B2B EMAIL MARKETING

EFFECTIVENESS
BENCHMARKS, INSIGHTS, & ADVICE
TABLE OF CONTENTS

3 Introduction 16 Email List Maintenance

4 Executive Summary 18 Email Reputation

5 Research Methodology 20 Analyst Bottom Line

6 Email Marketing Landscape 21 Acknowledgements

9 Email Performance 22 About Demand Metric

11 The Email Marketing Minefield

INTRODUCTION
Research conducted earlier this year by Demand Metric confirmed that email is still the most favored marketing channel for
businesses. Even with the growing popularity of social media, email remains at the top of the heap. Does email remain popular,
however, because it continues to work or just because it’s familiar? This Demand Metric study was commissioned to understand
email effectiveness in B2B environments and measure the impact of forces working against it.

This report details results from the Demand Metric study on B2B email marketing effectiveness, whose goal was to understand how
effective email is as a marketing channel, specifically to understand the impact of each of these factors known to negatively impact
email marketing effectiveness:

!  Catch-all email addresses. These are addresses set up on a mail server to catch email sent to any address at that domain,
whether the address is actually associated with a real person or not. The purpose of a catch-all address is to prevent email from
being rejected as undeliverable when it’s not addressed to a known user. The problem for marketers is that it appears a
message was delivered, when in fact it sits in a catch-all inbox which is rarely, if ever, checked by a human.

!  Expired or invalid email addresses. Quite simply, these are emails that may have once been valid, but are no longer, often due to
employee retirement or departure.

!  High-risk email addresses. These are email addresses of individuals who have previously opted-out of other email campaigns,
not necessarily yours, or they have reported email as spam. Including these individuals in your email database poses risk for
your email marketing effectiveness.

Thank you to all those who participated in the survey. We really appreciate your input!

Jerry Rackley, Chief Analyst

Demand Metric
EXECUTIVE SUMMARY
 A survey was used to collect the data for this study, and its analysis provides these key findings:
 
!  Email is a dominant marketing channel, with 91 percent of this survey’s participants reporting that they use it to some degree.
However, only 28 percent of survey respondents report that their email marketing or lead generation efforts are becoming
more effective.

!  A majority of this study’s participants (61 percent) reported average email open rates of below 15 percent. By comparison,
the Silverpop report, “2013 Email Marketing Benchmark Study: An Analysis of Messages Sent Q1-Q2 2012,” shows a 2012
average email open rate of 19.7 percent.

!  Participants from different industries reported significant variation of open rates, with Financial Services doing the worst (71
percent reporting an open rate of 15 percent or less) and Manufacturing doing the best (54 percent reporting an open rate of
15 percent or less).

!  Ignorance abounds with respect to understanding of the impact of catch-all, invalid and high-risk email addresses. Thirty six
percent of respondents don’t know how catch-all addresses are impacting them. Seventeen percent don’t know the
percentage of invalid email addresses in their database, and 44 percent don’t know the percentage of high-risk emails
addresses that are in their databases.

!  A majority of marketers (62 percent) in this study do not know what their digital reputation is as an email sender, as measured
by Sender Score (www.senderscore.org). Of those who claim to know, they have a dramatically inflated view of it, with merely
three percent reporting a Sender Score of 70 or lower, compared to a recent Sender Score rolling average of 38.3. This is
despite the fact that it takes only minutes to obtain a Sender Score online, and it is free.

This report details the results and insights from the analysis of the study data.
RESEARCH METHODOLOGY
The Demand Metric B2B Email Marketing Effectiveness Survey was administered online over a period of July 5th through July 16th,
2013. During this period, over 530 responses were collected, 478 of which were complete and not duplicates and were therefore
included in the analysis.

All members of the Demand Metric community received email invitations to participate in the survey, and participation was
encouraged through a random draw incentive for an iPad Mini. While respondent email addresses were collected in order to
facilitate the prize drawing, no identifying information was considered in the analysis of the survey data.

