There is more than one reason for this downward trend, but the most prominent is a lack of sufficient testing. "The majority of e-mail marketers are not testing enough,"says Anne Holland, publisher of marketing research firm MarketingSherpa, adding that "those that do focus too heavily on creative and not enough on segmentation." While creative changes do affect response, she says they don't generate as high an impact as segmentation does.

MarketingSherpa's report, "E-mail Marketing Benchmark Guide 2006," showed that marketers who use "A/B offer" tests (as opposed to "A/B creative" tests) are likely to have the highest open and response rates, and those that segment their lists to send the right offer or newsletter to the most appropriate names get substantially higher results than those who don't (30.86 percent versus 6.68 percent for lists of more than 100,000).

>WHAT'S WORKING: A "new user" series is one of the most creative things Holland is seeing today. "When someone is a new opt-in, they get a different series of e-mails" than the rest of the file. "Some marketers even test for discounting. You learn a lot about that name before you add them to your main file. That works extremely well."

As with traditional direct marketing, the newest names to an e-mail list work best, particularly during the first 30 to 60 days. "Send special messages -- perhaps even a whole 'welcome' series -- to those new names for their first 60 days," Holland adds.

Another progressive idea that's working is content tailoring. "Retailers are moving beyond just looking at what customers have ordered in the past year, but are also layering in which department you shopped in, profiling you against other customers and what they shopped," says Bart Sichel, associate principal of McKinsey & Co. "That's driving higher than normal response and conversions rates, because they're doing a better job of matching the content to the consumer."

Sichel also notes that successful e-marketers are starting to track how people consume e-mail and "are becoming very effective in learning how consumers are working their way through the content." For instance, they're paying more attention to whether customers read above or below the scroll.

In addition, "I've seen more focus lately on studying opt-out numbers...to drive high conversion and future return on investment," Sichel says. "Marketers are learning more about what's going to turn a customer off. The leading turn-off: frequency of contact, followed by perceived unneeded content. This links back to why marketers heavily involved in data mining tend to enjoy the lowest opt-out rates, because the content is typically so much more on focus."

>NEW DELIVERY CHALLENGES: Part of the blame for lower response rates can be placed on new challenges, including automatically blocked images (in Outlook and Gmail) and the addition of preview panes -- windows that allow recipients to view a few words of each e-mail without opening the file.

Marketers can take heart from an EmailLabs survey of B2B newsletter subscribers whose e-mail programs automatically block images. Fifty-five percent of respondents said they always or frequently download the images in preview panes, while 83 percent do so in opened e-mail. This can make a difference, since results of a recent eye-tracking study conducted by MarketingSherpa showed that we read more text when e-mail includes pictures.

To compensate for preview panes, EmailLabs suggests that companies redesign the top of e-mails to include a 2- to 3-inch preview-pane header area in either HTML or text that includes article teasers, key offers, and "In This Issue" information to help the subscriber determine whether to read further and/or open the e-mail. Holland adds that if you're using a two-column format in your e-mails, make sure your thin column is on the left and to put your best copy there, because the right column may not be visible in preview panes.