If my inbox is any indication, list growth was a common goal set for this year. In the past week, I have been asked for information on email appends and other list growth tactics by several clients a day.
Most email append providers offer what we call an "opt-out" email append service. The process looks something like this:
1) Client provides a file containing street addresses of customers or prospects that is matched against a database. Where a match to the client's list is found, the email address is appended to the record.
2) An email is then sent to the individuals on the newly created list with the option to opt out. (Interestingly, many email append companies advertise the low number of opt-outs that are received... but more on that in a minute)
3) After allowing some time for people to opt-out (typically a week), two files are returned to the customer. The first file is a list of successfully appended and delivered emails. The second is a list of opt-out emails to be used for suppression.
Cost
We have worked with several third parties on email append projects with clients. Pricing is competitive in this industry with rates from reputable email append providers starting around $0.50 per appended email address with significant discounts based on volume. Pay attention, since there are hundreds of companies that advertise significantly lower rates. If someone quotes you rates starting at $0.05, or even $0.10, per email append... RUN!
Issues with Opt-out Append
1) Those low opt-out rates are not a good thing.
One prominent player in the email append space advertises, "Less than one-fourth of one percent choose to opt out." No one should be impressed by this since opt-out rates are always low. The industry wide average opt-out rate is about one-tenth of one percent. So, quoting one-fourth of one percent suggests that their average opt-out rate is 2.5 times higher than the industry averages. Not good!
2) Quantity, not quality.
The opt-out approach to email appends provides no incentives for the email append provider to ensure that the names will be responsive. They get paid by the address they provide back to you, regardless of whether or not the address is responsive. While reputable providers do have an interest in repeat business and referrals, which is some incentive, the fact still remains that you pay for the email addresses you receive back at the end of this process. The only requirements are that the email address is deliverable and they did not opt-out to a single email sent to them as part of the process. These are embarassingly low thresholds. In my experience, addresses acquired through opt-out append are less responsive than new registrants from other sources. At least part of this can be attributed to “recipient dilution”, which you can read more about in Al’s recent post. At the end of the day, you just end up paying for a lot of deadweight.
3) "Opt-out" is not permission.
Why is this important? Because lists that are not permission-based result in higher unsubscribe rates, higher percentage of people clicking this "This is SPAM" button, and lower open, click-through, and conversion rates. These factors lead to problems with your online reputation, and thus, your ability to get your email delivered. Just because someone does not unsubscribe or report you as SPAM the first time you send an email to them (as part of the opt-out append process) is no indication that they will not do so later. The best predictor of someone reporting you as SPAM is the level of permission you obtained when they were added to your list. "Opt-out" lists, while legal under CAN-SPAM, do not meet the demands of most ISPs receiving your email, significantly increase the likelihood that your email will be blocked, and make it much more difficult to get your email unblocked.
"But all the email addresses are 'double opt-in'!" is a common protest when we bring up this point. Well, yes... maybe at some time they double opted-in for something. But, they never opted-in to anything for you! Permission in marketing is non-transferable.
For that reason, ExactTarget is a permission-based ESP. All ExactTarget clients sign an agreement agreeing that the lists they provide are permission-based and are not permitted to send to opt-out lists using our system.
4) Opt-out append leaves a negative impression with some recipients.
I have yet to find a way to measure the financial impact of the negative impression that is left in the minds of unwilling recipients of appended emails, but there is no question that there is a dark side. Forrester provides excellent insights based on a survey they conducted in August 2004. "Nearly 50% of likely email subscribers wouldn't mind and would read appended emails from a cataloger. However, appended email blatantly offends between 25% to 39% of consumers, depending on the type of business sending it. And it has hidden risks. About 20% of consumers say that even though they read appended emails, they find them annoying. Another 12% say that although they don't unsubscribe, appended emails annoy them."
5) Results are spotty at best.
MarketingShepra's 2007 Email Marketing Benchmark Guide indicates that of marketers who have tried email appends, more than half said it either didn't work or it wasn't worth the effort.
Part II coming soon... email appends done right!
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