• by editor , David Baker , June 19, 2006

You need to find qualified new customers. Are you considering e-mail lists, or is that a scary notion for you these days? E-mail consumers have become numb with all the consolidation of data files, the increased frequency of e-mail and the overwhelming misuse of e-mail by nontraditional marketers. So what is the best way to reach new markets and customers through e-mail?

I work with some of the best online advertising and media strategists, and many of them are bullish on e-mail lists as an acquisition vehicle. But be aware, one of the biggest issues with using e-mail as an acquisition vehicle is the actual context of your efforts and what value e-mail will truly help you gain.

In general you shouldn't expect to introduce your product, service or brand to a new consumer and expect them to make a purchase in the three seconds they spend browsing your e-mail. You also should not expect them to recognize your brand by the "from" line, or find context in a 50-character subject line. I typically reserve using lists for mainstream brands with universal offerings that have compelling consumer offers. I firmly believe you can attract attention and develop leads through rented lists, but you should have a firm handle on acquisition, its true costs and its risks. I think this whole space has been underutilized and misappropriated in the media mix.

To illustrate my thoughts, I want to share a story: I once had a client that sold "dream home lots on lakefront property." And the property sold very effectively. This client made it work by advertising via direct mail, radio and newspapers targeting affluent areas. They achieved a cost-per-lead of $100. They offered valuable rewards to consumers who attended sales sessions--you could win golf clubs, free dinners or vouchers, they would fly you over the lake and properties in a helicopter, they had live music and dancing, they even had a place for children to play, providing the perfect environment for a weekend family outing. And while consumers enjoyed themselves, they dreamed of building homes on a beautiful lake. This client had a 50 percent close rate on $50,000--$150,000 pieces of property. These guys were some of the best closers I've ever met.

So we decided to test rented e-mail lists (CPM) on several promotions and found plenty of inventory (i.e., credit-worthy, geo-centric, the right demographics). During the first promotion, we achieved a 250 percent increase in registrants via rented e-mail lists; our clients thought they had struck gold. The numbers were good, but we started seeing cracks in the program. Of the registrants who signed up online, only 30 percent actually attended the sales session, a low percentage compared to the company's usual attendance rates of 60 percent. They felt okay about this because the online volume was so much higher than traditional channels.

The problem came when the sales reps tried to close sales with the online customers. The close rate dropped to less than five percent, and centered on the lower-value properties. There were also complaints from the salespeople about the difficulty in closing the online leads.

So was this company's use of e-mail lists successful? From a business perspective, it was a toss-up; they did in fact close 95 percent of the properties over the weekend. Their cost-per-lead cost less. But was their cost really lower? After testing several properties, we learned a few things about e-mail acquisition:

You should customize your interaction or method of qualifying prospects. An online registration page will never take the place of a live person.

Clearly define what acquisition means to you and understand you may have to use other channels to build each relationship (realistic expectations = realistic achievements).

Acquisition is NOT just cause and effect (spend = $$) and can't always be monetized this way. This is where e-mail's value really comes into play. Your cost to re-connect and incubate or nurture qualified leads is significantly less than a salesperson calling them and trying to maintain a "personal connection"--but not if it extends your sales cycle and reduces your close rates.

So, does lead generation and acquisition work by renting e-mail lists? Yes. But remember this saying by Flint McGlaughlin, director of MEC Labs, "People don't want to be marketed to, they want to be communicated with."