How to Squeeze More Value From Your ESP In Tough Economic Times

In case you haven't kept up with the email marketing industry over the past few months, it has been star of glimmering hope for marketers enduring economic turmoil. In fact, the industry has been faring so well that many email service providers (ESPs) have announced record growth for 2008 and expect to do equally as well in 2009.  

Even though demand for ESP services is high and clients are spending more, there is still a lot of competition. Now is the time to try to squeeze more value from your ESP, while many are fat and happy.

But before you start calling your ESP to demand a rate decrease, there are some things you should know to help you get the best deal. To start with, if you're a casual email sender or use an entry-level email service provider that services small businesses, you're out of luck. Their pricing is set in stone since they rely on a massive number of customers to be profitable. However, if you send a lot of volume and use an advanced email service provider, you might find them not only a bit more flexible on price, but also more accommodating in offering additional features and services.



Get your best price. Whether your contract is up for renewal or you're shopping for a new ESP, now is the best time to get the best price. ESPs are walking a tightrope between protecting their current client base and taking advantage of growth opportunities, so they will be more flexible with their pricing terms, especially with existing clients. I have seen some ESPs reduce their fees by up to 50% to keep an existing client from changing to a competitor. However, many ESP fees were bloated to begin with so in the extreme 50% reduction case, the customer is now paying market price.

Just as you would negotiate with any other vendor, you need to be armed with a competitor's quote when you start pricing negotiations with your ESP. In order for your quote to even be considered in negotiations, it needs to be from an ESP in a competing class. By competing class I mean ESPs with similar feature sets, client sizes and services offered. Don't expect your ESP to budge on price if you present a low-ball offer from a competing ESP lacking two of the three of the above criteria. Once you finagle a competing quote, expect your ESP to beat that price by at least 5% -- sometimes 10%. For big volume senders, this can be a huge cost savings.

Get a unique IP address and custom DNS for FREE. All good email marketers know that a unique IP address coupled with a custom DNS is one of the marquee standards for exceptional deliverability, so much so that it is a requirement for most white listing and sender-certified programs. For this fact alone, many ESPs charge very hefty IP address rental and DNS configuration fees, even though the IP address costs them $1 a month from their ISP. This cash cow ESP service needs to be deflated in these tough economic times. There's no reason why your ESP shouldn't GIVE you a unique IP address at no extra charge -- especially if you're a high volume sender.

Get access to your ESP's API for FREE. Another ESP cash cow is charging access to use its application programming interface (API). This tax amounts to crimes on par outlined in the RICO Act and should be considered legal extortion. It costs your ESP next to nothing to offer Web services and it's something they can easily give you access to at no charge. If your ESP starts whining that your access consumes resources and there is a true cost associated with access, just kindly remind them that there are a number of other ESPs that don't charge for the same service and that they made up for the costs in three months of charging access to it. If your ESP's whining turns into cries, just string the sales guy or account exec along for a couple of weeks. They will come around and you'll get a better deal. Don't worry! Your sales guy will still eat.

Get personalized training thrown into your deal. Most email marketers want to start sending with their new ESP before the ink dries on their agreement, but are at a loss on where to begin. Instead of providing personal training sessions, many ESPs give clients half-baked instructional vcasts and webinars, expecting their clients to retain the details of complex features. In my opinion, there's no reason why an account exec can't spend a couple of hours with new or existing clients to make sure they understand the complexities of feature sets and application logic. Given this low cost to the ESP and high return to the client, I am confident that if you demand the extra attention you will receive it. If you're prepared to spend thousands of dollars with an ESP, you should get some personalized handholding and love.

Unless you're in healthcare, the federal government, or email services, the effects of an economic pinch by now have turned into a nasty bite with relief only to be had in cost savings. Bloated ESP licensing and ancillary access fees will soon give way to market conditions enabling email marketers to take advantage of cost savings and increased ROI from the email medium. The best deals are out there. All you have to do is throw a little fit.

5 comments about "How to Squeeze More Value From Your ESP In Tough Economic Times ".
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  1. Joyce Berlin from Thinkhouse, March 11, 2009 at 10:55 a.m.

    Thank you for this insight as I am negotiating right now with some ESP's. If anyone on here can recommend companies that they use and trust, I would be most appreciative. I'd like one company that offers email, voice and sms. thx.

  2. Lana Mcgilvray from Datran Media, March 11, 2009 at 11:08 a.m.

    In full disclosure, I have worked with clients and partners at adigital marketing technology company that offers email marketing and monetization services as part of the mix for the past seven years.

    This article reflects the right spirit to help marketers maximize the value of their investments in a tough economy but negotiating contracts is only one part of the recipe for success. In terms of pricing, I would add: 1) Not all ESPs have the same price model. One ESP for instance, is advertising "No CPMs" as they differentiate themselves from others and tout a license model which isn't something that all ESPs can support. In our case, we offer variable pricing as we understand that the needs of our clients are different and monetization of email is AS important as retention campaigns in comprehensive email strategy.

    Beyond pricing, if you are really seeking innovative ways to leverage the full potential of any ESP, I would also suggest reading the recent Forrester Report "Five Ways to Perk Up Your Email Program in 2009", authored by Julie Katz. The independent report highlights extremely important points about relevance versus volume and cross-channel integration. FYI, we are referenced in the report - but again - are one of several in the space. If you access the document, my guess is you'll walk away with a lot of food for thought and some that is already available on your current plate and won't cost you a dime. Good luck!

  3. Alex Waddell, March 11, 2009 at 11:49 a.m.

    While all ESP's should offer their client the option of having a dedicated IP, a dedicated IP is NOT beneficial to all clients and can be a serious disadvantage to those who don't have the volume/frequency to maintain the IP's integrity. When it comes to IPs, if you don't use it, you lose it. By sharing a closely monitored IP with other closely monitored senders, you can maintain high deliverability. If you are only sharing this IP with other low volume senders, and if campaigns and IP rating are closely monitored, there is no risk of suffering from another senders bad behavior. "Dedicated IP" is NOT synonymous with better deliverability. Check to make sure your ESP is providing you with an IP set-up that is best tailored to your sending behavior, and don't be sold on the hype around "Dedicated IP."

  4. Bryan Puccinelli from Message Systems, March 11, 2009 at 1:22 p.m.

    try j2 global

  5. Frances Dugan from Permanent General Companies, Inc., March 11, 2009 at 3:14 p.m.

    ouch! your post made me realize that our ESP is guilty of a couple of these cash cow service fees. thanks for the info Elie! it should help when it comes time to renew our contract (or go with a competitor)

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