Summarized below is the basic information that was collected about survey respondents to enable filtering and analysis of data:
 

Number of Employees: Type of Organization:

!  Zero to 25 (48%) !  B2B (64%)

!  26 to 100 (13%) !  Both B2B and B2C (30%)
!  101 to 250 (12%) !  B2C (6%)
!  251 to 1,000 (11%)
!  1,001 to 10,000 (12%)
!  Over 10,000 (4%)
 

5
EMAIL MARKETING LANDSCAPE

A recent Demand Metric study identified email as the

Email use for Marketing or Lead Generation top marketing channel for the organizations surveyed.

This B2B email study took a slightly different approach

in trying to understand the email marketing landscape
Constantly use 23% with the question:

“Which of the following statements best describes

your use of bulk email solicitation (e.g. email ‘blasts’)
Regularly use 42% as a marketing or lead generation tool?”

Most organizations – 91 percent in

Rarely use 26% this survey – continue to market
using email.
Of those that don’t use email for marketing or lead
Do not use 9% generation, they are primarily small companies, 12
percent of which reported not using it, compared to
only three percent of large companies.!
0% 10% 20% 30% 40% 50%
!

6
EMAIL MARKETING LANDSCAPE - EFFECTIVENESS

This understanding of email usage begs a more important

Email Marketing or Lead Generation question: how well is it working? To find out, the survey
Effectiveness asked:
50%
“Which of the following statements best describes the
45% effectiveness of your email marketing or lead generation
47% efforts?”
40%

35% An almost equal number of survey respondents feel that

email effectiveness is declining as improving, with the largest
30% group reporting that it is “holding steady”. Reviewing this
25% effectiveness data by company size reveals that there is no
relationship between how effective email is and the size of
20% the company using it for marketing or lead generation. In
22% other words, company size does not influence the perception
15% 19% of how well – or how poorly – email is performing.
10%
The relationship that does exist is a linear one between
5% effectiveness and use: the more a company reported that it
0%
6% 6% uses email for marketing or lead generation, the more likely it
Declining Declining Holding Improving Improving is to also report that it is effective.
significantly slightly steady slightly significantly
EMAIL MARKETING LANDSCAPE – SYSTEMS

Bulk Email Systems in Use

The email landscape with respect to the systems
120
in use to send bulk email is diverse:
107
110
100
96 96
90 Internal, server-based solutions
80
70
lead the way, followed by a
60 combination of marketing
45 44
50 automation, CRM and dedicated
40
29 email marketing systems.
30 22 18
20 15
7 6 6 5 5 3 3 3
10 Finally, company size is related to the number of
0 addresses in a company’s email database. Not
surprisingly, smaller companies maintain and use
smaller databases, and larger companies have
larger ones.

8
EMAIL PERFORMANCE – OPEN RATES
There are a number of indicators that help email marketers
understand how any given email has performed.
Email Open Rate
Silverpop, in its “2013 Email Marketing Benchmark
Study: An Analysis of Messages Sent Q1-Q2 2012,”
More than 25% 12% reported that the average open rate in 2012 was 19.7
percent, with top performing companies enjoying an open
rate almost twice the average. In this study, the
21 to 25% 12% participants’ view is far more pessimistic:

16 to 20% 15% 61 percent of companies are reporting

open rates well below this average.
11 to 15% 21%
Open rates vary by industry. For the top six industries in
this study, the open rates were reported as follows:
6 to 10% 23%
!  Financial Services – 71%
!  Education – 70%
5% or less 17% !  Software/Tech – 66%
!  Professional Services – 58%
0% 5% 10% 15% 20% 25% !  Media & Publishing – 58%
!  Manufacturing – 54%

9
EMAIL PERFORMANCE – CLICK THROUGH RATES
Most promotional or commercial bulk email messages
include a call to action in the form of a link. Clicking on the
Email Click Through Rate link represents a level of qualification and interest in the
40% offer, so the click-through rate (CTR) is a key measure of
performance for email marketing.
35%
35% The previously referenced Silverpop study reported a
30% worldwide, mean CTR of 3.6 percent, which coincides with
the largest reported CTR segment in this study.
25%
Email open and click-through rates are relatively easy to
20% 22% measure. Most of the email marketing solutions and
virtually all of the marketing automation systems provide
15% this data to users. Ideally, users of these systems monitor
16% these metrics and perform analysis to determine why email
10% campaigns perform well (or don’t), taking what they learn
11%
9% and constantly tuning the parameters of their email
5% 7% campaigns to achieve better performance.

