E-mail marketing can help your company achieve a variety of online marketing objectives, ranging from tangible revenue increases to “softer” benefits such as improved branding.

Historically, companies have approached e-mail marketing with the idea of sending out a load of messages to everyone in a database and hoping some of them yield results. But your mantra for e-mail marketing should really be: “Right person, right message at the right time”.

E-mail marketing is among the most cost-effective marketing tools you’ll ever use. According to Forrester Research^*, e-mail marketing return on investment (ROI) is two to three times higher than other forms of direct marketing. The costs to start up an e-mail marketing program are relatively modest and extremely cost-effective on a per-campaign basis. Furthermore, list segmentation tactics allow you to send targeted campaigns to customers or prospects instead of a generic blast, increasing the likelihood of generating more sales per customer.

Your friend with benefits

To make the most of e-mail marketing at your company, it’s worthwhile to review the strategic benefits of e-mail marketing.

Relatively low cost of fulfilment
The physical costs of e-mail are substantially less than direct mail. According to recent survey by Forrester Research^*, 66% of respondents said that e-mail is the most cost-effective marketing tool at their company. “Marketers tell us that they enjoy an ROI that is two to three times higher with e-mail than it is with any other form of direct marketing,” Forrester said in its U.S. E-mail Marketing Forecast.

Indeed, in a recent survey of 900 digital marketers, the vast majority of respondents (87%) rated e-mail as “excellent” or “good” for ROI, higher than for any other digital marketing channel. Some respondents reported seeing a 500% ROI from this channel.

How do you rate the following channels in terms of return on investment?

Source: EConsultancy, Email Marketing Census 2010

Direct response medium encourages immediate action
E-mail marketing encourages click-throughs to your website where the offer can be acted upon immediately, thereby increasing the likelihood of an immediate response.

Relationship development and engagement
E-mail marketing, and a series of welcome e-mails in particular, offer a great way of starting a conversation with your customers.

Faster campaign deployment
Lead times for producing creative and the campaign lifecycle are much shorter for e-mail marketing than traditional media.

Tracking and follow-up
If we know that a customer has opened an e-mail or clicked on a link but has not yet converted, you can follow-up with a second e-mail campaign. And because this second campaign is targeted to a specific individual or group, you’ll be saving even more on costs.

Measurability
If you can click it, you can track it. Plus, your company gains instant feedback on the popularity of offers, enabling you to respond quickly to customer wants and needs.

The bad news

It is too simplistic to describe e-mail marketing as “cheap, quick and easy.” Instead, many practical issues need to be examined in order for success to be achieved.

Achieving relevance
If your messages are not relevant, it’s inevitable that customers will tune out and response rates will fall.

Determining the right frequency
Be sure to set expectations for frequency. If you tell customers you’re going to send them a monthly newsletter, then send it monthly – no exceptions. Nothing spoils a customer experience more than unmet expectations.

Declining subscriber engagement through time
E-mail recipients are most responsive when they first subscribe, as shown in the chart below¹, but their interest naturally tends to decline. This is a fact of e-mail marketing life. To address this, consider a campaign to jolt subscribers every once and a while – everyone loves an iPad giveaway, don’t they?

Source: Barratt, S. and Davis, S. (2009) Connected Commerce: The intersection of e-commerce and e-communication. Journal of Direct, Data and Digital marketing practice, Vol. 10, No 3. p249-61.

Data quality and integration
Using an e-mail service provider – such as Campaign Monitor or Lyris hosted — can potentially mean that you have a separate customer database that records e-mail interactions. For e-mail marketing to be really effective, consider spending the extra money to integrate e-mail data with your CRM.

Set objectives

Before embarking on any e-mail marketing project, be sure to set clear objectives. What do you hope to accomplish? What does success look like? How will you measure it? Here are some possible high-level objectives:

• Increase sales
• Maximize cross-sell opportunities
• Increase brand awareness
• Increase customer loyalty

Increase sales
By using list segmentation, your company can send targeted e-mail campaigns to its customers. The more customized and tailored an e-mail campaign is to the recipient, the most likely they are to “convert” or carry out the desired action, increasing the likelihood of generating more sales per customer.

Maximize cross-sell opportunities
A well-planned e-mail marketing campaign can generate high response rates, allowing you to not only get the word out about products and services, but realize opportunities to cross- and up-sell your target audience.

Increase brand awareness
Integrating your messaging and creative into e-mail campaigns will allow your company to enhance perceptions and improve brand recall.

Increase customer loyalty
Tell me if you’ve heads this before: Acquiring new customers is more expensive than retaining existing ones. E-mail is a great way to inform current customers about new offers.

Following these guidelines should enable your organization to start planning your e-mail marketing strategy. Be sure to include key stakeholders in the planning process and seek out executive level buy-in for your plans.

^*Source: JupiterResearch/ClickZ E-mail Marketing Executive Survey (7/08), n = 286 (e-mail marketers, US).
¹ Barratt, S. and Davis, S. (2009) Connected Commerce: The intersection of e-commerce and e-communication. Journal of Direct, Data and Digital marketing practice, Vol. 10, No 3. p249-61.