How E-mail Marketing Fits into Digital Marketing
It is useful to return to Figure 1.1 which illustrates the company website design and usability as central to digital marketing and then e-mail, search, social, and mobile as the four foundations of the digital marketing delivery mix that should relate to our digital strategy. These are the primary areas where the company wants to focus on developing digital marketing competencies because all work together.
So the reason that these channels are foundational is that they work to produce results. Of course, as stated above, before beginning any digital marketing campaign, managers should carefully consider the overall strategy of the organization and the brand positioning strategy, that is, the target market, the products offered, the product category, and the point of differentiation. Without a strong strategic background, all marketing efforts lack focus and are less effective.
Assuming the strategy is in place, the subsequent marketing campaigns that are run on digital platforms should work in tandem. For example, the website should be optimized for organic search in terms of the title tag and appropriate keywords and point the user to sites for social interaction. In turn, search and social media should work together also. One way to ensure they are integrated is to monitor social media channels to understand how to optimize paid and organic search, as discussed in Chapter 4.
E-mail marketing can be integrated with other platforms of digital marketing quite easily. We can include icons on our e-mails pointing customers to social media or back to our websites. Including social media connection information and forwarding capabilities on e-mails can also increase the reach of communications.
There are a number of other ways to make sure e-mail campaigns are integrated with social media.36 In social media platforms, we can ask customers to give us their contact information in exchange for some specific offers. It is a good practice to use e-mail to send out social media updates and solicit permission e-mail addresses from customers not only on your website but on social media. Once people are on the site, collect customer e-mail addresses and continue to communicate with them effectively. Therefore, as a strategic element of the digital marketing delivery mix, e-mail fits into the scheme of customer retention and service as well as acquisition.
The most effective marketers look at all four foundations of digital delivery and their website design and see how they can work together in an integrated fashion to produce results. Dreamfield’s Pasta, which provides a type of pasta targeted toward diabetics (allegedly low carb), is a good example of this type of integrated digital campaign across channels. The company has a high price point, a unique point of difference, and uses this information with a strong grasp of digital channel communication.37 The video link below describes how this one company clearly understands its unique differentiating point and leverages it across all delivery channels.38 By understanding its customers and which channels they use, the company created a highly effective cross-channel campaign, using e-mail as its lynchpin. Similarly, Toyota received an award for its e-mail marketing campaign, which drove 70,000 visitors to engage on its website with a simple e-mail directing customers to a Microsite (a landing page specific to a campaign) and a follow-on e-mail.39
E-mail Marketing as the Unsung Hero of the Digital Age
E-mail marketing provided the link between campaigns for Dreamfield’s and Toyota as it has for many other companies. In many ways, e-mail marketing is the unsung “hero” or “workhorse” of the digital age. The reasons for this statement are many. First, e-mail was the first tool that really allowed companies to take advantage of the interactivity of the Internet in marketing. Using e-mail technology powered by customer data, we could identify those customers most likely to respond to an offer, send a targeted offer, and track the results of the campaigns as well as other statistics. Another reason e-mail continues to be the unsung hero of the digital age is that it does a lot of the work of digital marketing. Although e-mail is not a glamorous technology, it is a powerful one. E-mail technologies are used throughout the customer relationship management process, from e-mails confirming purchases to follow on newsletters and promotions, e-mail is a vital tool throughout the customer experience. In fact, in a recent report from ExactTarget on the State of Marketing in 2014, 88 percent of marketers reported that they use e-mail marketing technology, with 58 percent of them planning to increase their budgets in this area.40
Another reason e-mail marketing can be considered the unsung hero of digital marketing is that e-mail marketing was the first digital marketing technology to be used over the Internet that took advantage of the interactivity of the Internet. Prior to the widespread adoption of e-mail as a digital marketing technique, marketers had primarily focused on the use of display advertising. In fact, e-mail has evolved from a broadcast mechanism to a permission-based channel to a true engagement channel.
The thinking in the beginning was that the computer looked like a small television screen, so let’s advertise on it! What marketers failed to take into account was that the Internet provided consumers with much more control and the desire for control over their content. In order for an ad to be seen, much more work had to be done on the part of the marketer. Click through rates on display ads were high and then rapidly fell to a similar range for direct mail, 2 to 3 percent or less. What was needed was a way to get the consumer’s attention and also to take advantage of what makes digital marketing unique. Digital media allow for interactivity, the use of customer information, and immediate response in the form of a conversation. Digital media also involve the customer in the marketing process and enable engagement.