0% These are best practices when it comes to email marketing,

Less 3 to 5% 6 to 8% 9 to 11% 12 to 14% 15% or however, to achieve top performance, there are other
than 3% more factors to consider: the impact of “catch-all”, invalid and
high-risk email addresses in the email database.
!
10
THE EMAIL MARKETING MINEFIELD
For an email to reach its intended recipient, it must successfully negotiate a number of hazards. The most obvious is the now
ubiquitous spam filter. Many marketers perceive that the spam filter or blocker is the only significant barrier to greater email
marketing success. It is true that this is a barrier, and one that is fairly well understood. Most marketers understand and follow best
practices to ensure their emails have the greatest chance to pass through spam filters.

Far less obvious but no less impactful are other barriers to email marketing success.
Unbeknownst to many marketers, there is an unseen “minefield” that messages must
traverse to successfully reach recipients. A goal of this study was to measure how
aware marketers are of these hidden hazards to email marketing.

The first of these are “catch-all” email addresses. These addresses are set up to catch incoming email and filter spam – they are
not necessarily associated with a real person. An example of such an email address is the commonly used “info@domain.com”.
These addresses are configured to accept all email not addressed to a valid email address at that domain. It will therefore appear
as if an email was successfully sent, so it prevents undeliverable or unknown user errors. However, assuming that all messages that
end up in the catch-all inbox are reviewed and properly distributed is naïve. Quite often, a real person never sees these emails.
This study asked participants to report the percentage of email addresses in their email lists or databases that are associated with a
real person, and not a catch-all email address.

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MINEFIELD – “REAL” EMAIL ADDRESSES
These results indicate there is unwarranted optimism about
the percentage of email addresses in the database that are
Perceived Percentage of "Real" Email associated with a real person. The goal of an email send is
Addresses in the Database to first achieve inbox placement, then of course to have
opens and clicks. ReturnPath, in its Email Intelligence Report
Q3 2012, reports that:
95%+ 34%
!  North America saw inbox placement rates decline by 3% to
90 to 94% 21% 82% in Q3 2012, compared to the same period in 2011.
!  Europe experienced a 5% decline with inbox placement
85 to 89% 15% rates dropping to 84%.
!  Latin America suffered an 11% drop to 69%, the largest
80 to 84% 9% regional decline.
75 to 79% 4%  
Research from study sponsor Social123 reveals that 35% of
70 to 74% 3% all email servers accept any email address to its domain,
meaning that marketers that send email to addresses not
< 70% 3% associated with someone have no way of knowing those
messages did not reach the intended recipient. Worse, the
Don't Know 11% presence of those messages in a catch-all inbox increases
the sender’s exposure to having its messages flagged or
0% 10% 20% 30% 40%
reported as spam, because it is perceived as a sender that is
careless about list maintenance.

12
MINEFIELD – “CATCH-ALL” EMAIL ADDRESSES

The study survey asked participants to rate how the

Impact of Catch-All Email Addresses existence of catch-all email addresses negatively impact the
effectiveness of email marketing or lead generation efforts.
40%
Once again, these results seem to reflect some naiveté
35%
36% about the impact of catch-all email addresses, with just
30% under one-third of study participants reporting “minor” or
“no impact” on their email marketing and lead generation
25% effectiveness.

20%

15%
The fact that over one-third do not know
17% 16% is even more telling: it is highly likely
10% 12% 11% that marketers that do not know are
5% 8% being negatively impacted by catch-all
0% email addresses.
Don't Minor Moderate No impact Significant Severe
know impact impact impact impact

