The Surprising Cost of Unsubscribes

A few years ago, I decided to take a close look at my personal finances. I found a lot of ways to reduce costs but the thing that really surprised me was the amount of money I was spending on my morning latte habit. Every day I spent  just a little bit on the way to work. Over time, that expense really added up.

It is the same with unsubscribes and spam complaints. In any given campaign, you will remove only a  very small number of subscribers from your list because they have either unsubscribed or complained about your message through the “report spam” button in their inbox.

For an individual campaign this doesn’t seem like a lot.  Yet over time, losing subscribers really starts to add up.

This problem is frequently masked by the way that many email service providers report unsubscribes and complaints.

Let’s take a look at an example of a marketer sending twice per week to a list of 1 million subscribers. According to Experian’s Quarterly Email Benchmark Report, a “good” per campaign unsubscribe rate is about 0.12% (1.2 per thousand). Spam complaints are typically under 0.1%. For the purposes of this example, let’s assume 0.08% (0.8 per thousand).

In one campaign, this doesn’t look so bad. With the assumptions above, you only lose 200 subscribers. The lost clicks and revenue from this group doesn’t look like a lot. The cost to replace 200 subscribers is pretty low.

Over one year, though, you lose over 20% of your list. Losing a few subscribers with each campaign starts to add up over time. With the assumptions above, more than 200  thousand subscribers will leave your list over the course of a year. The lost revenue, opens, and clicks from this the group are substantial. You have dramatically decreased the size and value of your key asset as an email marketer: your list. (Please note that the calculations above assume that your list continues to grow over the course of the year. Subscribers added are assumed to be equal to subscribers lost each week.)

If you are interested, you can try this unsubscribe calculator to use the actual number from your own program.

You can take a few approaches to mitigate this cost:

Understand the hidden cost. Take a look at the number of subscribers you are losing as well as the quality of the subscribers you are losing. For many of our clients, the quality of unsubscribed addresses is higher than the average for their list.

Experiment with changing frequency. By mailing less, you will drive fewer complaints and unsubscribes. However, you will likely drive fewer opens, clicks, and conversions. Your objective is to find an optimal point, not to move unsubscribes and complaints to zero. As I mentioned in a previous post, there isn’t a one size fits all for frequency. Different segments of subscribers will have an ideal frequency.

Send more targeted and contextual messaging. Lifecycle messages (e.g., welcome and anniversary messages), triggered messages based on site and other behavior (e.g., abandoned browse or back in stock notifications), and content that is based on observed behavior (e.g., browsing and purchase behavior) will drive fewer unsubscribes and complaints per message sent.

Play “moneyball” with your acquisition efforts. If you are acquiring subscribers through various methods, review the number of opens, clicks, and conversations that you are getting per dollar spent in each acquisition channel. Load up on those methods that provide opens, clicks, and conversions less expensively. If you do this, the cost of replacing lost subscribers will fall.

As with my coffee habit, understanding the cost is the first step. Take five minute to analyze the cost of unsubscribes and complaints in your program.

This post originally appeared on Media Post.

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