Email Marketing by the Numbers, How to Use the World’s Greatest Marketing Tool to Take Any Organization to the Next Level by Chris Baggott and Ali Sales
Recommendation
E-mail marketing, the electronic descendant of direct mail, has changed the way businesses communicate with customers. The problem is that many marketers misuse it. Enter Chris Baggott, who brings to the table years of experience both in marketing and with e-mail software. Writing with Ali Sales, he provides a solid presentation of the topic and plenty of real-world examples showing how companies have used industry-tested e-mail techniques to attract and retain clients. This guide includes input from other e-mail experts and users, offering readers a variety of helpful opinions and handy pointers for measuring the success of an e-mail campaign by looking at the numbers. getAbstract recommends this eminently practical, direct book to anyone looking to find more effective ways to influence buyers.
Take-Aways
- E-mail marketing is the electronic descendant of direct mail, but it offers a lot more benefits.
- To help your business gain visibility, treat your customers well, act human, let client relationships develop at a natural pace and admit your mistakes.
- People remain loyal to your company because they want your expertise.
- Use e-mail to retain customers and to build credibility, but not to acquire new clients.
- Segmentation allows you to customize marketing messages based on demographics, survey results and behavioral data.
- Database segmentation can increase current and future customer value.
- Message testing helps you determine how to elicit positive customer responses to your e-mail communications.
- It is an ongoing part of effective e-mail marketing, as the rules continually change.
- In all your e-mail campaigns, measure delivery rate, open rate, click-through rate, unsubscribe rate and the number of spam complaints.
- When customers make a purchase from your company’s Web site, they should automatically receive a thank-you note, a satisfaction survey or an invitation to a relevant event in their area.
Summary
Building Relationships
Most people want businesses to treat them as individuals, but mass marketing has eliminated many customized approaches. That’s unfortunate, since relationship marketing opens the door to stronger ties with customers, longer retention periods, more repeat business and a high rate of referrals. Customers now have more control over the ads and products they receive than they did in the past. The Internet allows them to make informed choices and better comparisons among products.
“The time has finally arrived when organizations are getting serious about marketing for what it does best: driving value.”
To gain consumers’ attention, marketers should push their companies to become more accessible. Treat your customers well, act human, let relationships develop at a natural pace and admit your mistakes. If a client wants to end the relationship, acknowledge that decision.
Create stronger relationships by being honest and forthright with your customers. This can be difficult in some cases. For example, you might not want to make a constructive suggestion or point out a weakness to a client for fear of offending that person. However, people are loyal to your business because they want your expertise. If you don’t offer it readily, they may lose confidence in your company and go elsewhere. When that happens, you lose the “Lifetime Value” (LTV) of those customers, which hurts your company’s profitability.
“Relationships are how you can increase the value of your customers and convert your prospects.”
Not all customers are equally profitable; some provide much higher margins than others. The challenge is to identify the most profitable clients, strengthen relationships with them and keep them coming back. You can do this via e-mail marketing, which has distinct benefits. It is “inexpensive, interactive and data-driven,” and useful to large and small firms alike. Because it transmits your communications instantly, it works well for “time-sensitive content” that may quickly become outdated. You can reach an extensive audience by e-mail and, since it is cheap, you can send more messages without incurring huge additional costs. Yet, in spite of its benefits, e-mail has also created problems. The biggest is the proliferation of unsolicited, irrelevant e-mails, or spam. Although this is an industry-wide problem, the challenge for marketers is to design more focused, high-quality messages that build relationships and increase the customers’ LTV.
Engaging the Customer
People who receive your marketing e-mails will often welcome them initially. But, over time, they may tend to disregard them. They become “disengaged.” Minimize this effect by monitoring response rates, which compare the number of e-mails delivered against the probability of receiving a positive response. When this rate begins to fall, use segmentation analysis to create a re-engagement strategy.
“Chances are, you lose money on every new customer.”
Your e-mail recipients will respond positively to your message if you design it well. Make it relevant to them. Ensure that it conforms to their “past behavior.” Did they react enthusiastically to similar content last week? What strategies have failed to engage them? Use this information to your advantage. Determine how often you should send e-mails for best results – this can vary, depending on the person and the segment. Be creative. Follow the formula that has succeeded in direct-mail marketing: Focus 40% on your audience, 40% on your offer and 20% on creativity.
