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| Points of Comparison: Email Marketing and Traditional Direct Marketing April 3, 2000 BY REGINA BRADY Marketers, including those who work for “bricks and mortar” enterprises, have long acknowledged the arrival of the Web. In the same way, many traditional direct marketers have discovered the power of email. More interesting to me is that many dot-com companies are beginning to recognize the importance of the long established principles of traditional direct marketing — test, measure and target — and how to apply them in the evolving world of the Internet. In fact, many dot-coms are hiring direct marketing experts away from the traditional direct marketing enterprises. After all, who better to understand how the fast-growing customer database can be used to increase revenues? So, for those brick and mortar companies embracing the new medium of email, or for those dot com companies attempting to incorporate the tried-and-true principles of direct marketing to their efforts, here is a primer on some of the similarities and dissimilarities between email and traditional direct marketing. The database is king Long hailed as the key to successful direct marketing campaigns, the database is, if anything, more powerful in email campaigns. Because email is a computer-based medium, information collected in a campaign can be fed into the database with little or no human intervention or interpretation. Traditional mailers can work with their service bureaus to identify change of address information and can perform address hygiene to help make their mailing more deliverable and feed this information back to their database on their own customers. Once a mailing goes out they will track orders, the total dollar value of those orders and will monitor subsequent performance to determine the lifetime value of the customer, the offer, and the list source. E-marketers don’t have an e-mail change of address system available to them and address hygiene is rudimentary. But they do enjoy several benefits that can help them enhance their databases. The first data set gathered during a mailing— that an address is no longer valid or that certain customers can view richly formatted (HTML) files in email — can be captured in the database within minutes instead of weeks. For those customers who can read HTML mail a marketer can even tell if the message has been opened. Traditional marketers would kill to find out how many people at least opened the envelope or decided to browse through the catalog! Specific behaviors of recipients can be captured on an customer, offer and list level and tied back to the database: click throughs, pass-alongs, orders, and the total dollar value of orders. (Of course, if the e-marketer is doing a prospect mailing they only receive aggregate data by list until the consumer takes an action to become a customer or registrant at the site.) This information can be critical in data analysis. For instance, you may discover a customer who clicks through to read more about every special offer, but only purchases when the offer pertains to women’s cosmetics. It is more cumbersome and time-consuming to gain this kind of insight in traditional direct mail. Segment for greater impact The database is a powerful asset, but as the old saying goes, use it or lose it! A fact proven over and over in traditional and in electronic media is database segmentation is the key to successful ongoing marketing efforts, where the marketer builds a relationship with each customer. Traditional marketers use RFM data to segment their files. And they currently have much more demographic and lifestyle overlay information available to them to generate customer profiles and scoring models. But one way of looking at email marketing is that it is segmentation “on steroids”. Marketers can look at behavioral data by analyzing click through patterns: what offers and what items are of interest to the consumer. Then they can segment their files based on these interests. When a two-way, interactive relationship is established it is mutually beneficial. The customer receives only the information and offers that will be of interest to him, and the marketer has the ability to cross-sell and up-sell effectively, with a true understanding of the customer. For example, if Gwen Smith has bought khakis before, she may be interested in this month’s special on chinos. Sophisticated emarketers are just beginning to also use data overlays on their customer files. The marriage of behavioral, demographic and lifestyle information will be powerful in developing customer segments and customer scoring models. . Email in particular lends itself to segmentation, because it is so tightly linked to the database. Any field that is contained in a database can be used to personalize and customize an email message. So, the marketer can change their mindset when they approach campaign planning. They need not think about large, mass mailings; they can think of many smaller segments with specialized content. The costs of sending separate email offers to many smaller segments is trivial when compared to creating unique printed pieces and paying postage to deliver mail to smaller segments.. Testing is important Successful direct marketers test and retest. Then they test again. Traditional marketers often wait weeks to compile campaign list and test results, and they rely on this feedback to improve what they do in the future. Email is no different, except that the feedback is much more direct and immediate, Campaigns are generally 80% complete within 36 to 48 hours. Interactive email is really a closed loop, with built-in tools to measure response and direct input into the database. Does inserting the name into the subject line pull a