Email marketing is well suited to the digital age. E-mail marketing provides for there to be interactivity because the consumer can respond and his or her preferences can be taken into account in the next communication. E-mail is immediate because, especially with mobile devices, the message can be delivered in a timely manner. E-mail is involving because the messages, although brief, can lead to other parts of the Internet and thus draw the consumer into a particular website. E-mail is information intense because we can use information we have collected about the consumer in our communications to them via e-mail.
E-mail marketing caught on rapidly because of these features that are related to the interactivity of digital marketing. However, it was also natural to compare e-mail to traditional forms of direct marketing, particularly direct mail, because of the similarities. The missives were delivered to the customer’s inbox (instead of physical mailbox), could be addressed to the customer specifically, and could contain a targeted offer.
However, there were several key differences between the two communications channels. E-mail is faster, cheaper, and more effective than direct mail. E-mail is faster because offers can be assembled quickly without having to wait for the print production process. It is cheaper because again there is no need to print and mail communications. It is more effective because we can quickly determine customer response and change the next offer to increase response rate. In fact, although we used to have to wait three weeks for direct mail response, the time was shortened to three days and today, most responses are garnered within the first 24 to 48 hours after the e-mail is sent. So e-mail is seen as more effective than direct mail because response rates are higher and because we can quickly change our offers and parameters and gauge results. E-mail statistics vary by industry, country, and quality of the list used. However, in spite of the negative publicity that e-mail has received recently, unique open rates (unique individuals who open the e-mail) are hovering at about 19 percent41 and click thru rates at over 3 percent,42 quite acceptable metrics. Although open rates have declined a bit, depending on the study, overall click through rates (CTRs) are remaining relatively consistent. Most Western and European countries have similar statistics.43 The current unsubscribe rate is about 0.25.44
E-mail as a Branding Tool
What has really put e-mail marketing on the map has not only been the access to measurement but been the ability to integrate with other marketing channels. The integration of the four foundations of the digital marketing delivery mix, search, social, e-mail, and mobile with website design is made easier through e-mail marketing. We can put links to our social site on e-mail and put keyword-rich terminology on our e-mail messages and our website.
As discussed above, a typical scenario is to drive people to the Facebook or other social media site via e-mail or the website, collect customer information, and continue ongoing communications that way.
E-mail can reinforce our brand image as well by producing a consistent message to the customer. Branding, as illustrated in Chapter 4, takes many forms on the Internet. In its most basic terms, branding is our promise to the customer about what value our product will deliver. Whether it be cleaner floors or efficient computer software, branding is an important aspect of customer communication. In fact, in an increasingly fragmented world of customer communications, branding can be considered the way to “break through the clutter” of the consumer inbox to create a unique and special message to which the consumer will respond.
Typically, the e-mail is used as a promotional message. However, e-mails can be used effectively in a content marketing strategy to reinforce a brand image. For example, a local Chicago website development company45 uses bimonthly web posts to increase traffic to its website and reinforce its brand image. The company wishes to be known for its image as a leading purveyor of website development expertise. The blog posts are promoted on the website and customers and prospects are encouraged to subscribe to the system. The blog posts are then e-mailed out each month to encourage readership. The e-mail format also makes it easier for the posts to “go viral” and reach a larger audience.
However, some marketers indicate that they do not believe digital marketing has delivered as a branding vehicle. Gartner group indicates that social, mobile, analytics, and e-commerce are the most frequently recognized tools of digital marketing. We have focused on the four foundations of the digital marketing delivery mix (search, social, e-mail, mobile ) supporting our central web site design. It is not at all surprising this set of delivery platforms would not be considered effective branding tools. These tools can reinforce a brand image but not create a brand image. In general, the most effective way to build a brand image is still through various forms of advertising, whether traditional or digital.46
E-mail as a Retention Tool
If overall e-mail is faster, cheaper, more effective, and more easily measured than direct mail and effective in brand-building, it is no surprise that e-mail as a digital channel caught on quickly. Marketers rapidly realized, however, that customers did not appreciate receiving e-mails from those whom they did not have a prior business relationship. Seth Godin47 coined the term “permission marketing” around this time and e-mail marketers adopted the concept of different levels of permission.