13
MINEFIELD – INVALID EMAIL ADDRESSES
Catch-all email addresses are just one reason why inbox
placement rates are declining. Another is simply the
expiration of email addresses that were once valid. This
Percentage of Invalid Email Addresses in occurs for many reasons: recipients for whom senders
the Database once had valid email addresses change jobs, retire or
30% move on for other reasons. This study asked participants
to report the percentage of email addresses in their lists
25% 28% that become invalid for any reason over the course of a
year.
25%
20%
With these results, the optimism about invalid email
15% addresses is completely out of alignment with reality.
17% 16% Hubspot has researched the problem of invalid email
10% addresses and reports that on average, approximately 25
percent of email addresses in a database become invalid
10% during the course of a year.
5% 3%
1%
0% Comparing that benchmark with these results reveals that
Don't More 21 to 16 to 11 to 15% 6 to 10% 5% or there is a major gap between perception and reality, with
know than 25% 20% less only four percent of participants reporting that 21 percent or
25% more of the addresses in their email lists or databases
becoming invalid. Compounding this problem – and the
ability to detect it – is the prevalence of the previously
discussed catch-all email address.
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MINEFIELD – HIGH-RISK EMAIL ADDRESSES
The final hazard in the email marketing minefield this study
considered was high-risk email addresses. These are addressed
associated with a person who has previously opted-out of other
email campaigns, or has reported email as spam. Marketers might
Percentage of High Risk Email Addresses in
view such individuals as crusaders who are out to rid the world of
Database
spam by aggressively reporting senders. This occurs even when
45% some recipients have previously opted-in to email communications
40% 44% and their tolerance threshold is exceeded, so they report a sender’s
35% email as spam. This hazard may represent the greatest danger of
37% the three this study considered. Participants were asked to indicate
30%
what percentage of email addresses in their lists have previously
25% opted-out of other email campaigns, or reported email as spam.
20%
15% This result should cause alarm for email marketers, particularly the
10% 44 percent who report not knowing how many emails in their
3% 4% 11% database are high-risk. This ignorance is the functional equivalent
5%
1% 0% of walking through a minefield without a map of where the mines
0% are. These high-risk email addresses belong to individuals who are
Don't More 21 to 16 to 11 to 6 to 5% or known to report senders. Including them in the email database
know than 25% 20% 15% 10% less exposes senders to much higher incidences of being blocked or
25% reported. Marketers must understand that failing to identify these
email addresses and remove them can lead to significantly lower
inbox placement for their campaigns. Once the damage is done, it
is difficult to reverse.

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EMAIL LIST MAINTENANCE

Email List Maintenance Practices in Use

If there is good news about the hazards explored in this
study, it is that they are avoidable. The key to avoidance is
26% maintenance of the email list or database, coupled with the
21% use of third-party services to validate addresses in the
database. This study examined which email list maintenance
88% practices were in use by participants.

77% While it seems risky, it is perhaps no

surprise that 100 percent of
76% organizations are not honoring opt-out
requests.

Failure to do this exposes the organization to risk, and

Honor Opt-outs negatively impacts the acceptance and performance of email
Remove Bounces marketing for everyone who does it.
Add new addresses organically
Purchase addresses

16
EMAIL LIST MAINTENANCE - EFFECTIVENESS
Of these list maintenance practices, the one that the
Impact of Validation Technology on Email study data points to that has the greatest impact on email
Performance marketing effectiveness is using software or technology
80% to validate email addresses, a strategy used by just 26
percent of this study’s participants. Comparing those
70%
survey respondents using such a solution to those who
are not reveals the apparent advantage.
60% 67%  
62%
50% These results point to greater overall
40%
51% effectiveness, open and click through
43% rates when some sort of software or
30% 37%
technology is in use in an attempt to
20% 28%
validate email addresses.
10%
Using these results, it becomes a much simpler exercise
0% to cost-justify a validation solution: simply multiply the
Effectiveness Open Rate > 10% CTR > 5% value of an open or click through by the increased
increasing
number of either to calculate the benefit.
Using Validation Technology Not using

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EMAIL REPUTATION
Every company that uses email to market has a reputation.

This reputation exists in at least two forms, the collective recipients’ perception of the
sender, and a digital reputation that is a compilation of reports and data collected and
used by mailbox providers to determine how trustworthy a sender’s email is.

Sender Score (https://www.senderscore.org/) is a digital reputation indicator. Conceptually similar to a credit score, a Sender Score is
a trustworthiness indicator for email sources. Using data aggregated from 60 million mailboxes at a variety of ISPs, spam filtering, and
security companies, Sender Score derives a numerical rating of a sender’s reputation. This rating is based on the type of data that
mailbox providers use to determine when to accept or reject email. On a scale from zero to 100, the higher a sender’s Sender Score,
the better inbox placement it is likely to enjoy.

