We've all seen the numbers: According to a recent Aberdeen Group report, email marketing grew by more than 270 percent over the past two years. Spending on email marketing is expected to rise from $2
billion this year to over $4 billion in 2003.
Experience with this new direct-response vehicle is yielding a variety of tips for successful implementation, including: Don't spam, Target wisely,
Personalize your message, Be innovative and compelling, Keep it short and simple, Be timely, Provide value, Include links, Manage responses, Follow through, Track and analyze results.
Below is
the first of five stories in this issue's Email Marketing special report. Each of the writers is an executive with a firm involved in email marketing. And each brings a different perspective to the
question of how to use this rapidly proliferating medium to achieve business objectives--whether online or off.
MEASURING RESPONSE
by Debbie Weil
President, WordBiz.com
Click-through
rates (CTRs) for opt-in email marketing campaigns ranged last year from a low of 0.9 percent to a high of 8.5 percent. But what are you really measuring? A useful discussion of response rates requires
two things: 1) a clarification of terms and 2) a more nuanced definition of email marketing that distinguishes email address acquisition from a retention email program.
Calculating the CTR is
easy enough: If you send a promotional message to a list of 5,000 addresses and 137 people click through to your website or landing page, the CTR is 2.74 percent.
But then what? Until your
recipients convert to whatever action you’ve set as the goal of your campaign (in B2C, it may be a purchase; in B2B, it could be the download of a white paper), you don’t have a result that impacts
the bottom line. You do, however, have a way to measure certain elements of your direct-response marketing efforts. If you’ve segmented your list, you can use relative CTRs to test one subject line
against another, text vs. HTML, etc.
If your mandate as media buyer or marketer is a meaningful ROI, then cost of conversion is your key response metric. How many leads did your campaign
generate—and how much did that cost you? Over a period of months, you can use cost per lead to calculate cost per customer acquisition. Eventually, you can compute lifetime customer value.
Just
as important, however: How many valid email addresses did you capture, along with permission to communicate with these prospects in the future? That’s a roundabout way of asking: Were you successful
in building your house list?
Which brings us to the dirty secret of email marketing: Yes, with careful research you can find B2C and (with difficulty) B2B opt-in lists that target your audience
and yes, you can come up with a great offer and craft a benefits-laden message. But if you want your response rates to correlate with measurable business results, you’ve got to redefine email
marketing.
Successful email marketing is not a one-off acquisition campaign to collect email addresses. It’s a strategically planned retention program of mailing e-newsletters, special
promotions, and product updates to your opt-in house list with the goal, over several quarters or even a year, of converting your prospects into customers.