Thirty-one percent of Americans change e-mail addresses each year, in part to evade spammers, according to a new study -- and it's costing legitimate businesses millions in potential sales.
A survey on e-mail churn found that merchants lose half of their online relationships with customers when those customers change e-mail addresses when they change jobs, switch ISPs or when their inboxes become too stuffed with spam.
Commissioned by dot-name domain owner Global Name Registry and e-mail change-of-address service Return Path, and conducted by research firm NFO WorldGroup, the survey got responses from 1,015 people. Recently, 87 percent of the total respondents have changed a personal e-mail address and 35 percent have changed a work address.
At least 16 percent said they switched specifically to shake spammers, who have become much more aggressive in their tactics -- not to mention more offensive in subject matter.
But while spammers cause headaches for e-mail users, the high turnover of addresses stands to hurt legitimate businesses, especially in cases where consumers have volunteered their addresses to merchants. NFO WorldGroup found that 22 percent of people who change their address don't bother to notify websites of the change.
"It's too much of a hassle to update their personal information with the sites," said Margaret Bustell, marketing manager for NFO WorldGroup. "They look at it and think if they have to go through this process with 20 websites, it's too much trouble. Whereas with contacting 20 friends, that's a different thing."
This means marketers potentially lose one-third of their database every year. Because e-marketers typically spend between $5 and $57 per customer, the loss could range from $1.1 million to $12.8 million for a company with 1 million customers.
"Hard bounces," or e-mail returned to the sender as undeliverable, are a high-cost problem.
Return Path estimates e-mail churn cost businesses between $3 billion and $4 billion in 2000 due to lost sales, wasted e-mail acquisition marketing and unnecessary e-mail delivery costs. It's an expense Return Path predicts will grow from $10 billion to $20 billion in five years.
For Register.com, which sells domain space and addresses, hard bounces account for just under 10 percent of its mass mailings, but with a large existing customer base, it adds up.
"The real loss is the opportunity cost, the loss of foregone revenue and foregone renewals," said David Hirschler, vice president of marketing for Register.com. "We're a subscription-driven business. The health of our business is predicated on renewals, cross-sell and upsell. If you can't reach a significant portion of your audience, you can't cross-sell and upsell."
To reach customers whose e-mail addresses are no longer valid, Register.com has to contact them using the telephone and direct mail.
The company expects these sorts of changes, especially with customers who sign up for a two-year domain name and move on when the two years are up.
"It's not always top-of-mind for people to keep in touch when they change addresses, so it's up to us, because we owe it to them as customers to keep in touch. So, it forces a lot of diligence on us," said Hirschler.