“Branding is the most expensive aspect of marketing and the least measureable.”
To increase your probability of success in any e-mail campaign, ask these questions: Are you sending the message to the right audience? Did you target it correctly? Does it explain a distinct benefit? Is your e-mail a good length? Will the message incite the reader to action? Can you measure the results? Considering these factors helped one insurance company significantly increase its response and conversion rates for e-mails to its brokers. Its in-house staff implemented an e-mail program that allowed them to personalize and track messages containing premium information and rates. They gained the brokers’ attention by offering individualized sales tools and other incentives. This campaign increased the company’s return on investment (ROI) to $4,400 for every dollar spent and resulted in more than $5 million in new sales.
Credibility Marketing
Many people make the mistake of thinking they can use e-mail marketing to acquire clients. This doesn’t work. Instead, devise messages that increase customer retention. Consider e-mail your “credibility-marketing tool.”
“If good marketing isn’t easy, it doesn’t get done.”
First, get the e-mail addresses you need “to continue the relationship” with people who are already interested in your company. Employ permission marketing, that is, ensure that people consent to your messages. Maintain a “record of the date and time that you captured your subscribers’ opt-in.” On your firm’s Web site, obtain e-mail addresses through a client registration function, which should be visible on your landing page or home page. To entice people to register, offer a clear benefit. Do not ask too many questions or request unnecessary information, especially personal data. Once people register for more information, add their names to your company’s database. When you receive an address or another bit of individual data, you have achieved a form of “microconversion.”
“E-mail is so accessible and inexpensive it can be abused by both spammers and trustworthy organizations.”
Your online registration feature should leverage your marketing efforts in print, TV or radio. For instance, marketers working for a dry-cleaning business sent a postcard to local residents that encouraged them to visit the company’s Web site to activate a discount coupon. The Web site was customized for specific neighborhoods, and offered anyone who registered an opportunity to receive future promotions via e-mail. In another example, restaurant owners who had only about 100 client e-mail addresses wanted to expand their database. They created a promotion that offered a $10 discount to all patrons who provided their e-mail address or filled out a comment card in the restaurant. To increase the number of reservations, the restaurateurs advertised wine discounts, a Valentine’s Day dinner and other special events. Their efforts generated 10,000 e-mail addresses in 10 months and $58,000 in revenue. Their ROI was $4 for every $1 spent.
The Benefits of Segmenting
Segment your e-mailing database according to specific customer characteristics to make better marketing plans. Segmentation allows you to customize messages based on demographics, survey results and “behavioral data.” Behavior is the most critical of these factors, since it can determine a client’s monetary value over time. Gain information about a customer’s behavior by following the direct-mail marketing formula: Measure how recently the customer showed the desired response, how often he or she exhibited it, and how much money that person spent in a specific time frame. This is called the Recency, Frequency and Monetary value (RFM) model.
“One of the most glaring issues for e-mail marketers today is dwindling engagement.”
Use customer information to build your subscriber base, which is one of your most important assets. It should expand over time. If you lose clients, find new ones to replace them. Nurture your “best segment” with selective messages. The 80/20 rule, well-known in sales, says that “80% of your revenue will come from 20% of your customer base.” Group your customers in creative ways to “change the dynamics” of that rule. Find the customers who can help your business grow.
“Think of your subscriber base as an appreciating asset, like a bank or IRA account, instead of a resource that can be endlessly exploited.”
One goal of segmentation is to increase current and future customer value. Over time, an organization can become more important to a client. In turn, that person grows more valuable to the business. Use a segmentation strategy that prioritizes your most valuable prospects according to profitability and market share. Consider whether your strategy is long- or short-term. You can differentiate customers by status (new, old or former clients), demographics, brand usage, technology preferences and buying behaviors, or by how they respond to messages.
