Building a Better E-Mail Database

By Ian Oxman, RappDigital Innovyx

Most marketers today acknowledge the strategic importance of collecting email addresses from their customers. However, few marketers can claim much success in this pursuit.

On average, traditional marketers possess email address for no more than 10 percent of their customer database. If you are in this group, don’t feel bad. Welcome to today’s world of email marketing.

Hence, the question on most marketers minds: How can I quickly grow my meager email database without breaking my budget? Here is a five-step strategy that could help you toward that goal.

Step 1: Set Realistic Expectations
You will not achieve 100 percent email coverage on your database. Why? Quite simply, many consumers and business people do not have an email address — hard to believe for those of us in the online world but it’s true. Roughly 50 percent of American consumers do not have an email address of their own; the same is true for about 25 percent of employees in the business marketplace. And not all of those with email addresses are willing to give them to you.

Because of concerns consumers have over spam and privacy, a realistic goal for collecting email addresses would be around 40 percent of your customer base and roughly 60 percent for a B2B marketer’s customer base. Of course, these percentages will increase as the email equipped population continues to increase.

Step 2: E-mail Append
Let’s say you currently possess 10 percent email coverage of your customer base and you set a realistic goal of 40 percent coverage. How do you get there quickly and cost effectively? I suggest you start with an email append. Expect anywhere from a 5 percent to 20 percent append rate at a cost of between 40 and 75 cents, depending on volume discounts, per email address appended.

But use common sense: Never append any email addresses to your database unless the append vendor first sends a “permission request” email to each matched customer. This permission request email typically contains a subject line to the effect, “Company XYZ requests your permission.”

The consumer then provides permission, or not, to append his or her email address to the marketers’ file. Also, send a “thank you” confirmation email to reconfirm the permission and redisclose your intended use of the email address. This email should contain an opt-out option for the customer too.

Step 3: Analytics
Let’s assume the email append process supplied you with additional email addresses and your email coverage has now increased from 10 percent to 25 percent. A great start, but you still lack email addresses for 75 percent of your database. So how are you going to prospect among that 75 percent in order to help you reach your goal of 40 percent email coverage?

Obviously, cost remains a major concern. Offline targeting of that 75 percent would be ridiculously expensive and unproductive. How can you best pre-identify that 15 percent subset? The answer lies in analytics.

Linear regression or cluster segmentation can be cost-effectively applied to predict those customers most likely, and most unlikely, to provide email permission. Use the 10 percent of customers that previously provided their email address as a dependant variable. You want to find more customers with profile characteristics similar to this audience. The model will determine those characteristics and develop a formula, which predicts a likelihood to opt-in score.

Next, run this model across the 75 percent segment of non-email customers to predict each customer’s likelihood to opt-in. This scoring identifies the customers which the marketer can cost-effectively focus the task of offline email collection.

Step 4: Least Expensive Offline Contact Method
Once the model identifies the best target audience, utilize the least- costly offline contact method possible. Whether it is a postcard mailing, a billing stuffer, or an inbound customer service call depends on your situation, but use your least expensive contact method to ask for their email address.

Don t forget, like any good direct marketing effort, you need an offer, a reason for your customer to opt-in. The reason could be a discount promotion available only through email. Often, white papers make the best offers as they cost little while immediately demonstrating that you use email to send, not spam, valuable and relevant information.

When collecting email via postal submission or via telephone, always send the customer a thank you email confirming their permission and re-disclose your intended use of their email address with another opt-out opportunity.

Step 5: Permission Audit Trail
Absolutely, positively, maintain a database log on how you obtained the customer’s permission, when you obtained it, as well as any steps you took to confirm the permission.

Given the increasing legal implications to email marketing, you should document every step. Maintain proof that you used only permission and ethical techniques in building your email database. The inability to prove this point could undo your email database efforts overnight if a customer contacts the authorities accusing your company of spamming.

In summary, building an email database intelligently means setting realistic goals and employing a combination of appends, analytics, and offline collection. Documenting the permission confirmation processes with an audit trail protects your email database investment. Building a customer email database is certainly not inexpensive. However, the value gained in terms of decreasing messaging costs, increasing messaging frequency, and generating incremental revenue makes an email database a highly worthwhile investment.

Ian Oxman ([email protected]) leads the email consulting practice for RappDigital, a wholly owned subsidiary of Rapp Collins Worldwide. His 15 years in the marketing industry include database marketing, segmentation analytics, direct mail, and permission email work.

Before joining RappDigital, he founded email services company ChooseYourMail.com in 1997. He is a faculty member of the Direct Marketing Association and participates on the Association for Interactive Marketing’s council for responsible email.