When You <i>Really</i> Lose Customers

They've changed e-mail addresses without telling you. But new services mean wayward clients aren't gone forever.
Magazine Contributor
5 min read

This story appears in the January 2002 issue of Entrepreneurs Start-Ups magazine. Subscribe »

By all accounts, you're a good web marketer. When shoppers visit your website, you ask them to register, and then you dutifully collect their e-mail addresses. You also regularly send out e-mail messages that serve to market your products, services and seasonal promotions. You've done such a good job managing your company's e-mail mailing list, in fact, that sales have improved and you even have your best customers segmented to receive special promotions just for them.

Then, suddenly and without warning, your formula for success breaks down. Instead of receiving orders from eager customers wanting to buy your wares, you're hit with a mountain of electronic messages that have bounced back from expired accounts. Before long, "Undeliverable. User is not recognized" messages fill your inbox. Now you're left wondering if you'll find those great customers ever again. What's going on?

As you've probably already guessed, your customers have moved on, changed jobs or their ISPs and neglected to let you know about it. It happens every day: A recent study by research firm NFO World Group found that on average, less than one-third of consumers notify regularly visited Web sites, online newsletters and discussion lists when they change their e-mail addresses. The study found that the most common reason for switching, as indicated by 55 percent of the respondents, was going with a new ISP. New jobs accounted for 25 percent of e-mail address changes. But it's not that customers don't want to keep up with these relationships; 36 percent of survey respondents explained there were just "too many people to update," and 17 percent said they thought the whole process would be "too time-consuming."

This is seriously bad news for e-mail marketers--especially because they don't have the convenient tools that help traditional direct marketers deal with changes of address. Catalog senders can always turn to the U.S. Postal Service's National Change of Address (NCOA) program to help them locate new addresses. For a modest fee, the NCOA will update a direct marketer's list whenever a U.S. resident files a change-of-address notice. But unfortunately, it's not as easy to update e-mail address changes.

According to Larry Chase, 48-year-old founder and publisher of Web Digest for Marketers, a weekly e-mail marketing newsletter in New York City, "E-mail addresses are sort of a moving target, because it's obviously a lot easier to abandon an e-mail address than a physical address." So what's a marketer to do?

On the Move

Luckily, there's a place entrepreneurs can go to solve this problem. Return Path Inc. (which funded the aforementioned study and recently merged with Veripost Inc.) offers an electronic change-of-address directory. The company compiles e-mail address changes directly from consumers who register at its Web site and then updates the various other companies that still might have the old e-mail addresses. The system not only simplifies the updating process for consumers, but also allows them to use the service to recall all the places where their e-mail addresses are registered.

The cost of the service depends on the size of your customer database and is essentially billed on a pay-for-performance basis. Sometimes there's a minimum setup fee of $500. Then, on a monthly basis, Return Path will bill the client for all updates delivered. An electronic change-of-address correction costs between 80 cents and $1 per correction. For most entrepreneurs, the cost will fall between $500 and $3,000 annually. And you should expect the service to correct about 10 percent of your total customer mailing list.

You can either work directly with Return Pathor through e-mail marketing companies like Bigfoot.com, Digital Impact, DoubleClick, Lyrisand Responsys. The main benefits of going through a partner are convenience and ease of effort when getting started. Prices vary slightly depending on which vendor you use.

Many business owners swear by these services. "It allows us to keep up with our customers and market to them better," says Eran Weis, 36-year-old founder and CEO of Moving.com, a New York City relocation Web site launched in 1999. His e-business, which uses Return Path's electronic change-of-address service, offers an assortment of tools, guides and services designed to simplify the moving process for customers. In 2001, sales exceeded $1 million.

Anand Singh, director of corporate development at Moving.com, says the company sends out 6,000 e-mails each day to customers; they include everything from thank-you notes and follow-up messages to company newsletters. According to Singh, about 5 to 10 percent of them bounce back. Now that they use Return Path, Moving.com can update about 31 e-mail addresses per week.

Of course, you don't necessarily have to pay someone else to provide change-of-address services; you could put a "change-of-address" page on your Web site. But that means you're relying 100 percent on customers to notify you of e-mail address changes--and let's face it, how often is that going to happen?

Another approach is suggested by Chase. "If I had a mailing list of customers and was losing customers' e-mail addresses at an alarming rate," he says, "I would compile a list of lost e-mail addresses and then prepare a [snail-mail] piece that I can mail out to these customers in a timely fashion that says something like, 'You've changed your e-mail address; we'd like to get it back.'"

Sometimes, it seems, the tried-and-true traditional methods--such as good old direct mail--still work best at getting results.

Melissa Campanelli is a marketing and technology writer in Brooklyn, New York.


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