understand the needs of their subscribers and tailor email marketing content accordingly to drive mobile engagement.

Industry Breakdown

Industry Desktop CTO Mobile CTO

Automotive 12.2% 11.8%

B2B 16.8% 4.8%

Consumer Services 24.1% 19.5%

CPG 13.4% 12.0%

Entertainment 12.8% 14.0%

Financial Services 10.2% 9.2%

Hospitality/Travel 7.8% 8.4%

Publishing 24.3% 22.1%

Retail/Wholesale 10.8% 10.8%

Technology 9.5% 10.2%


Amazon is another great example. The retail giant sends emails with links to specific items users have viewed on the site, but not yet purchased. Amazon also saves all payment information so users can easily make additional purchases with just a few clicks directly from the email.

With regards to entertainment, many of these brands are working with mobile-friendly audiences. From gamers to concert goers, these subscribers are likely to use mobile devices due to the nature of the purchase they’ve made. Still, these brands can offer compelling and relevant content (i.e. in-game tricks or music suggestions given recent concert ticket purchases) to motivate consumers to engage with emails for more than just a download.

While almost all industries have seen an increase in mobile engagement over the past several years, they cannot consider the job done. The next step is for marketers to ensure that the desktop and mobile experiences are seamless, should a subscriber switch from one to the other throughout the process. If a user searches for an item on a desktop, she should be able to complete the purchase through an email on her smartphone.

An example of one retailer that offers a great mobile experience is Lands’ End. The clothing brand sends emails with personalized promotions that include bar codes that subscribers can scan in-store for the deal, along with easy-to-navigate buttons to direct users to the brand’s mobile site. Once they’re on the site, they’re logged into their account and are given personalized deals. The emails (and subsequent conversion process) are so easy to navigate that consumers have no need to switch to desktop to convert.

Industry Breakdown



The Slow Adoption of Responsive Design The proportion of mobile to desktop clicks has surpassed the 50 percent mark this year. In other words, more clicks occur on mobile devices than they do on desktops. This is yet another closed gap that illustrates consumers’ growing comfort with mobile.

It’s clear that consumers are more inclined to engage with marketing email on mobile devices than ever before, yet many marketers are still failing to provide subscribers with a seamless mobile experience. Implementation of responsive design might be a significant roadblock preventing mobile from surpassing desktop across every industry.

• Between Q2 and Q3 of 2016 the number of responsive campaigns grew by just 5 percent, and less than a quarter (21 percent) of marketers deployed exclusively responsive campaigns

• A third (32 percent) of brands still have less than half of their campaigns responsive, or none at all

Recommendations: Brands that have not yet adopted responsive design for all campaigns will be smart to make it as easy as possible for subscribers to navigate and click through mobile marketing emails. Responsive design should be common knowledge, but many brands are still failing to use this extremely useful tactic. Consumers have come to expect it and will disengage brands that do not make it easy for them to click through and convert.

Make sure your email design and layout are optimized for all screens, and work to reduce the number of steps a user needs to take or form fields she needs to fill out before making a purchase on mobile.

Proportion of Mobile Clicks to all Clicks

Q32013

Q32014

Q32015

Q32016

60%

55%

50%

45%

40%

35%

30%

35.2%37.7%

46.7%

55.8%

Proportion of responsive emails sent None

18.0% 14.0% 46.7% 21.3%

Some (less than half)

Most (more than half)

All

Percentage of brands meeting this criteria



Smartphone revenue specifically (as a portion of all revenue) is growing the most. Smartphones now drive about 24 percent of all revenue, which is up 14 percent quarter-over-quarter (QoQ) and 59 percent YoY.

