Pega- Why Irrelevant Emails Are Killing Your CLV

Ugh, Another One? Why Irrelevant Emails Are Killing Your CLV

The following blog post was written by Andrew LeClair, Product Marketing Manager at Pega

111 BILLION emails are sent to consumers every day. But, with only 3.8 Billion email users worldwide, this means that the average consumer can receive up to 30 emails per day from brands trying to sell them something. That’s a lot. There’s no way that all of those emails can resonate – and the numbers prove it.

The average marketing campaign generates less than a 1% response rate – meaning that for every 100 emails sent, only one is actually relevant. 99% of the time, we’re just annoying our customers. In fact, we annoy them so much they’ve taken steps to avoid us all together. The average person has at least two email accounts – one they actually use and one (or more) to handle the emails they have no interest in. Think about it. Do you have a spam account? I bet you do. How many unread emails are in there? 5,000? 10,000? 20,000?

At Pega, we call this the death spiral. As marketers, when our numbers aren’t high enough we try to fix it by pulling bigger audiences, running more campaigns, and trying to sell even harder. But, in reality, this has the opposite effect: instead of generating more customers we end up training consumers to ignore us, that our messages are irrelevant, and that even opening them isn’t worth their time.

Every time we send an email, only two things can happen – we either bring that person closer, or we push them away. With each irrelevant message, we’re one step closer to adding ourselves to the list of brands consumers send to spam land. How close are you to becoming one the thousands of unread emails? Or even worse, are you already there?

Email marketers everywhere need to change their approach. It starts with re-focusing around what the customer needs – not just what we want to sell.

Let’s Hit the Reset Button: Customers, Not Products, Drive Revenue
As marketers, we’re very often told what products we have to market/sell, how many units we have to convert, and given dollars to “make it happen”. So, we work really hard to create the perfect campaign – finding the ideal subject line, optimizing send-time, using different images and tones, cycling through tons of A/B testing, etc… and through this we can do some amazing things. But no matter how amazing our campaigns are, a campaign approach is not going to solve our problems. Why? Because campaigns are built from the inside-out. They’re about us and what we want to sell – not about our customers want, and what they truly need.

We have to hit the reset button. Customers, not products, drive revenue. They’re the source of all value for an organization, and they’re precious. Every time we get an opportunity to engage, we have to make it about them. We need to figure out what’s right for them, right now – and that’s not always about selling a product.  Is that customer a churn risk, and we need to focus on retaining them? Are they in need of service? Or maybe we don’t want to do anything because they’re in collections.

This type of thinking requires a major ideology shift. We need to ditch the idea that we can make that happen through campaigns – selling one product to as many people as possible. We need to switch to a Next-Best-Action approach, where we evaluate all the possible engagements we could have with one, individual, customer – and choose whichever is right for them in that moment.

What’s Next-Best-Action?
It’s all about the math – P*V*L. In today’s marketing, every interaction must be rooted in statistics – Next Best Action provides an equation that balances what’s relevant to our customers, as individuals, with what’s financially worth our while – all in the context of the situation.

P=Propensity
We could probably send our customers any one of over 500 messages, at any given time. Historically, we tried to do that using a segmentation approach. Whatever bucket the consumer fell into is the message they’d get. But when we rely on segments, we compromise relevance in exchange for convenience. We push products based on what we think people like our customer are interested in, not what our actual customer needs. The best companies are looking at all the things they could talk to someone about and determining how likely each one, individually, will be desirable. This spans sales offers, service actions, retention strategies, relationship builders, etc. – even doing nothing.

V=Value
If the customer accepts our offer, or our outreach increases their affinity to the brand – what’s that worth? Not just in the short term, but looking through the lens of customer lifetime value (CLV). If a message is highly relevant to a customer, but it won’t ultimately add adequate value to our business… why waste our touch? We only get so many before we become one of the thousands flagged for spam land. Don’t engage for the sake of engaging. Be strategic. Make sure each outreach is worth the risk of losing them.

L= Lever
Sometimes we need to adjust things. We may need to add or remove priority from certain actions based on our current business situation. Perhaps we’re behind on sales for a specific product, so we need to drive up acceptance rates even though it’s not what our customer is most likely to be receptive to. While this may be necessary, it’s tricky – is the reward worth the risk? Going against propensity will decrease your relevance to and likely undermine the customer experience.

So, what is the Next-Best-Action? Whatever action has the highest value – P*V*L.

A Successful Next-Best-Action Approach Requires Always-On Marketing
When we run campaigns, we’re pushing messages out on our time, not the customer’s. With all the planning cycles and lag involved in executing campaigns, there’s only a small chance that we’ll hit our tiny window of opportunity with each customer. We can’t wait days, weeks, or even months to fill a customer’s needs. Once they’re presented we only have a few hours or minutes before the opportunity’s gone.

To make sure we deliver our Next-Best-Action during our tiny window of opportunity we need to adopt an always-on approach to marketing. An approach where we’re constantly listening, monitoring interactions on all channels and when a customer need arises triggering a response automatically – not waiting for the next campaign run.

The key to an effective always-on approach is having one centralized, AI-powered, decision engine driving our Next-Best-Action strategies– a “customer brain” if you will. A brain that sits in the middle of all our channels, analyzes the customer’s current context, combines it with all the previous information we know about them, then applies predictive analytics and machine learning to suggest the Next-Best-Action in real-time. Because the brain sits at the center, the minute we detect a change on one channel, our Next-Best-Actions are instantly updated on all others. And, the minute the customer’s propensity jumps over a threshold we act – sending them an optimized email for their situation.

Avoiding Spam Land
We can fix email.

The technology exists. But, we can only do so if we’re willing to change. Traditional campaigns won’t get us there – we’ll be lucky to maintain a 1% response rate if we continue down this path. We owe it to our customers to be relevant. And, we can be – if we’re willing to adopt an always-on, Next-Best-Action approach. This is how we ensure every interaction is relevant, timely, and contextual. This is how we move from just pushing products to having connected conversations. This is how we avoid spam land.