New Data on the Effects of Personalization in Email Marketing [Research Summary]
You’ve heard before that you should personalize your email marketing campaigns—and you probably even believe it is important. But this has largely been an intuition, not necessarily supported by high-quality research or data.
So, does the evidence support the claim that personalization results in better advertising?
This post summarizes results from a recent study conducted by researchers at Stanford University and published in Marketing Science. The study concludes that personalization significantly increases open rates, increases sales leads, and lowers unsubscription rates.
The researchers conducted a field experiment in collaboration with a large US company selling test preparation products. The experiment was conducted on an email marketing campaign aimed at acquiring new customers for their products. It used a sample size of over 60,000 potential client emails.
The researchers randomly assigned potential client emails to either an experimental group or a control group. The control group received emails in a typical email subject format used by the company: “Learn Financial Modeling from Industry Experts.” The names of the recipients were not mentioned in the subject line.
The experimental group received the same email, but with their name at the beginning of the email subject line: “Jack, Learn Financial Modeling from Industry Experts.”
There was a significant difference between the two groups in open rates, sales lead generation, and unsubscription rates.
Adding a name to the subject line resulted in
20% higher probability of opening the email
31% increase in sales leads
17% reduction in unsubscription rate
In real terms, the email campaign was opened by 458 more individuals and it generated 35 additional leads, which, for this company's products, had a value of $3,500.
To ensure that these results were robust, the researchers then replicated the experiment with two other organizations. One was MercadoLibre, the largest online marketplace in South America. Unlike the first company, MercadoLibre targeted mostly returning customers.
The researchers replicated findings in a sample size of over 1 million users of MercadoLibre, which suggests that email subject personalization is not only effective for customer acquisition campaigns but also for customer re-engagement campaigns.
Are These Findings New?
You might ask yourself, “didn’t we know that already?” Personalizing the subject line of an email marketing campaign isn’t exactly groundbreaking.
It’s true that there have been many calls for personalization in email marketing. And these have been supported by some previous research. For example, in 2016, Experian reported data that brands that included personalized subject lines had 27% higher click-through rates, and twice the transaction rate as brands that did not.
This was useful data, but it was not a perfect experiment. In “research speak”, it lacked some validity. It was not clear that there was equivalence between the groups before the treatment, so we are limited in the extent to which we can be confident that differences between the groups were in fact due to the personalization of the subject. There may have been some third factor that explained the difference in open rates that was not personalization.
This current research study is much stronger because it randomly assigned participants to groups. Random assignment can help ensure that groups are roughly equivalent to each other before an experiment. That means that we can be more confident any difference between the groups in open rate is really due to the personalization and not to other factors. Basically, this method is stronger and we can be more confident in the results.
Of course, in science, we want to look at the body of evidence as a whole, not just one study. These two pieces of research corroborate each other and they are particularly compelling taken together.
Implications for Marketers
The main takeaway for e-mail marketers: personalization is important. You may have known that already; now you have the data to prove it.
One effective way to personalize your email marketing is by using first names in subject lines. Here are some other tips for email marketing personalization.
Sahni, N. S., Wheeler, S. C., & Chintagunta, P. (2018). Personalization in email marketing: The role of noninformative advertising content. Marketing Science, 37(2), 236–258. doi:10.1287/mksc.2017.1066
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