Quarterly email benchmark reportQ3 2016 — July, August, September

A Cross-Channel Marketing email report

CONTENTS

Executive summary: Q3 2016 ....................................................................................................................1

Spotlight on: Rules for triggers ..................................................................................................................2

Q3 2016 benchmark volume ......................................................................................................................5

Performance analysis ................................................................................................................................6

Mobile trends ............................................................................................................................................10

Appendix: Metrics definitions ..................................................................................................................12

Quarterly benchmark report Q3 2016 (July, August, September) | 1

Executive summary: Q3 2016

The following report details overall email marketing trends for the third quarter of 2016, as well as the key performance indicators (KPIs) that shaped the year-over-year email program success for Cross-Channel Marketing clients.

Key trends:

• Email volume rose by 19.8% in Q3 2016 compared to Q3 2015. Though send volume increased, transaction rates, revenue per email, and average order values were similar to the rates seen in Q3 2015.

• Year-over-year total click rates have declined for the past 4 quarters. We found a negative correlation between the increase in clicks on mobile phones, and the decline in total click rates.

• Quarter-to-quarter volume had a modest 3.9% increase for Q3 compared to Q2 2016. Most metrics were similar to those seen in Q2, but revenue per email and average order values were somewhat lower. For example, luxury brands showed a drop in average orders from $539 in Q2 to $472 in Q3.

In this quarter’s Spotlight on section, we explore rules for triggers:

• Business rules for trigger emails such as abandon cart and browse campaigns often include suppression rules of 24 hours, 2 weeks, or even 30 days.

• The shorter, 24-hour period, allows more than one abandon cart email to be sent to the same email address if the customer abandons another cart even on the next day. Our study of abandon cart emails in July 2016 found that customers who received multiple abandon cart emails were 2.4 times more likely to complete a transaction than customers who received only one.

• Business rules for trigger emails should be driven by customer behavior, and brands should test reducing any suppressions to find the optimal cadence for these email programs.

Quarterly benchmark report Q3 2016 (July, August, September) | 2

Spotlight on: Rules for triggers

As the holiday season approaches, consumers will be stocking their online carts in the hunt for the perfect gifts. However, it is important that items actually make it from the cart to the gift box, and that’s where triggered campaigns can help. A recent analysis of abandon cart campaigns highlighted the importance of business rules in designing and deploying triggered messages. A retail brand came to us with a question as to why one set of the campaigns in their abandon cart program had higher transaction rates than the other. Both sets of campaigns were deployed within one hour of the cart being abandoned. A close look at the business rules for these campaigns revealed that the lower performing set of campaigns suppressed subscribers for 2 weeks after the first abandon cart message had been delivered, while the more successful campaigns had only a 24-hour suppression. Intrigued by this difference, we wanted to see if there were any subscribers that received additional abandon cart messages after the first 24 hours and if so, how they performed.

The business rulesIt is normal business practice to suppress duplicates in any email. It is also common to be concerned about sending too many emails to the same subscribers for fear of increasing unsubscribe rates, especially during the flurried activity of holiday shopping. With these concerns in mind, we found that some brands choose to suppress abandon cart and browse triggers for 2 weeks or even, in some cases, for 30 days.

Both sets of campaigns were deployed within one hour of the cart being abandoned. A close look at the business rules for these campaigns revealed that the lower performing set of campaigns suppressed subscribers for 2 weeks after the first abandon cart message had been delivered, while the more successful campaigns had only a 24-hour suppression. Intrigued by this difference, we wanted to see if there were any subscribers that received additional abandon cart messages after the first 24 hours and if so, how they performed.