18
EMAIL REPUTATION – SENDER SCORE
This study asked participants to report their Sender Score.

Reported Sender Score Survey participants who did report a Sender Score had a
dramatically inflated view of it. According to representatives
of Sender Score interviewed as part of this study, the average
95 or higher 13% Sender Score for the seven day period leading up to July 18,
2013, was 38.3, and the median Sender Score was 16. In this
90 to 94 8% study, of those survey respondents who reported a score,
only three percent indicated it was less than 70. This is a
85 to 89 7% substantial disparity between perception and reality. To
provide some context for these scores, having a Sender
80 to 84 3% Score of 90 or above is considered very good – inbox
placement rates are correspondingly high as well. Scores
75 to 79 3%
that fall in a range between 50 and 80 indicate a need for
70 to 74 1% improvement, without which a portion of the sender’s emails
will get blocked at the incoming gateway. Scores less than
Less than 70 3% 50 indicate the sender is perceived as a spammer.

Don't know 62% The largest single response category for Sender Score was “I
don’t know”, an admission of ignorance that is certainly
0% 20% 40% 60% costing email marketers who are not attempting to objectively
determine their email reputation, and more importantly, do
something about it.

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ANALYST BOTTOM LINE
While most email marketers are paying attention to some important things such as honoring opt-outs and removing bounced email
addresses, many of them are either ignorant of or simply choosing not to manage some other significant inhibitors to email marketing
effectiveness: catch-all, invalid and high-risk email addresses. This study clearly shows that marketers are chronically underestimating
the impact that these inaccuracies in their databases have on their results.

If the popularity of email as a marketing channel persists, marketers need to do more to at least maintain its effectiveness, if not
improve it. To use a metaphor, email is a vehicle that we rely on to take us places we need to go. For it to run well over the long
term, it needs regular maintenance, but many marketers are neglecting to perform it, which will ultimately leads to worse performance
and eventual abandonment – or perhaps forcing a trade in for a newer, better marketing vehicle (if one exists).

An effective email maintenance program certainly consists of the basics: having a real opt-out mechanism that is honored, removing
bounced email addresses and populating the database with new addresses. While these measures are important and should be part
of every marketer’s email database maintenance regime, they are not sufficient.

There is a minefield of hidden hazards that email must negotiate to arrive at the intended inbox. Third party software or service
providers exist that can help marketers identify and manage catch-all, invalid and high-risk email addresses that lurk in their
databases. Those who use these email address validation services are experiencing greater success, open and click through rates.
Using these study results as a benchmark, creating the business case for using these solutions should not be difficult.

The bottom line for marketers when it comes to email marketing is to know thy recipient. To have the greatest success with email
marketing, marketers must know that the messages they send are going to a real person, whose email address has not become
invalid and who is not a threat to report the sender’s messages as spam. To achieve this level of assurance requires process
discipline combined with a validation technology assist. The marketers that adhere to these practices will enjoy long-term
effectiveness of the email marketing channel. Those that don’t will scratch their heads and wonder why email doesn’t work as well as
it used to.
ACKNOWLEDGEMENTS
Demand Metric is grateful for those members of the Demand Metric community that took the time to provide their input to this study.

Demand Metric thanks this study’s sponsor, Social123. Social123 harnesses the power of Social Media to provide Socially Enabled
Data to Customers of every size in every industry. Its powerful suite of solutions includes email validation services to help senders
understand the deliverability of the contact’s email addresses. It provides a valid, invalid, catch-all and unsure status based on the
unique circumstances of the email addresses.

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ABOUT DEMAND METRIC BENCHMARKING
Demand Metric is a marketing advisory firm serving a membership community of over 33,000 marketing professionals and
consultants in 75 countries with consulting methodologies, advisory services, and a library of 500+ premium marketing tools and
templates.
 
Demand Metric is conducting benchmarking research to provide metrics and data on key marketing initiatives, strategies and
execution. Members can use this data to benchmark their performance against their peers and get an objective view of their
organization's maturity with regard to specific marketing disciplines and competencies.

If you’d like to work with us to conduct or sponsor a custom research study, email us info@demandmetric.com

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www.demandmetric.com

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© 2013 Demand Metric Research Corporation. Metric
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Reserved. Corporation. All Rights Reserved.!