To further understand e-mail marketing as a retention tool, let’s take a closer look at the distinction of what digital marketing is by examining the Gartner group definition and see how e-mail might fit into the scheme. Gartner defines digital marketing as a “set of techniques, enabled by technology, which allows marketing to improve its processes to engage in a dynamic conversation with people who are influencers and buyers and ultimately target, acquire and retain customers. Digital marketing includes the ability to interactively communicate with customers through electronic channels, such as the Web, e-mail, smart devices such as phones and tablets, and mobile applications.”48
Therefore, e-mail is a digital technology that that allows for a conversation to occur between the buyer and seller. E-mail, although best used for customer retention efforts such as ongoing communications via newsletters and promotions, can be used to target and acquire customers. Because of legal concerns which will be discussed later and the perceived intrusive nature of “spam” e-mails, consumer response to e-mails is better when there is an established relationship. (Parenthetically, the term spam came from an old Monty Python skit in which the word was used over and over and did not originate from the product by Hormel).
As we have come to understand through our work so far, companies need to know who they are and develop a clear positioning strategy in order to begin their digital marketing campaigns. The next step is then to develop a clear objective for the particular digital technology. These objectives may be set using the customer lifecycle. As the customer lifecycle indicates, e-mail is best used as a retention tool. The reason is that e-mail that is expected is more likely to be opened and read by current customers.
In fact, as indicated by the four foundations of the digital marketing delivery mix, e-mail does not work alone. In addition to search, social, and web design, mobile marketing is important to digital marketers and can be used by e-mail marketers. In fact, e-mail mobile and loyalty are all intertwined. For example, Rack Room Shoes was able to analyze customer data and then create a permission-based loyalty program for its customers, busy Moms. Consumers wanted quick access to their rewards points that the company created a digital program that was accessible through a mobile application. Reminders were sent by e-mail messages. Customers preferred e-mail messages because of the limited number of text characters. However, e-mails were quite often opened on the mobile platform either before, after, or during the shopping experience. The results in terms of customer loyalty and sales were striking. The company captured 20 percent more of its customers’ overall shoe budget (share of wallet). Rack Room Shoes also saw the number of customers spending more than $400 a year increased.49
This type of e-mail marketing with permission is highly effective. As e-mail has evolved from broadcast spam, to permission to true engagement, it has continued to hold a solid place in the digital marketer’s list of tools. As noted on the previous page, the highest response rates and other measurements will most likely come from a list of the marketer’s current customers or “house list” because those customers have purchased before and are familiar with our product.
Figure 5.1 illustrates the different levels of permission, opt-out, opt-in, confirmed opt-in and double opt-in. Each one requires a higher level of commitment from the customer. Therefore, the tool is not really optimal for customer acquisition. If we think about the customer acquisition and relationship continuum, we would see that e-mail is best for customer retention and service. E-mails that are permission-based and use information that the customer has given us to develop tailored communications have the best results.
Figure 5.1 Layers of permission
The different types of permission in e-mail marketing are opt-out, opt-in, confirmed opt-in, and double opt-in and are shown in Figure 5.1. Opt-out is the lowest level of permission. When a box is checked on an e-mail and the consumer must “uncheck” the box to not receive future e-mails that are opt-out. In opt-in the box is unchecked and must be checked to start receiving communications. With confirmed opt-in we send another e-mail to confirm intention and with double opt-in we send yet another e-mail to confirm the consumer’s wishes. Although response rates might drop off with double opt-in e-mail, the quality of customer is usually quite high.
In opt-out, we ask the customer to do something so as not to receive future information from us. In opt-in the opposite is true; we ask the customer to do something to continue receiving communications from us. In confirmed opt-in, we send a communication that tells the customer what has happened, reminds them they will be receiving future communication. In the highest form of permission, the double opt-in, we ask the customer to reconfirm their original intention to opt-in.
E-mail response is measured by CTR, which is the number of e-mails opened divided by the number of e-mails delivered. E-mails that are not delivered are said to have “bounced,” with a “hard” bounce being an undeliverable e-mail and a “soft” bounce being an e-mail that could not be delivered at that time. Perhaps a better measure of e-mail performance is the click to open rate (CTOR), which is the number of unique opens divided by the number of e-mails delivered. Unique opens is important in terms of tracking performance because these individuals may be interacting with us more than once and unique opens means they are not double counted.
