Unless you've been hiding under a rock, you know that the economy is in desperate times. As companies begin to tighten their belts, thoughts often turn to cutting marketing budgets. The good news is that email is one of the most efficient forms of marketing available. The bad news is that not all the people in charge of making the cuts know this.
To cope with this likely scenario, you should be focusing on two things. The first one is easy: Educate the powers that be about the value of email marketing, particularly in a down economy. The second one is a little more complicated, but it is well worth the effort: Make sure that the email marketing dollars you do have are spent in the areas where they can have the biggest impact.
On the education front, you will want to arm yourself with a couple of handy statistics. For instance, it might be helpful for your boss to know that the Direct Marketing Association estimates that email will bring in $45.65 for every dollar spent in 2008. Or how about an average cost per order for email that comes in at less than $7 versus $84.21 for banner ads, according to the Shop.org's State of Retailing Online 2008 report? That's a 10-fold difference! With these kinds of numbers, you can make a strong case for maintaining or even increasing your email marketing budget by allocating dollars from more expensive programs.
Now that you've convinced your boss about the important role that email marketing plays in driving revenue, you need to make sure you're spending your budget wisely. The first step is to look at the money that is being spent on email marketing and break it out into the various components -- email creative, database management, customer segmentation, deliverability, production, delivery, overall strategy and any other number of areas.
All of the items mentioned above are important, but you need to figure out where you can do things more efficiently so you can allocate more money to the strategic areas that can actually increase your conversion rates -- areas like testing and targeting. If you're currently outsourcing email delivery to an ESP, you'll likely notice that a big chunk of your budget is going toward just getting these emails out the door.
This is a situation where you should consider whether a new approach might be more cost effective in the long term. Rather than paying per-message fees with an ESP, there are technology solutions available that will allow you to own your email delivery and management technology, which usually ends up being a lot cheaper for companies with decent email volumes. Making this investment in email delivery is also a smart move because it allows you to own your email sender reputation, which is an increasingly important component of deliverability.
Speaking of deliverability rates, you need to make sure you are doing everything you can to get your numbers as high as possible. The more email that gets delivered, the higher your conversion rates. When we worked with The Parent Company's eToys division to increase its delivery rates by 9 percent over the previous holiday season, it resulted in $1.1 million in additional revenue.
When it comes to deliverability, don't overlook the obvious -- such as email authentication. This is easily implemented with the right solution. If you're working with an ESP, make sure you verify that they have implemented various forms of authentication, including DKIM and SPF. I'm always amazed at the number of companies that neglect this simple exercise. Next, if you have access to deliverability tools like campaign preview and mailbox monitoring, use them. If your email isn't making it to the inbox, or your email isn't appearing as you expected, you're going to miss out on opportunities.
One last point on deliverability: Make sure you're keeping your lists clean. This will help keep your email reputation clean by avoiding sending messages to dead accounts, which is one of the main factors that ISPs look at in evaluating your reputation. It's even more important if you're working with an ESP that you pay for the number of emails sent. By getting rid of the bad addresses, you reduce your list size along with your CPM fees.
Next, make sure you're leveraging your customer data properly to send relevant messages and offers. We all know this is important, but sending a broadcast email is so much easier. The problem is that broadcast emails will generate a fraction of the response rates than a 1-to-1 message. If you don't know where to start, consider employing strategies services from your email technology provider or ESP. The investment will quickly pay for itself and will show your customers that you understand their wants and needs.
There's no way to tell if we're headed into a long-term recession or not, but figuring out how to get the biggest bang from your email marketing buck is always a good idea in any economy.
Good luck and good sending.
Spencer Kollas is director of delivery services for StrongMail Systems.