better response, or does it cause more people to opt out of future mailings? Why not test and be sure? Many marketers who are planning a campaign will pre-test offers or different copy approaches to small subsets of the planned mailing a couple days before the date of the campaign. They read test results and use this input to determine what offer and approach they will use for their entire mailing. All marketers evaluate the success of each campaign. The hard numbers can be achieved much more quickly with email. With advanced email services now available, marketers can get a much more accurate picture of behaviors they have had to guess at in traditional media: how many people was the piece passed along to (the pass-along rate in email)? How many people acted on the offer, and what part of the offer specifically did they react to (the click-through rate)? While testing is important for all media, email can give a more accurate snapshot of who responds to what, and it can provide the information more quickly. Now, let’s look at ways that traditional direct marketing and email are dissimilar. Permission is more important for email marketers In traditional direct mail, it is quite uncommon to see a simple “opt-out” clause in mailings. To get off a particular mailing list, recipients, at best, might be advised to send a letter to a specified address with clear, written instructions. There is almost never a simple check-box option on an attached mail-in postcard. In telemarketing, households cannot usually ask that the person at the other end take them off the list for future calls; this instruction must be given in writing to a separate address. In the world of email, permission must be given and repeatedly confirmed. A marketer who wants to communicate via email with customers should receive permission to mail to them. If the marketer has collected email addresses in the past the general practice is that they can communicate with their customers explaining they would like to continue to send email. But, if a customer indicates they do not wish to receive these communications a marketer must cease and desist immediately. It is good email practice that each subsequent email to customers includes a simple and foolproof way of getting off the list. If a marketer wishes to put their list on the market they must also receive permission to do so. This permission is separate and distinct from a marketer mailing to their own customer file. And, again, the marketer needs to be prepared to process any subsequent opt-outs immediately. A marketer can be labelled as a spammer if they do not have the appropriate systems in place to handle this. List availability is different Today, there are only between 125 and 150 email lists on the market. My definition of a list is an offering from a particular company. So, I am counting list sources such as NetCreations or YesMail as having one list available; although these companies would have multiple selections within their lists. The depth of information associated with postal lists is not available for email. Many lists have consumer reported interests (travel, technology, entertainment, etc.) but what we do not know is whether they have ever purchased in their categories of interest. Also, we don't have RFM: the recency data, the frequency data and the monetary data on e-mail lists that we do in postal lists. Many traditional marketers are building their own house lists of email addresses but their lists are not yet on the market. My theory is that privacy concerns are a partial reason for their reluctance; and they want to make sure they understand how to market to their own customers via email before they begin to make those names available to third parties.. All this points to the fact that marketers who want to get serious about building an email program need to find ways to accelerate in-house list creation and augmentation. What you can send is different With email, you can send any digital file format, and so a marketer’s creativity is not constrained by paper and ink. Of course, there are many times you will just send plain text, but marketers can add animation, video, and even audio to email. There are many instances where marketers have successfully added fully interactive multimedia files to email, making it closer to television, albeit personalized and interactive television, than to traditional print media. At the same time, while a residential postal mailbox rarely rejects a letter because there are too many graphics, the ability for recipients to read specific file formats is an issue that email marketers need to be sensitive to. And, in email marketing beware of the most powerful four letter word in the English language – FREE. Traditional marketers will often include FREE on the outer envelope as a method to entice the recipients to open the mailing piece. Some ISPs and also corporations will scan the subject line of an email for the word FREE. They use this as an automated filter to determine the possibility that the message might be spam. So, the mail might not get through. The bottom line The key differences between email and traditional media for direct marketing underline the lessons we have learned as direct marketers. In fact, they heighten the importance of these principles, because the impact of the decisions we make as marketers is quicker, more direct and easier to track. Email makes it possible for more marketers to realize the promise of direct marketing: stronger customer relationships. And that’s the bottom line. Regina Brady is president of Reggie Brady Marketing Solutions, a direct and e-mail marketing consultancy. She can be reached at (203) 838-8138 or reginabrady@att.net. Return to Articles | ||||||||||||
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