E-Mail Marketing: How to Improve Your ROI in Prospecting and Retention
BY REGINA BRADY
Volume 2 Issue 3 September, 2001
Today most companies are using email and to focus on retention marketing — to cement loyalty and to cross-sell and up-sell existing customers. If your company is focused on customer communication and you have yet to use email for prospecting, you are in good company. In August 2001 industry analyst firm Forrester Research issued a report entitled “Effective Email Marketing.” They interviewed 50 email marketers and concluded that retention is driving email marketing growth. Here’s a look their findings on what marketers are experiencing in acquisition and retention for email prospecting and retention: | | Email to a Rented List | Email to a House File | | CPM | $150 | $5 | | Click-through rate | .4% | 15% | Conversion rate | 3.0% | 3.7% | | Cost per sale | $1,250 | $1 |
Conversion rates for email are represented as a percentage of click-throughs
Response rates are Forrester estimates based on data from comScore Networks
Direct mail costs and response rates are from The DMA
Clearly, Retention Marketing is KING!
Retention marketing is a cost-effective way to communicate with your customers. Because they have an existing relationship with you, your customers are much more likely to click-through on your messages and order from you.
Use the numbers above as a benchmark to measure your retention email efforts. Are you consistently getting a 15% click-through on your emails? If you aren’t, here are three questions that may point to what you can do to improve your ROI.
1. Are you sending the same email to all of your customers or are you segmenting your communications so that different groups receive different content?
Too many companies are using what I call the “one size fits all” approach. (Simply personalizing a message to the recipient is not customizing content.) I suggest that to start you create three or four segments either based on industry segment or types of products purchased. I’m not suggesting that you create totally new content for each group. Begin by varying only one or two paragraphs of content that is specifically directed to the segment.
2. Are you looking at your opt-out or unsubscribe rates from your emails?
This is one of the most important measurements you should examine. After you have developed a regular email relationship with your customers, your unsubscribe rates should be half of 1% or lower. If your rates climb above this threshold you’ll want to look carefully at your email plans. Perhaps you are mailing too often or not often enough. Perhaps the content is not relevant.
3. Are you analyzing activity patterns from your emails?
Look at your click-through rates. You may want to devise a different strategy for those people who have not clicked on a message over the past two months. Do you have evangelists who are passing your message along to colleagues? These customers are very valuable and you may want to treat them special. Can you create customer segments based on click-throughs?
The predicted email glut is here!
With so many companies embracing email the email glut that analysts were predicting is happening today. Knowledge Systems and Research conducted a study in June 2000 on the number of email marketing messages people received each week. Here’s what they found:
| Emails Received | Percent | | None | 3% | | 1 - 10 | 42% | | 11 - 20 | 28% | | 21 - 50 | 16% | | 51 - 75 | 5% | | 76+ | 6% |
Over 50% receive at least 11 marketing messages per week! Remember, these statistics are more than a year old so with the trend unchecked, email overkill could squelch customer response. We don’t want to kill email’s effectiveness.
For business-to-business marketers to stand out in this clutter they must make sure to make their messages relevant and targeted. They need to provide value in each message. I believe that B-to-B marketers will find they can mail smarter and to fewer people and still get the same or better conversion rates. It takes effort and ongoing measurement of results but the development of an ongoing strategy and methodology to analyze data will pay off in spades!
Regina Brady is a consultant on interactive and direct marketing. She formerly held executive roles at FloNetwork, Acxiom and CompuServe. A respected industry leader, Brady is active on several industry boards and advisory committees and is a frequent speaker at trade conferences. She can be reached at 203-838-8138 or reginabrady@att.net
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