Economics of cold emailing

 

La economía del correo electrónico frío

 

Stevens Reyes-Simpe*

Daria Kubantseva*

                  

ABSTRACT

This study provides a mathematical model that analyze the factors that determines response rates in bulk cold emails. To test the model, we conducted an empirical analysis based on data from our experiment that included 5,187 cold emails, having an average response rate of 15%. Three key determinants were found: email length combined with the sender's presentation timing, personalization for non-patient buyers, and the time between each product’s features presentation. Specifically, the findings claim that an email under 150 words with a timing introduction of the sender (up to 3 seconds after the start) increases the response rate from 17% to 44%. Personalization, defined as name, company, and location, for non-patient buyers increases the rate to 58%. In contrast, response rate decreases by 17% each increment of 1 second on the average time taken between presenting each product’s features. Unexpectedly, some variables like price discrimination turned out to not have statistical significance on response rates.

 

Keywords: Cold emails, email lengthiness, personalization, sales strategy

 

RESUMEN

Este estudio proporciona un modelo matemático que analiza los factores que determinan las tasas de respuesta en los correos electrónicos masivos no solicitados. Para probar el modelo, realizamos un análisis empírico basado en datos de nuestro experimento, que incluyó 5187 correos electrónicos no solicitados, con una tasa de respuesta promedio del 15 %. Se identificaron tres factores determinantes: la longitud del correo electrónico combinada con el momento en que se presenta el remitente, la personalización para compradores que no son pacientes y el tiempo transcurrido entre la presentación de las características de cada producto. En concreto, los resultados indican que un correo electrónico de menos de 150 palabras con una presentación del remitente en el momento adecuado (hasta 3 segundos después del inicio) aumenta la tasa de respuesta del 17 % al 44 %. La personalización, definida como el nombre, la empresa y la ubicación, para los compradores que no son pacientes aumenta la tasa al 58 %. Por el contrario, la tasa de respuesta disminuye un 17 % por cada segundo adicional en el tiempo medio transcurrido entre la presentación de las características de cada producto. Inesperadamente, algunas variables como la discriminación de precios resultaron no tener significación estadística en las tasas de respuesta.

 

Palabras clave: Correos electrónicos en frío, longitud de los correos electrónicos, personalización, estrategia de ventas

 

INTRODUCTION

Emailing is one of the most important channels to acquire potential buyers. Aufreiter et al. (2014) stated in 2014 that email channel will keep being useful since it serves as a primary and effective mean of communication between sales representatives and potential customers, which can be observed nowadays, due to salespeople dedicate approximately 21% of their working hours to the task of just writing and sending emails (Suresh, 2023).  In addition, some marketing studies strongly suggest that 80% of buyers keep indicating their preference for being contacted through cold emails, which makes sense in the big picture when comparing a leading 43% of salespeople that rate it as their most effective sales channel (Suresh, 2023). However, aside the potential suggested, cold emailing faces significant challenges when it comes to response rates. Gartner (2019) found that only 23.9% of cold emails are opened, with just an 8.5% of recipients eventually replying to the messages (Dean, 2019).

These data suggest a gap between the perceived effectiveness of cold emailing as a sales channel and its per-email performance. This gap is largely driven by the many variables that influence the success rate of cold emails, including factors such as personalization, subject lines, and list segmentation, specifically, research suggests that personalization increase the response rate of cold emails up to 32.7% compared to non-personalized emails (Dean, 2019). Moreover, subject lines that state a question have been shown to increase response rates by 21%, according to Keohane (2021). Similarly, Siewierska (2024) demonstrated that reducing the number of emails recipients in each email bulk by fivefold can lead to a 60% increase in average response rates. These researches suggest the need of following some techniques in order to have higher response rates, providing some sort of recipe behind the logic of cold emails.

However, the cold email field remains under-researched under an academic scope, as Tucker (2016) argued in the Harvard Business Review. Among the few researches that used experiments, we can find Le Plaisir (2024) experiment that suggests that a lack of personalization decrease the open rate from 62.2% to 17%, and reduce the response rate from 8.9% to 0.4%. The lack of substantial academic research into cold emailing should raise some concerns, since there is a lot of strategies suggested on the internet that can be detrimental to the optimization of cold emailing. For example, during the internship of one of the authors at a Chinese company, it was witnessed how some salesmen incorporated emojis into their cold emails, inspired by internet blogs mentioning the “science” behind using emojis to enhance response rates (Collis, 2020). However, instead of increasing the response rate, it provoked many serious buyers to reply negatively, complaining that the use of emojis was inappropriate in a business context.

In this research, we aim to address this gap by developing a mathematical model for cold emailing, built upon insights from both qualitative studies, specially of Rodrigues (2024) and Tucker (2016), and real data from an experiment conducted. This experiment involved sending 5,187 emails across 32 bulk emails, each with different characteristics. By analyzing the results, we aim to empirically test our model and provide evidence-based conclusions on how to improve cold email effectiveness.

 

MATERIALS AND METHODS

Incentives of sending bulk cold emails

A product  is standardly priced  subject to the stage  it faces at time , where , so at any  there is non-negative revenue. The price curve  satisfies  and , where at