For the first time, mobile revenue drives over a third (34%) of all email-generated revenue, up 37 percent YoY and 50 percent from Q3 of 2014.

among Smartphone, Desktop and Tablet Purchases

3. The Gap

Total revenue (mobile vs. desktop)

Q3 2014 Q3 2015 Q3 2016

80%

70%

60%

50%

40%

30%

20%

10%

0%

22.4% 24.6%33.6%

77.6% 75.4%66.4% Mobile

(% of all revenue)

Desktop(% of all revenue)

Smartphone revenue (% of all email revenue)

Q3 2014 Q3 2015 Q3 2016

25%

20%

15%

10%

5%

10.4%15.0%

23.8%percent of allemail-drivenrevenue from smartphones



In Q3 2016, nearly half (48 percent) of email-driven orders were placed on a mobile device, which is up 14 percent QoQ, and 34 percent YoY. Smartphone orders specifically have more than doubled since 2014 (from 17 percent in 2014 to 39 percent in 2016). Since mobile orders account for nearly half of all orders but only drive a third of all revenue, it is clear that consumers are still making more expensive purchases on desktop.

Total orders (mobile vs. desktop)

Q3 2014 Q3 2015 Q3 2016

80%

70%

60%

50%

40%

30%

20%

10%

0%

28.8%35.8%

71.2%64.2% 52.1%

47.9%

Mobile(% of all orders)

Desktop(% of all orders)

Percentage of all email orders driven by smartphones

Q3 2014 Q3 2015 Q3 2016

40%

35%

30%

25%

20%

15%

10%

5%

0%

16.6%

25.4%

39.8%

Percentage of all email ordersdriven bysmartphones



Smartphones now drive 70 percent of mobile email revenue, leaving tablets at only 30 percent. In 2014, the tables were turned. This growing gap does not mean that marketers should consider the tablet dead, however. Smartphones have grown in size and capability over the past three years, which can explain the spike in smartphone orders. Consumers will continue to use tablets, but likely differently than they do smartphones today.

Tablets should generally not be grouped with smartphones; they should be considered their own channel. Unlike smartphones, consumers do not cling to their tablets 24 hours a day. But they are used regularly for more leisurely activities like social media browsing, online shopping, travel and entertainment. So instead of using tablets to target on-the-go shoppers, marketers should consider initiatives such as social media advertising or in-app advertising with games or streaming services.

Recommendations: Not only are subscribers engaging with email on mobile devices, but they’re also converting. This pattern is particularly notable for smartphones, which now drive a third of all email revenue and 70 percent of all mobile email revenue. Marketers can take advantage of consumers’ willingness to shop on mobile devices by offering location-based notifications, coupons and incentives to drive people in store while on-the-go or to a mobile e-commerce site.

For example, when a frequent shopper is near a brick-and-mortar location the brand can send her an email with a personalized deal to incentivize her to stop in and make a purchase. Similarly, marketers can send online-only deals for frequent mobile shoppers to give them a reason to make more purchases directly from their smartphone.

Mobile orders (smartphone vs. tablet)

Q3 2014

Q3 2015

Q3 2016

70%

60%

50%

40%

30%

20%

10%

0%

60.7%53.3%

39.0%

29.1%

70.8%

46.7% Smartphone(% of mobile revenue)

Tablet(% of mobile revenue)



ConclusionMinding these three gaps will play an important role in the success of email marketing campaigns this holiday season. Consumers’ inboxes will soon be saturated with Black Friday and other holiday deals, so marketers must go above and beyond to incentivize engagement and grow market share.

While this should go without saying, marketers must remember to personalize all emails. This can be as simple as using the subscriber’s name or it could be more complex like retargeting based on browse behavior. Secondly, consider the days of the week your audience is most likely to engage. This quarter, consumers were most likely to engage on Fridays and convert on Saturdays.

Additionally, marketers can no longer treat mobile as an afterthought. Tactics like responsive design or mobile-based offerings must be a key part of all brands’ holiday campaign plans. Consumers are not only comfortable browsing on mobile devices, but they’re also clicking through emails on their smartphones and converting. Take advantage of this trend with tactics designed specifically to make the mobile shopping experience seamless.

So, mind the gaps this holiday season by personalizing, using responsive design for all campaigns and developing contextually relevant offers to motivate today’s mobile shoppers.

[email protected] yeslifecyclemarketing.com

http://yeslifecyclemarketing.com

http://www.yesmail.com/mind-gap-yesmail-email-benchmark-report-q3-2016

Email Benchmark Report Q3 2016: Mind the Gap

Marketing

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