E-mail marketing 101 (Permission marketing)
by
Toby Ward
on Mon 31 Oct 2005 10:07 PM PST
I hate spam. You hate spam. We all hate spam. Yet, just like negative political advertising during the heat of a hot campaign, it works brilliantly.
In fact, except for traditional direct marketing, there is no single more effective marketing tool.
Here are some of the numbers:
Ø Only telemarketing has a higher ROI than e-mail (IAB)
Ø In Q2 2005, the open rate fell to 23.6 per cent versus 2004 (DoubleClick)
Ø Bounce rates, which were at an all time low at 7.9 percent, declined 25 per cent from 2004 rate (10.5 percent) (DoubleClick)
Ø Orders per e-mail delivered were 0.35 percent in the fourth quarter of 2004, an all-time high and much higher than the previous records - 0.30 percent (DoubleClick – based on 2.5 billion e-mail sent)
That last number is very telling. It means there’s a sale, on average, for every 300 e-mail solicitations sent. While it depends on how you do it, the cost of sending 300 e-mail is next to nothing. And this is why e-mail marketing continues to be wildly successful despite the stigma against spam.
To be honest, the real winners are not those marketers that are spamming (though some are wildly successful), but those that undertake permission marketing.
Permission Marketing
Coined by online marketing guru Seth Godin, permission marketing is a sales approach used by a marketer to obtain advanced, explicit permission from a sales prospect before sending them marketing information. In other words, a person gives you permission to sell them – usually in the form of opt-in e-mail.
Of course, we’re all familiar with opt-in e-mail – usually it involves signing-up for a newsletter and then they ask you to also divulge some personal information and whether or not you’d like to receive some special offers. Double opt-in means you are sent a confirmation when you agree to sign-up and you’re expected to confirm that you are in deed providing your permission to receive marketing information.
Permission marketing is a big business. Generally speaking, PM is more effective and the response and conversion (sales) rates are higher because people want to be marketed to (yes, of course, plenty slip through the cracks and still treat this marketing as spam but it’s still more effective than blind spam).
Show me the money
“What kind of returns can I expect?” you ask. Well, it depends on many factors of course. A key of course is the quality of marketing list...
- Are your e-mail targets voluntary opt-in subscribers?
- Are they past customers?
- Do they know what to expect from you?
The more your subscribers know you, know what to expect, and have purchased from you, the better your success.
Like any business, you do have to spend money to make money. However, you don’t have to break the bank.
In a ClickZ column this summer Jeanne Jennings featured in a great e-mail marketing case study The Little E-Mail Marketing Budget That Could. The company, Dakin Farm, is a small, family-owned specialty foods company in Vermont.
In 2004, Dakin Farm had an e-mail marketing budget of a little under $14,000. It sent regular marketing offers three times per month (on average) via e-mail to its subscriber base of some 13,500. The return was huge. Total sales equaled $185,000. That’s an ROI of 1300%.
The click-through rate was fairly standard: only 4.34% of recipients clicked on specific offers. But of those that clicked, 98% bought.
Jennings quotes the following reasons for success, right from the owner’s lips (Sam Cutting IV):
- Everyone with a direct response Web site should build an e-mail list and send offers, even if the list is small.
- Measure response to e-mail offers.
- Determine your breakeven.
- Increase the frequency of sending e-mail to a level that feels right and is above breakeven.
- Ensure every e-mail contains a strong offer.
- Use short deadlines as a call to action.
More Tips for success
Firstly, use e-mail to communicate with your customers, but get their permission:
Ø Double opt-in is strongly recommended
Ø Opt-out option on all correspondence Privacy Policy is a must (PIPPA requirement)
Ø Third-party lists is strongly discouraged; ditto for sharing
Ø Provide links to back issues and related information
Ø Write succinct, punchy subject lines
Ø Don’t be shy – be persistent
Jeanniey Mullen (also a ClickZ columnist) recently cited an insurance company (My Last ClickZ Column Had A Typo) that decided to re-connect with e-mail subscribers that had not read an e-mail from the company in the past six months. The company established a system that automatically sent a message to those subscribers who hadn’t opened an e-mail in the subsequent six months.
The e-mail team used the following subject line:
"WTF! Don't you like our e-mails?"
For those of you that don’t use instant messaging, WTF stands for “What the ____ (expletive)?
The response to the edgy but frank e-mail was impressive: 25% of those non-readers opened the e-mail. And, over 500 replies came back replying why they weren’t reading the e-mail messages – valuable feedback for future campaigns.
Bottom line: don’t be shy – get out there and start getting to know your customers (and potential customers). They want to hear from you.