Send another abandon cart email if

abandonment is beyond the suppression period

Send another abandon cart email if

abandonment is beyond the suppression period

Cartabandoned

Cartabandoned

Send 1st abandon cart

email

Send 1st abandon cart

email

2nd or more carts abandoned

2nd or more carts abandoned

Suppress if sent within

past 2 weeks

Suppress if sent within

past 24 hours

2 weeks or more

Just 24 hours

The flow for the more successful abandon cart campaign is the same, with the exception of the length of suppression

Quarterly benchmark report Q3 2016 (July, August, September) | 3

The customers

To analyze the impact of the shorter suppression rule, we expanded our analysis to include over half a million abandon cart emails sent from several brands in July, 2016. By counting campaigns sent at the email address level, and matching email addresses to specific transactions, we were able to identify differences in the performance of those customers who received multiple abandon cart emails compared to those that only received one. This study did not look at any follow-up campaigns in an abandon cart series, but instead only focused on the initial abandon response. 10% of the recipients of these abandon cart campaigns received more than one abandon cart email and generated 18% of the total transactions for these campaigns. Transaction rates per customer were used to compare the response of these multiple abandon cart recipients to those in the same campaigns that received only one abandon cart email.

In addition, these multi-abandoned cart recipients had a 43.4% higher rate of multiple transactions than those customers receiving only one email (9.9% of multi-email recipients had multiple transactions compared to 6.9% for those receiving only one email). To see if the higher transaction rates per customer occurred with other types of triggers, we also looked at browse email campaigns

1 abandon cart email

Tran

sact

ion

rate

per

cus

tom

er

Transaction rates more than doubled for thosereceiving multiple abandon cart emails

Source: Cross-Channel Marketing Multiple abandon cart emails

0%

1%

2%

3%

4%

5%

1.9%

4.6%

11.2%

1 browse email

Tran

sact

ion

rate

per

cus

tom

er

Although rates were lower, the pattern was the samefor those receiving multiple browse emails

Source: Cross-Channel Marketing Multiple browse emails

0.0%

0.1%

0.2%

0.3%

0.4%

0.5%

0.2%

0.5%

Quarterly benchmark report Q3 2016 (July, August, September) | 4

Discussion

The high rates of transactions per customer for those receiving multiple emails would appear to indicate that these customers are not bothered by receiving more than one abandon cart email. To the contrary, they seem to welcome it. This is not surprising if we consider that customers have initiated the contact with the brand, selected items, and then abandoned a cart before receiving each email. People abandon carts for many reasons: a phone call, a child’s needs, an appointment to make, a budget to check. In our study, 70% of people who received multiple abandon cart emails and then completed a purchase did so after receiving, on average, 2 abandon cart emails. These buyers are clearly willing to hear from the brand again, though brands must remember it’s necessary to test suppression lengths and optimal frequency to find the ideal cadence. While business rules are needed to maximize the deliverability and response of email campaigns, a case can be made that the rules for trigger campaigns, such as abandon cart and browse, should be driven first by the customer behavior. If we remove the word ’email’ from this discussion, and imagine a customer in a retail store, we can see how some suppression rules may be illogical. If a customer seeking that perfect present went to a store today, and left without purchasing, would you instruct the store personnel to ignore them the next day if they returned? Would you not try to sell them anything for the next two weeks?

Summary

An analysis of business rules for abandon cart emails has shown that some suppression rules (of 2 weeks or more) may be reducing the possible response to these trigger campaigns. In campaigns with only a 24-hour suppression, subscribers who received 2 or more abandon cart emails within 7 days had more than double the transaction rate per customer than those receiving only one email. This same pattern held for browse campaigns as well.

• As the holiday season ramps up, review the business rules for your trigger campaigns, and see if they are in line with the customers’ interactions with your brand

• Test reducing any suppressions to find the optimal cadence for delivering these trigger campaigns

If you would like more information on how Experian Marketing Services can help you optimize your trigger campaigns, please call 1 844 747 1667 or visit www.experian.com/marketingservices.

Quarterly benchmark report Q3 2016 (July, August, September) | 5

Q3 2016 benchmark volume

Year-over-year volume comparisonThe following benchmarks report the year-over-year (YOY) trends for Q3 2016 compared to Q3 2015. This quarter, email volume rose by 19.8% compared to the same quarter last year.

2.9%

37.5%

22.3%

16.3%

38.1%

6.2%

19.8%

Volume variance Q3 2016 versus Q3 2015, by industry

0%

5%

10%

15%

20%

25%

30%

35%

40%

All industryTravelPublishersMulti-channelretailers

Mediaand

entertainment

Consumerproducts

andservices

Businessproducts

andservices

• 73% of consumer products and services and 76% of multi-channel retail brands had YOY gains in volume in Q3.

