The Little E-Mail Marketing Budget That Could

Think you need a big budget to make email marketing work for your organization? Or a large list? Or a three-digit average order? Think again. Here’s the story of a company that’s seeing a tidy profit from its email marketing efforts with none of the above.

I heard Sam Cutting IV, president of Dakin Farm, speak at the Vermont/New Hampshire Direct Marketing Group annual conference last month. My thanks to him for letting me share with you what he shared in his presentation, including specific cost and revenue figures. If you’re looking to do a lot with a small email marketing budget, you’d do well to follow Dakin Farm’s lead.

A Small Company on a Small Budget…

Dakin Farm, based in Ferrisburgh, VT, is a family-owned specialty foods company. Its bacon, cheeses, hams, maple syrup, turkeys, jams, and ribs are sought after (my mouth is watering just writing about them). It markets its products via two retail stores, a catalog, a Web site, and email.

Like most small companies, Dakin Farm doesn’t have a large marketing budget. The total spend on email marketing for FY2004 was a little under $14,000, an average of just over $1,000 per month. Each send to its list costs about $400.

Sue Downing handles Dakin Farm’s marketing. She, along with Sam, teamed up with Timberline Interactive and SubscriberMail to help manage email marketing.

… With Big Returns

$185,000. That’s how much revenue Dakin Farms can directly attribute to 2004’s email marketing efforts. That’s over $13 in revenue for each dollar spent.

Sue and Sam figured they needed to bring in $800 per send to break even. They needn’t have worried. Even last year’s least successful send surpassed this, reaping $1,200, or 50 percent over their breakeven.

The best send? It harvested over $28,000 in sales. Not bad for a $400 investment. Over the course of 2004, they earned an average $2,500 each time they sent to their email list.

List Details

Dakin Farm has a house list of nearly 13,500 people. A house list keeps send costs low. For long-term success in email marketing, having a list is critical. You can mail repeatedly without list rental fees. It’s like the difference between renting and owning a home. When you rent, it’s an expense; when you own, you build equity.

The company loses an average of about 30 addresses each send through unsubscribes and hard bounces. That’s roughly 0.24 percent of the list, which is low. Meanwhile, net file growth between sends averages about 55 addresses. The figures are small, but they’re moving in the right direction. Dakin Farm’s list is larger with each mailing.

Campaign Details and Testing

Dakin Farm’s products have seasonal appeal, which is reflected in its email marketing schedule. In 2004, it did 36 email sends, an average three a month. But those mailings are weighted toward the busy seasons. In December, it mailed five separate email times to its list (the products are very popular holiday gifts). To compensate, it mails much less frequently in the spring, its slow season.

Testing is another thing Dakin Farm does right. I like the approach: very straightforward, nothing fancy. The goal is simply to learn what works best, and to do more of it. Strong offers, such as “Your Last Chance to Save $10 on Holiday Shopping,” and clear deadlines, such as “just 5 days left,” are proven successful, so they’re included in all email copy.

Metrics

Dakin Farm knows revenue is the only metric that counts. It uses other metrics to identify ways to optimize future email efforts. Here are some very impressive results from its best 2004 campaign, which brought in over $28,000 in revenue.

Unique click-throughs were a respectable, but not overwhelming, 4.34 percent, meaning just under 500 people went from the email to the site. After that, it gets interesting. Total orders were also just under 500. The company got almost one order per unique click-through. The click-to-order conversion rate for this email was a very impressive 98 percent.

Even without high conversion rates, Dakin Farm’s email marketing is profitable. One of its off-season email messages had a click-to-order conversion rate of just 6.8 percent. Yet it generated $1,875 in revenue. An average order cost of $50 (again, not a particularly high average order) helped.

At the end of his presentation, Sam offered these words of email marketing wisdom:

  • Everyone with a direct response Web site should build an email list and send offers, even if the list is small.

  • Measure response to email offers.
  • Determine your breakeven.
  • Increase the frequency of sending email to a level that feels right and is above breakeven.
  • Ensure every email contains a strong offer.
  • Use short deadlines as a call to action.

Sam, I couldn’t have said it better myself.

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