Introduction to E-Mail Marketing

Consider these three facts about American e-mail usage in 2005. A report by the Pew Internet and American Life Project found that 53% of Americans consider e-mail less trustworthy due to spam. A study by the e-mail security company Postini found that in March of 2005, a full 87% of all e-mail messages sent were spam. Yet a survey conducted by Opinion Research Corp. found that the average e-mail user has three e-mail accounts and spends almost one hour every day reading and sending e-mail messages. Based on these findings, it is reasonable to draw a few conclusions:

• Americans want to use e-mail as a communication tool, but they are frustrated by the high levels of spam they receive.
• It is easy for legitimate commercial e-mail messages to be lost, accidentally deleted, or simply remain unviewed among the deluge of spam in your customers' in-boxes.
• Your e-mail marketing must be personalized, focused, relevant, enticing, and unique to be seen.

In the past several years, spam has become so endemic that the U.S. Congress passed the CAN-SPAM Act, a set of laws governing how businesses can send commercial e-mail. Adhering to the Act is vitally important for your business; for more information, please see our article "The CAN-SPAM Act and What You Need to Know."

Advantages of E-Mail Marketing

Used correctly, e-mail can be a powerful marketing tool for increasing brand recognition, increasing sales, driving traffic to your Web site, and building and maintaining customer relationships. Some of the advantages of e-mail over more traditional marketing methods include:

• Inexpensive: You may need to spend some money on designing your text- and HTML-based e-mail pieces, but you can eliminate paper, printing, manufacturing, and shipping costs.
  
  
• Fast: An e-mail piece can be created very quickly, and many of your customers will receive it within 30 seconds of it being sent. Likewise, response time is very fast: 80% of customers who respond to an e-mail piece do so within 48 hours of receiving it.
  
  
• Personalized Message to a Targeted Audience: E-mail enables you to send targeted messages to specific segments of your customer base. Research shows that personalizing an e-mail greatly increases the chance that your customer will read it; it also increases the chance they will follow your call to action.
  
  
• Verifiable Results: Like no other marketing vehicle, e-mail enables you to immediately measure many types and degrees of customer reaction to your campaign. You can measure how many customers open your e-mail, how many click on a link in it, and how many ultimately purchase a product or take any other action suggested in the message.

Building an E-Mail Marketing Campaign

In this section we explain the five steps involved in launching a successful e-mail marketing campaign.

Step 1: Obtaining a List of E-Mail Addresses

Perhaps the biggest challenge is obtaining a list of qualified e-mail addresses. You can take two different approaches: build your own list, or rent a list. One way to build your list is to ask your Web site visitors to sign up for further information about your company, its products, and services. The advantage to this method is that you collect a relevant list of pre-qualified customers who have expressed interest in your company. The disadvantage is that it can take a long time to build a list. You must also be vigilant about following the CAN-SPAM Act laws. Keep the following in mind as you build your list:

• Obtain your customers' permission to send them e-mail by giving them a way to opt-in. Make it clear that you are asking them to sign up to receive commercial information about your company, products, and services. Make the form they fill out short and easy. Ask them about their interests so that you can send them targeted e-mail.
• Clearly explain your privacy policy (what you will do with the personal information they give you) and adhere to it.
• Offer something free--but of value to your customers--to entice them to sign up. Some examples are: free information or research, product discounts, a chance to win a prize, personalized customer service, access to additional services on your Web site, or notification of future events.
• You must also provide a clear and easy method for your customers to opt-out of further e-mail.

The second method is to rent a list of e-mail addresses from another company. This can be a quick-fix solution, but ratchet down your expectations: rented lists are normally only one-third to one-half as effective as lists you build yourself. If you rent a list, you must manage the process closely. To get your money's worth and avoid legal issues, ensure that:

• The company you are renting the list from follows all rules of the CAN-SPAM Act.
• The list contains qualified e-mail addresses; in other words, the people on this list have indicated that they want information about the type of products and services that your company offers.
• The list has been kept up-to-date and contains only people who have recently opted-in or that communicate regularly with the company you are renting the list from.
• The company guarantees useful results. Guaranteeing that a percentage of customers open your e-mail is not nearly as useful as guaranteeing a percentage of responses or click-throughs. Be wary if no guarantees are offered.
• You are comfortable with how the campaign will be managed. Will the company provide you with the list so that you can physically send the e-mail, or do you have to submit the e-mail message to the company so that they can send it. The latter is very common when the company wants to protect the privacy of their list, but it also means you must rely on the accuracy and timeliness of their reporting mechanisms.

Step 2: Define Goals for Your Campaign

Like any other marketing effort, you should define goals for your e-mail campaign. Are you trying to increase brand awareness, drive customers to your Web site, increase sales, or improve customer relations? Once you've decided on your goal, define what success will look like. If you want to drive customers to your Web site, you should already have several weeks or months of traffic statistics to use as a baseline for measuring the success of your e-mail marketing campaign.

Step 3: Determine Customer Segment to Reach

Once you define goals for your e-mail campaign, you need to define the customers that can best help you get there. If you took the time to ask your customers several questions about their interests when they opted-in to your e-mail program, it will pay off now. Being able to send targeted e-mail to specific customer segments is usually much more effective than sending generic e-mail offers to your entire list.