• For the other verticals, only about half of the brands in each vertical had volume increases.

Volume variance, quarter-to-quarter

-0.2% -0.5%

27.7%

4.5%

-8.1%

3.9%

-5.5%

Volume variance Q3 2016 compared to Q2 2016,by industry

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

All industryTravelPublishersMulti-channelretailers

Mediaand

entertainment

Consumerproducts

andservices

Businessproducts

andservices

• Overall volume rose by a modest 3.9% in Q3 compared to Q2 2016.

• Within media and entertainment, gaming and media/broadcast brands had large volume increases.

Quarterly benchmark report Q3 2016 (July, August, September) | 6

Performance analysis

To enhance our understanding of performance by industry, we analyzed all Q3 metrics for 2016 versus 2015.

Positive change Minimal change Negative change

All industry: Q3 year-over-year performance analysis

All industry: Q3 2016 compared to Q2 2016 performance analysis

• Even as send volume increased, transaction rates were similar to the rates seen in Q3 2015.

• The declines in revenue per email and average order values were driven by lower average order values for luxury brands ($539 in Q2 compared to $472 in Q3).

Quarterly benchmark report Q3 2016 (July, August, September) | 7

Business products and services: Q3 YOY performance analysis

• While the Q3 2016 click rates rose for business products and services, only 50% of the brands had statistically significant increases in total and unique click rates.

Consumer products and services: Q3 YOY performance analysis

• For consumer products and services, open and transaction rates were higher than last year, despite a 37% increase in volume. Beauty and consumer financial brands led the volume increases.

• While overall click rates declined, 46% of brands had statistically significant year-over-year increases in both total and unique click rates, and 50% had significant increases in transaction rates and revenue per email.

Media and entertainment: Q3 YOY performance analysis

• Q3 YOY total open rates for media and entertainment brands matched those seen in Q3 2015.

• Click rates declined as volume increased. At the same time, the percentage of clicks occurring on mobile phones and tablets grew from 44% in 2015 to 54% in 2016.

Quarterly benchmark report Q3 2016 (July, August, September) | 8

Multi-channel retailers: Q3 YOY performance analysis

• While unique open and click rates were lower YOY for multi-channel retailers, the results were mixed, as 50% of brands had statistically significant increases in open and click rates.

Publishers: Q3 YOY performance analysis

• Year-over-year open and click rates rose for publishers, even as volume increased by over 38%. It will be interesting to see if these trends continue after the election season.

Travel: Q3 YOY performance analysis

• While click rates had YOY declines for travel, the results were mixed, as 42% of travel brands had significant increases in click rates.

• The percentage of clicks received on mobile phones and tablets rose from 42% in Q3 2015 to 50% in Q3 2016 for travel brands.

Quarterly benchmark report Q3 2016 (July, August, September) | 9

Methodology

Cross-Channel Marketing’s quarterly benchmarks are based on the analysis of major email marketing trends and key performance indicators across six major verticals: business products and services, consumer products and services, media and entertainment, multi-channel retailers, publishers, and travel. Data analyzed in these benchmark reports are from client brands within the United States and Canada that have opted to participate in the study. All metrics, including the historical benchmarks, reflect average performance 7 days after the emails were sent.

Trend to watch: Declines in click rates related to mobile use

All industry total click rates have declined year-over-year for each of the past four quarters. During this period, there has been a large increase in the percentage of clicks generated on mobile phones. We found a significant negative correlation between these two metrics (-92%). As mobile use continues to grow, brands must strive to ensure the clear visibility and ease of use of mobile calls-to-action.

