Feb 9, 2016

Inactive Subscribers are Still Valuable Customers

You love your engaged customers. They read your emails, click your links, and buy your products. With customers like this, it’s clear you’re doing something right. Nice work.

But what about those other people? You know, the ones who don’t even open your emails? They signed up for your list, but you’re not really sure if they care. Why are they still subscribed? Should you remove them from your list? What’s the deal with inactive subscribers?

Believe it or not, there’s more to the story than just opens and clicks. Your inactive subscribers might not be actively engaging with your email, but that doesn’t necessarily mean that they haven’t noticed your message or skimmed through your subject lines. Even without a single email being opened, your brand can still make billboard-like impressions on subscribers from the inbox.

In order to understand the true value of an inactive subscriber, you have to analyze revenue. So, that’s what we did. Luckily for us, MailChimp sends email on behalf of hundreds of thousands of retailers and merchants worldwide, so there’s no shortage of purchase data to sift through.

After crunching all the numbers, we’ve got some great news—it turns out that 1 inactive subscriber is worth 32% of an active subscriber. That’s a lot of revenue! We also learned that inactive subscribers purchase more frequently and are less likely to churn than customers who aren’t subscribed to your email list. This isn’t what we and a lot of other folks have said over the years, so allow us to explain a little more.

Learning from 6.6 billion sends

That’s what we analyzed, and those sends included 60 million e-commerce purchases and 40 million email addresses from retailers that use our e-commerce features for list segmentation and automation. We considered an email address "active" if it had opened or clicked in the previous 6 months. If an address had been sent campaigns but not opened any of them, we considered it "inactive." On average, 61% of retailers’ recipients in 2015 were active.

We then determined if each purchase from these retailers had been made by an active, inactive, or non-subscribed customer. We wanted to know how each customer type would differ on key retail metrics, so we focused on calculating the average purchase frequency, retention rate, and order value.

As it turns out, both active and inactive subscribers outperform non-subscribed customers in every way. Subscribers order at least 25% more frequently, and when they do, they spend at least 6% more than non-subscribers. Most importantly, they are much more likely to return. Inactive subscribers are 26% more likely to make a follow-up purchase than non-subscribers, and active subscribers were actually 38% more likely to come back.

Customer behavior by activity level

At a higher level, it’s important to note how much revenue comes from each type of customer. On average in 2015, 56% of revenue came from customers who were not subscribed before ordering, 37% came from active subscribers, and 7% came from inactive subscribers. If we only consider revenue from subscribers, 84% came from active subscribers and 16% came from inactive subscribers. Overall, an average of 45% of a retailers’ revenue comes from individuals who were subscribed.

Revenue breakdown by customer engagement level

As we noted earlier, 61% of recent recipients are active, but it appears that they account for 84% of subscriber revenue. We can use the following calculation to compare the revenue per subscriber from the active and inactive segments of a list:

Inactive subscriber revenue ratio

When we average this value across retailers, we found that an inactive subscriber was worth 32% of an active subscriber. We performed a similar calculation and found that inactive subscribers are also 32% as likely to convert as active subscribers. These percentages line up because, as we showed earlier, inactive and active subscribers spend about the same amount on an order. Active subscribers end up being worth more because they churn a lot less and keep spending money.

So, how should you treat your inactives?

Good question. Inactive subscribers might not engage with your email, but they still generate a lot of revenue. After all, they churn less, buy more frequently, and spend more than non-subscribers. Here are a few recommendations:

There you have it—inactive subscribers can still be key contributors towards your bottom line. If you sell things for a living, it’s important to look beyond the open rate and pay closer attention to the purchase behavior of your customers. Fortunately, MailChimp makes it easy to track your purchase data, so you can act on it. Remember: it’s great if someone actively engages with your email campaigns, but it’s even more important that they actively engage with your store.