All these analytical metrics must reinforce the major goal of e-mail marketing campaigns and help to integrate the e-mail program with our customer relationship and retention programs and to create engagement. There is no doubt that e-mail marketing has become a valuable tool for communication. E-mail therefore has become known as primarily a tool for customer retention rather than acquisition. The delivery platform is suited not just promotions but to ongoing customer communication for customer retention such as newsletters. In fact, it might be said that e-mail marketing is a powerful tool of the digital marketing age. The tool has consistently provided a way for firms to communicate with their customers and open rates and CTRs have remained surprisingly consistent over the years as well. With 50 percent of the population starting their day with e-mail and with mobile communications putting e-mail at our fingertips all the time, the tool has become invaluable for marketers.
E-mail Marketing as a Process
In general, a fully developed process also helps our e-mail marketing efforts (Figure 5.2). As the process below indicates, we start with the data we may already have on our customers. We analyze our current database and segment it and analyze the response rates, if any. We then create, execute, and measure our campaign and use those results to create the next iteration.
If we are building a database from scratch, we need to find ways to incent our customer to provide e-mail addresses to us. We can collect e-mail addresses through online registration on our website, face-to-face events, offline advertising, or through social media. List brokers will also provide lists of customers that have agreed to opt-in to e-mail offers from companies that they don’t know. Typically we don’t acquire the e-mail address unless they respond to the offer. As noted above, sending e-mails to individuals without permission, at least in the form of a prior relationship, is not recommended, not in the least because it does not provide the best results. Fortunately, there are many ways to obtain these permission-based e-mails to avoid the perception of spam.
Figure 5.2 E-mail marketing campaign process
In fact, the lack of permission in e-mail marketing led in 2003 to the Federal legislation known as the “Controlling the Assault of Non-Solicited Pornography and Marketing Act” (CAN-SPAM). This important piece of legislation was intended to curb abuse by spammers and those who “phish” for sensitive information via e-mail. This e-mail legislation applies to acquisitioned or promotional e-mails and says they must have the following:
• Valid from e-mail address
• Valid reply to e-mail
• Street address
• Be clearly recognizable as advertising
CAN-SPAM has become so well-recognized that many marketers who do not need to do so, such as those sending relational or transactional e-mails, still adhere to many of the CAN-SPAM rules. A good way to tell if an e-mail is official is to look for the valid reply address, street address, and unsubscribe provision. So part of our e-mail marketing process is generally finding a way to adhere to federal legislation.50
Often we use an e-mail service provider (ESP) to help manage the database and our marketing metrics. ESPs typically use hundreds of different offers and are able to track them individually. Other reasons to use ESPs such as ExactTarget Marketing Cloud Services or Mail Chimp is to help get e-mails delivered through Internet service providers (ISPs) and not marked as spam, aid in tracking and measurement, and easily integrate with social media and other campaigns. ESPs also help keep us compliant with CAN-SPAM by making it easy to do so.
Once we have the database in place, we can analyze the data and use segmentation and persona marketing (Chapters 3 and 6) to refine our offers. Using ESPs, we can provide dynamic content, changing offers, photographs links and other parts of our e-mail according to the target segment. This dynamic content capability allows companies to use personalization, as discussed in an earlier chapter, to great advantage. Customers respond to personalized messages, although some research indicates that caution is needed. Customers can perceive communications as “too much, too soon,” and the relationship needs to be developed slowly over a period of time before extensive personalization is used.51 This fact highlights that e-mail marketing is best used as a retention tool.
Effective E-mail Design and Offers
Whatever the objective, the e-mail marketing campaign must be planned. Typically we decide on the objective of the campaign and the target audience and create a viable list from which to work. We then create compelling copy and a subject line for the e-mail. Critical to the effective design is what is known as a “call to action.” The call to action is a principle from direct marketing that simply means what the company wants the consumer to do upon receiving the communication. Typical calls to action include asking for a purchase or to download information or ask for a customer response or review. Good calls to action should be specific and include a time deadline. Without urgency, customers will not have an incentive to react. These principles can also be used effectively in writing paid search advertising. Effective “action” words include the following:
Buy
Order
Call
Visit
Download
Read
One effective call to action word from direct marketing that is not so effective in direct e-mail marketing is the word “free.” Highly effective offline in print media, the word “free” will often be a red flag to ISPs, as action is not the only principle of direct marketing that can be applied in marketing. In fact, many direct marketing principles are now being applied in e-mail marketing, search, social, and website design.52 One of these principles is A/B testing as noted in Chapter 4. In this approach we test one particular offer, known as the “control” against something which has been changed to see which is most effective. Multivariate testing involves testing multiple aspects of the e-mail at once to see which combinations produce th e best results.