Step 4: Create the E-Mail Message

With a campaign goal defined and a customer segment identified, you can now create the e-mail message. One of the keys here is personalization. Any marketing piece must appeal to its intended audience, but this is especially important in e-mail because customers are so inundated with spam and junk they don't want. When your e-mail lands in your customer's in-box, it must stand out from the clutter; it must be clearly and immediately obvious that it is of interest to the customer. Here are some proven techniques to help you out:

• The "To" line of the e-mail should include your customer's name; even this simple level of personalization increases the chances of your e-mail being read.
• The "From" line should clearly indicate your company's name, or the name of someone associated with your company (and preferably known by the customer). A recent survey by Return Path revealed that recognizing a trusted company's name in the From line helped influenced 60% of customers to open an e-mail. If the customer does not recognize who the e-mail is from, they are much less likely to open it, fearing spam or viruses.
• The most important line is the "Subject." It is vital that these words accurately describe the value proposition of the e-mail, but most importantly, they must grab the customer's attention. However, don't overplay your hand. For instance, putting the word "free" in your Subject line is more likely to cause suspicion than excitement. It is also a good idea to keep the Subject as short as possible; recent research by EmailLabs found that open rates were 12.5% higher and that click-throughs were 75 percent higher when the Subject line contained 50 characters or less.
• The body of the e-mail should begin by addressing the customer. As in all direct marketing pieces, it is generally best to make your message as short as possible. Also, end with a call to action: if you want to drive traffic to your Web site, provide both a link and an incentive for clicking on the link. If you provide a link, be sure it takes the customer to the specific page on your Web site that provides the information or offer mentioned in your e-mail.
• Using HTML to create vibrant, professional e-mail messages not only increases the appeal of the message to customers, but it is an excellent way to extend your branding. You can even format the contents of your e-mail to look like a page from your Web site. However, you should avoid loading your marketing e-mail with lots of graphics--customers with older computers or dial-up Internet connections may become frustrated if the e-mail takes to long to download and open.

Step 5: Measure Your Success

An enormous benefit of using e-mail marketing is the speed and precision with which you can measure customer reaction. You can conceive of a campaign, execute it, and measure it's effectiveness within a matter of days. Following are some of the most important metrics to track for each e-mail campaign:

• Sent: This is simply the number of e-mail sent and functions as a baseline for several other metrics
• Bounced: The number of e-mail that bounced back because they were undeliverable. Some e-mail may not be deliverable for temporary reasons (such as a failure at the customer's ISP); other e-mail may be undeliverable because the customer's e-mail account is no longer active. If e-mail is undeliverable to a customer after three consecutive campaigns, their contact information should be considered invalid and deleted from your list.
• Delivered: The number of e-mail sent, minus the bounce back rate, equals the number actually received by customers. DoubleClick reports that the average delivery rate is 90 percent.
• Opened: The actual number of e-mail opened by customers. DoubleClick reports an average of 34.3 percent. If your average is significantly lower, consider changing the text in your e-mail's Subject line.
• Opt-Out: The number of customers who opted-out of receiving future e-mail from you. Obviously a high number here means that customers reacted poorly to the message or offer in the current e-mail.
• Click-Through Rate (CTR): The number of customers who responded to the call to action by clicking on a link in the e-mail. DoubleClick reports the average is 8.2 percent.
• Conversion: This is the ultimate number of successes, the people who were motivated by the e-mail and acted on it. If the goal of the e-mail was to sell more cameras, this is the number of people who bought cameras.

The inexpensive nature of e-mail marketing encourages experimentation; its ability to reach segmented audiences encourages refinement. Test variations of your messages on small groups of customers to find the most successful solution. Keep your e-mail lists fresh and relevant by constantly working to add new customers and weeding out old, expired, and invalid data.

E-Mail Marketing Software, Services, and Associations

There are many products and services available to help you manage your e-mail campaigns. Additionally, several professional marketing associations offer advice and up-to-date information about e-mail marketing. Here is a short list of resources to consider:

• Autoresponders: Used to instantly send an automated message to customers who opt-in to your e-mail list. Autoresponders can also aid your e-mail campaigns by sending repeated e-mail messages, over a specified time, to your customers.
• The Direct Marketing Association (DMA): A professional trade association with more than 5,000 member companies worldwide. The DMA publishes quality advice and information about e-mail marketing and actively works for policy change in the industry. Their Web site is www.the-dma.org.
• E-Mail Templates: There are many free, HTML e-mail templates available that can give your campaigns a professional look. Many of these templates require no technical skills at all to use. For several examples, see www.freenewsletterideas.com/free-newsletter-templates.htm.
• Publishing and Tracking Systems: These services offer businesses the ability to easily manage multiple e-mail campaigns and track their results. The features offered and associated costs vary considerably. Look for a system that tracks all the metrics discussed earlier in this article, enables you to send e-mail attachments, and offers free technical support over the phone.

The Future of E-Mail Marketing

E-mail marketing best practices continue to evolve, and new laws governing commercial e-mail are enacted on a regular basis. If you haven't done so already, please read our article "The CAN-SPAM Act and What You Need to Know." This Act forms the basis of commercial e-mail law in the U.S. Since its inception, the Act has been updated several times; for recent additions and proposed changes, see http://www.ftc.gov/bcp/conline/edcams/spam/rules.htm. One proposed change all businesses should monitor closely would reduce or eliminate a company's ability to engage in "pass-along" marketing--the practice of encouraging customers to forward commercial e-mail to friends.

Another important new development in the fight against spam is e-mail authentication. This technology seeks to significantly reduce spam by only delivering e-mail messages that can be verified as originating with a valid business. Several e-mail providers, including Microsoft Hotmail, are adopting authentication technology. This means businesses who want to send e-mail to Hotmail users will also need to adopt authentication technology. For more information, visit www.emailauthentication.org/resources.