Testing, Adjusting, Measuring
Just as Hollywood uses focus groups to assess audience responses to its new releases, you should test marketing e-mails on select members of your target audience. Employ rule-based messaging, or the “dynamic content” approach by building customization options into your e-mail system. For example, you could design a simple program that automatically changes parts of your e-mail template based on the recipient’s geographical location or purchasing patterns. Dynamic content allows you to experiment with important elements of an e-mail (photos, pictures, headlines, incentives, etc.) to see which variables generate the highest results.
“Consider the fact that your audience is twice as likely to react to a message coming from a trusted source, such as a friend.”
E-mail campaigns benefit from word-of-mouth marketing, which leverages customer relationships. Initiate word-of-mouth marketing by informing customers that you’d “like to tap into their individual relationships.” This is harder than it seems, and you must carefully consider how you phrase your request. Make it “low risk” for them. You cannot simply ask them to start talking about or buying a new product. That’s too abrupt and it requires a dramatic change in customer behavior. A better approach is to offer testimonials or studies about the new product, accompanied by a coupon to encourage a purchase. That is the kind of content people will want to share with their friends.
“By paying attention to analytics, you now have the power to know exactly what’s happening [and] why it is happening, and apply a return on investment to every single e-mail marketing activity.”
E-mail marketing is not only better suited for experimentation than direct mail, it is also easier to measure. Marketers who use direct mail face numerous unknowns: Was the mail delivered? Did the recipient open the envelope? Did he or she read all, or just some of, the content? Did that person ever buy the product? E-mail eliminates many of those questions. Even better, using an e-mail system provides you with data that is specific to your company and its product offerings. Having that data allows you to improve your marketing at a faster pace.
“The ability to measure success opens up a whole new world of improved marketing.”
Measure several variables in your e-mail campaigns, including delivery rate, open rate, click-through rate, unsubscribe rate and the number of spam complaints. To assess the effectiveness of your Web site, determine how many people visit your landing page and follow through on an offer. If you provide a coupon on your landing page but people still aren’t registering, there may be a problem with your registration form.
“You can’t rest on the results from a test a year or two ago.”
Use a program that helps you link your Web page and e-mail analytics to improve the overall effectiveness of your marketing campaigns. Integrating e-mail and an enhanced Web page helped one bicycle shop increase its sales. The store’s owner learned that bicycle jerseys worn by Lance Armstrong and other famous cyclists were available. The owner then created an e-mail message notifying 10,000 customers that the jerseys were for sale on the company’s Web site. In one week, that message generated $10,000 in sales.
“The organizations that embrace testing as an integral part of their programs simply outperform those that don’t.”
If you are just beginning a testing program for your e-mail content, ask these questions: “Do subscribers open the e-mail? Do subscribers click through? Do subscribers actually do what you want them to do?” Test many other variables, including message length and personalization. To ensure your success, continue testing throughout your campaign.
“Successful e-mail marketing begins and ends with our favorite d-word: data.”
Multivariate testing is similar to basic testing, but involves “more segments and variables.” This method may “seem a little more complex at first glance,” but you can implement it easily. Simply select the variables you want to test and combine them in systematic ways to create different versions of your e-mail. Ensure that all other aspects of your e-mail remain constant. Determine which combination of factors elicits the best response.
Effective testing requires good record keeping. Use a simple spreadsheet that lists variables, customer segments and results. The sample size you choose can skew your results if it is too small, so ensure that you have at least 250 people in your test group. Create it by randomly selecting 10% of your customer list. You won’t need a test group with more than 20,000 names.
The Data Factor
Collect relevant information from customers so you can build lasting relationships with them. Use carefully constructed surveys that contain pertinent, engaging, unobtrusive and easy-to-answer questions. Too much data can slow your campaign, so 10 to 15 data points often works best. Provide an incentive for completing the survey. Always clearly disclose your privacy policy.
When customers make a purchase from your firm’s Web site, they should automatically receive a thank-you note, a satisfaction survey or an invitation to a relevant event in their area. The key to having an effective automated system is database integration. This type of system enabled one music marketing business to schedule 180 solicitations and deliver 600,000 customized e-mails to people who expressed an interest in its content.
About the Authors
Chris Baggott founded ExactTarget, an e-mail software firm, and he is the CEO of the blogging software company Compendium, where Ali Sales is co-founder and president.