-0.2% -0.1% 0.0% 0.1% 0.2% 0.3% 0.4% 0.5%

Q2:2015

Q3:2015

Q4:2015

Q1:2016

Q2:2016

Q3:2016

Total click rates have declined as the percent of clicks on mobile phones have increased

Source: Cross-Channel Marketing

Uni

que

open

rate

s

6.9%

27.5%

38.1%

34.4%

43.5%

8.5%

4.9%

-12.6%

-9.5%

-12.0%

-10.9%

5.7%

YOY change intotal click rate

YOY change in % of clicks on mobile phones

Quarterly benchmark report Q3 2016 (July, August, September) | 10

Mobile device trends

Email opens and clicks by platform (Q3 2016)

0%

20%

40%

60%

80%

100%

TravelPublishersMulti-channelretailers

Media andentertainment

Consumerproducts and services

Business productsand servicesAll industry

0%

20%

40%

60%

80%

100%

Source: Cross-Channel Marketing

Per

cent

of o

pens

Per

cent

of c

licks

Desktop Mobile Tablet

$0.08%

44%

43%

13% 16%

5%

51%

12%

45%

16%

51%

13%

30%

19%

36%

23%

79%

37% 39% 36%51%

41%

51%

41%

8%

87%

11%2%

45%

48%

7%

46%

45%

9%

38%

53%

9%

58%

29%

13%

50%

34%

16%

• 56% of total email opens occurred on mobile phones or tablets in Q3 2016, a 4% increase from 54% in Q3 2015.

• The majority of email opens and total clicks occurred on mobile phones or tablets for all industries except business products and services and publishers.

Quarterly benchmark report Q3 2016 (July, August, September) | 11

Email opens and clicks by platform (Q3 2016)

-40%

-20%

0%

20%

40%

60%

80%

100%

TravelPublishersMulti-channel

retailersMedia and

entertainmentConsumer products

and servicesBusiness products

and servicesAll industry

-40%

-20%

0%

20%

40%

60%

80%

100%

Source: Cross-Channel Marketing

Year

-ove

r-yea

r ope

n ch

ange

Year

-ove

r-yea

r clic

k ch

ange

-4.3%

-15.3%

6.7%

-29.9%-18.9% -16.1%

-1.9%-13.6%

13.1%

-11.11% -15.7% -21.3%

28.9%

-20.1%

2.3%

27.5%

-15.0%

63.7%

17.9% 15.9%

-12.7%

19.4%

8.6%

3.1%

-63.7%

3.9%

76.1%

1.1%

57.2%

22.4%

-24.4%

-6.5% -6.7%

45.9%

85.2%

-32.9%

12.3%25.0%

13.1%

-1.4%

74.5%

-39.3%

Desktop Mobile Tablet

• The large increase in the percentage of clicks received on mobile phones was led by consumer products and services, media and entertainment, multi-channel retailers, and travel brands.

Quarterly benchmark report Q3 2016 (July, August, September) | 12

Appendix: Metrics definitionsTotal opens: All opens recorded for the mailing including multiple opens by the same subscriber. Total open rates are (total opens/received).

Unique opens: The number of unique subscribers that have opened an HTML-formatted message. Unique open rates are (unique opens/received).

Total clicks: Every click on a tracked link, including multiple clicks by a given subscriber. Total click rates are (total clicks/received).

Unique clicks: The number of unique subscribers who have clicked on any link. Unique click rates are (unique clicks/received).

Click-to-open rates: Unique clicks as a percentage of unique opens (unique clicks/unique opens).

Transaction rates: Overall percentage of transactions as related to delivered messages (transactions/received). This metric only includes data for clients who have implemented Experian Marketing Services’ Track to Purchase functionality.

Transaction-to-click rates: Percentage of transactions compared to the number of unique clicks (transactions/unique clicks). This metric only includes data for clients who have implemented Experian Marketing Services’ Track to Purchase functionality.

Average order value: Average total amount for each transaction. This metric only includes data for clients who have implemented Experian Marketing Services’ Track to Purchase functionality.

Revenue per email delivered: Average amount earned for each delivered email (total order/received).

Bounce rates: The percentage of subscribers that did not receive a mailing because their email addresses hard bounced (bounce/sent).

Unsubscribe rates: The total percentage of subscribers lost as a result of users unsubscribing from the mailing (unique unsubscribers/received).

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November 2016

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