#19 - Email Revenue Decline (What Should I Do?)

Let’s face it, declines are never nice (except the occasional decline in waist size - those are great).

A drop in email revenue, whilst worrying, is often a symptom of a bigger problem - your acquisition channels.

It’s a problem we’ve been asked about periodically as well:
“I’ve changed nothing in my email strategies, I don’t understand what’s wrong”

Here’s what I typically see happen when I get questions like these.

1) Net Revenue Is Down - Less Purchasers

Assumptions (note these are impossible, but for the sake of demonstration):
- No other emails added apart from purchasers
- Subs stay engaged indefinitely

Scenario 1

• 50,000 engaged subs

• 5,000 monthly purchases

• 95% valid emails, 4,750 emails added to list monthly

By month 3, you have 14,250 more engaged subscribers you can send campaigns to.

vs

Scenario 2

• 50,000 engaged subs

• 3,000 monthly purchases

• 95% valid emails, 2,850 emails added to list monthly

By month 3, you have 8,550 engaged subscribers you can send campaigns to, a 40% drop.

Now assume that these campaigns convert at 1%, and you have an AOV of $75.
Scenario 1 - 14,250 × 0.01 × 75 = $10,687.5
Scenario 2 - 8,550 × 0.01 × 75 = $6,412.5

Again, you see a 40% drop in revenue per campaign, even if you didn’t change anything up in email.

And because net revenue is down, you…

2) Decrease Paid Spend - Less Traffic

You have overheads, suppliers to pay, employees to feed.

To maintain profitability, you decrease paid spend.

Less traffic hits your site, and less prospects get enticed by your pop-up to join your list (and convert later down the line).

Scenario 1

• 250,000 monthly visits

• 5% pop-up CVR

• 12,500 new emails collected

Scenario 2

• 150,000 monthly visits

• 5% pop-up CVR

• 7,500 new emails collected

I’ll skip the rest of the math because I’m sure you get the idea.

But because you want to increase email revenue, you increase your campaign sale frequency which leads to…

3) Your List Getting Tired of You

(just wanted to lighten the mood a little 😂)

But you can absolutely burn out your list by sending them 15 campaigns a week.

It’s unsustainable for a customer to purchase from you thrice a week perpetually (you’ll need to run a cohort analysis to understand what your repeat customer purchase rate is).

In extreme cases, your brand will lose its luster and credibility, customers will stop opening your emails, and your deliverability will start plummeting.

Which might lead to panic and you dropping your prices sitewide, thus…

4) Bringing In Lousy Customers

…who only buy on discounts.

And now to convert these lousy customers, you discount deeper and deeper, leading to more decreased profitability, and eventually, an unsustainable business.

Now, you may find this newsletter slightly bleaker than usual.

But something I’ve seen happen far too often (and hope never happens to you).

At the end of the day, email and paid acquisitions have their roles in the flywheel, and impact one another greatly.

Retention marketing should be viewed as a healthy way to generate additional revenue, and not a juicer to squeeze every last dollar out of your customers.

By doing so, you’ll build a sustainable DTC business that will weather even the toughest storms.

Have a great weekend ahead.

P.S. If you’re looking for a retention marketing partner to help you grow sustainably, look no further.

We sit at the top 0.02% of all agencies worldwide and have generated over $250M in attributable revenue for our clients worldwide :)

Just hit us up.