Email ROI = Relevance + Opt-in + Incentive

Email marketing is hot! So hot everyone is jumping on the bandwagon. But don’t let that wagon derail off the path. Let me give you a little direction for a safe and successful email marketing journey.

Already, problems are emerging from email marketing. And I am not even talking about Spam. The trouble lies in the coming proliferation of email newsletters and promotions. They could go the way of the oft-ignored web banner if we aren’t careful.

I subscribe to about a dozen email newsletters and alerts. Unfortunately, I only read a couple of them on a daily basis.

Why should you be concerned? Because email content and promotions take money and time to produce. If subscribers aren’t responding, you probably aren’t meeting important marketing goals. To ensure that your customers will be reading and responding, I solicited the advice of folks who have been there, done that: LifeMinders, Exactis.com, and MarketHome. If you want email to payoff, then just remember this simple formula:

Email ROI = Relevance + Opt-in + Incentive

Relevance

Relevance means email content and offers that meet the needs and desires of the recipient. In addition to customizable content, personalization provides you with a way to match content to the customer in a highly targeted way.

LifeMinders is a personalized email news service that provides its members with brief “Minders” to provide expert help in the areas of family, entertainment, autos, personal finance, personal events, home, yard and garden. Because its messages are highly targeted, LifeMinders has achieved response rates as high as 45 percent. Its untargeted emails generate 1 to 2 percent click-through. One key element to successful email is to have content that is useful and informative. LifeMinders has expert content that really makes life a little easier and the easier the better.

Exactis.com is the largest email service in the world and delivers more than 8 million messages a day. Greg Schneider, vice president of marketing states: “Relevance is key because it is more useful and will more likely be read by the recipient.” As evidence, Exactis.com has experienced 50 to 75 percent open mail rates on personalized email versus 20 to 40 percent for straight broadcast email.

Opt-In

Opt-in is a divisive issue. “Opt-in is the only way to do email programs because it serves the marketer and customer best. Marketers get pre-qualified recipients and customers don’t get spammed. The relationship is built on a positive and trusting alliance between the brand and the customer,” states Mr. Schneider.

One of MarketHome’s customers, GolfBuyer, believes that opt-in is key to success. GolfBuyer is a small and growing specialty web site offering golfers the ability to build their own personalized golf equipment catalog and email notices.

“Opt-in is the right way to conduct email campaigns. You should make opting out just as easy, otherwise it is not true opt-in. Also, make it easy for customers to change their preferences,” states Dan Lein, owner of GolfBuyer.

Incentive

Incentive doesn’t necessarily mean you have to bribe people to read your emails. Currently, LifeMinders doesn’t include incentive promotions within the emails, yet they still have very high response rates. LifeMinders does use a contest incentive to get users to subscribe, and it works very well.

It plans to test incentives in the email message in the future. Stephen Chapin, president of LifeMinders states: “Our primary incentive is personalized content that is relevant. For example, our home and garden information is relevant because it is timed by season.”

Based on the evidence from these email experts, promotional incentives aren’t required for successful email. Your business objectives should drive the use of incentives. Using incentives to build your email list makes sense. Some programs such as MyPoints.com successfully use incentives, but that’s the business they’re in.

MyPoints is a membership rewards program that provides incentives in exchange for member participation in advertising and surveys. So incentives can take many forms: useful/indispensable content (and relevance), privacy protection, membership, loyalty programs, exclusive email offers, branding, discounts, community, and so forth.

Other Best Practices for Email

Additional advice from the email experts:

  • LifeMinders: Use personalization. The very first experience matters most. Good subject lines that include recipient’s name. Make sure links work and that you track response from these links. Another piece of advice is to view email as a way to build relationships. “We have a retention rate of 90 percent at 90 days because we view email as a relationship builder,” states Mr. Chapin.

  • Exactis.com: Know your program’s business goals and objectives first. Know your target audience because it impacts the type of content created for email programs. Collect email addresses from other channels in addition to the web site (e.g., customer service reps, mailings, orders, etc.). Produce both text (60-70 percent of users) and HTML email (30-40 percent of users) since HTML lifts response (especially if you sell ads in your email).

Reporting is key, so track open mail, response and attrition rates. Make it easy to unsubscribe. Send confirmation emails. And a warning: human beings are required. Replies that include “comments” should be handled and responded to by people. Replies regarding subscriptions can generally be handled by automated systems but not 100 percent of them.

For example, Exactis.com receives a 1 percent reply rate overall. Of those, 60 percent are unsubscribe requests where 10 percent must be handled by humans. Twenty percent are change of address requests where 10 percent of those need to be handled by humans. Another 20 percent are general comments where most require a human being. This benchmark will help you figure out how to staff this function.

  • MarketHome: Personalize the email with the user’s name. Email is flexible, so base your techniques (e.g., content and incentives) on your business model and the knowledge of your target audience. Other advice from GolfBuyer: Concentrate on your specific market, stay focused and stick with your business strategy.

The “ROI” formula could really supercharge your email efforts. According to Mr. Lein, “We have over 11,000 subscribers and only 200 have left.” The GolfBuyer email service follows the Relevance + Opt-in + Incentive formula — it is personalized, opt-in, and provides users with an incentive to sign up and respond.

Next Week: How online advertising is evolving beyond the banner.

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