• by David Goetzl  @dgoetzl, May 5, 2011

CAPTIVA ISLAND, Fla. -- Noted author Arthur Middleton Hughes, vice president at the Database Marketing Institute, said a larger share of a company's marketing budget can go to email if email marketers demonstrate to C-suite executives how email can produce a high "lifetime value" for a particular customer.

"In almost any organization, email is at the bottom of the power structure," he said.

Instead, TV leads the pack.

"Lifetime value" for a customer varies widely from company to company, of course, but he defines the metric as profit per customer over a three-year period.

Hughes, a 33-year veteran of database marketing who moved to the email space four years ago, gave the keynote address at the MediaPost Email Insider Summit on Tuesday.

Under the "lifetime value" umbrella, Hughes spoke about a metric -- an "off-email multiplier" -- that an email marketer can use to demonstrate how an email can drive more than just online purchasing.

In other words, within emails, the "shopping cart" function offers online purchasing options, but emails also drive awareness and send people to the store or the phone to make a buy. That needs to be accounted for.

"Actually, emails are like TV ads," Hughes said. "They result in all sorts of things happening that you cannot easily measure."

One way to compute an "off-email multiplier" is to take the overall sales generated by an email message and divide the percentage of sales that occurred online by the offline percentage. For example, 21% (online) by 79% (offline) produces an "off-email multiplier" of 3.76.

Tracking offline sales can be tough, but Hughes suggested that inserting a coupon in an email that can only be redeemed in a store is one way.

Nonetheless, Hughes said it is crucial to track the offline sales in order to determine that "lifetime value" of a customer figure, which he said builds a better case for a larger email marketing budget when pitching a CMO or CFO.

Companies, of course, have a need to continually find ways to acquire email addresses. For a retailer, Hughes suggested holding a contest among employees to determine who is most effective at getting addresses at the point of sale.

Hughes said improving a Web site is the most important tack needed to improve email address acquisition. There's a need to upgrade a site's "registration friendliness." On one level, that's as simple as making it easier to sign up to receive email.

But many companies struggle with better "friendliness" because the email team doesn't control the Web site. "The people who are really interested in email don't have the power to make those changes," Hughes said.

Another way to generate more email sign-ups via a Web site: "popover" ads, which are basically drop-down overlays that appear on the screen. The overlays encouraging sign-ups can't be blocked by a pop-up blocker. "It's very annoying, but it works," Hughes commented.