The detailed process of e-mail design is beyond the scope of this book. However, making sure that your e-mail is “above the fold” and uses the “golden triangle” principle from website design is another way to ensure a higher response rate. Making sure that the offer is clear and can be easily found and responded to is another way to increase response. As in website design, principles from behavioral psychology can also apply.
E-mail Metrics
In general, in designing e-mails we can put in links that can then be tracked and analyzed and these can provide valuable information on our customers’ interests and background. In addition, ESPs will provide us with a number of key marketing metrics for e-mail marketing. A few of these metrics are stated below:
• Open rate: Percent of e-mails opened
• Bounce rate: Percent of e-mails undelivered (hard bounce is a bad e-mail address; a soft bounce is one that is temporarily undeliverable)
• Unsubscribe rate: Percent of customers unsubscribing from our offer
• What links were clicked
• CTR: The number of clicks the e-mail generated
• Forward/Saves/Prints: Other measurements of activity on the e-mail
The specific e-mail metrics that a company uses depends on particular campaign objectives. Hopefully you have an idea of how to develop an e-mail campaign using permission principles and some idea of how to measure the results.
What to Do Next after Chapter 5:
1. Imagine you are creating a campaign for a company or service. Determine where you are going to get your list of e-mail contacts; if you have responses from prior e-mails, analyze those. Which were most effective and why?
2. Develop a list of more detailed objectives for an e-mail campaign based on the Customer Acquisition and Relationship Management Process (Figure 1.8).
3. Design your first e-mail for the campaign. You can use a free e-mail marketing service for the design or just paper and pencil. Who is the audience? What is the call-to-action, the timing? How will you measure results?
Chapter 5 Discussion Questions:
Discussion 5.1: Think about e-mail communications from marketers, perhaps some that you have received yourself. What makes them interesting and worth your time to open and read? Do you ever take any action as a result of the e-mails? Why or why not?
Discussion 5.2: If you were running an e-mail marketing campaign for your own or another company, what would be the most important metrics you would use and why?
Discussion 5.3: What are the main benefits of using an ESP? Do you think it is advisable to use such a service or to send the e-mails out on a personal or company e-mail address?
Discussion 5.4: Explain the concept of permission marketing. Does this concept relate to marketing beyond e-mail marketing and how?
Chapter 5 Glossary:
A/B split test: Testing two treatments of a website, an ad, e-mail, or direct mail communication with one modification to see which treatment is more effective.
Bounce rate: Percent of e-mails undelivered (hard bounce is a bad e-mail address; a soft bounced is one that is temporarily undeliverable).
Call-to-action: What you are asking the customer to do (usually by when).
CAN-SPAM: Stands for Controlling the Assault of Non-Solicited Pornography and Marketing Act; regulates unwanted e-mails; only applies if there is no prior relationship.
Click through rate (CTR): The number of clicks the e-mail generated.
CTOR or CTO (Click to open): Unique click/Unique opens.
Open rate: Percent of e-mails opened.
Unsubscribe rate: Percent of customers unsubscribing from our offer.
Permission marketing: Asking someone to opt-in or get them to consent to receive a marketing communication.
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51 T. White, D.L. Zahay, H. Thorbjornsen, and S. Shavitt. 2008. “Getting Too Personal: Reactance to Highly Personalized Email Solicitations.” Marketing Letters 19, no. 1, pp. 39–50.
52 D. Zahay and B. Massey. 2013. “Everything I Needed to Know about CRO I Learned from Direct Response Marketers.” Slideshare. http://www.slideshare.net/bmassey/what-we-can-learn-from-direct-marketers-by-brian-massey-and-debra-zahay-23117583?utm_source=slideshow&utm_medium=ssemail&utm_campaign=upload_digest (10/13/2014).