Last summer I wrote about some of the problems marketers encounter with a home-grown email marketing solution. Since that time, we've encountered additional situations -- both where a company was considering bringing its email marketing in-house and where a company was considering scrapping its home-grown solution and outsourcing the work.
Before reviewing the new reasons home-grown solutions can be bad news, let's quickly review the original three.
Here are additional ways that home-grown solutions can lead to grief.
If a platform at an ESP isn't an ongoing development project, that ESP will fall behind its competitors and begin to lose clients. The investment in people and dollars to continuously roll out new features and functionality reaches staggering levels at the top ESPs. Home-grown solutions, on the other hand, tend to be looked at more as projects of a finite duration. Once up and running, the home-grown solution can turn into "cementware" that is difficult or nearly impossible to change. So not only does that solution begin to fall behind the ESP solutions from the day it launches, but it is often already behind other ESPs' solutions because it was designed 12 to 18 months prior to launch with the features and functionality locked down at that point in time.
Even if the resulting platform is architected in a way that makes changes to it reasonably easy to accomplish, few companies have the stomach for the people and dollar investment required to keep those updates and improvements happening. (Amazon is obviously an exception to this!) As a result, if an RFP pitted an in-house solution against the leading ESPs, the in-house solution would lose almost every single time.
The No. 1 reason that companies take email in-house is a desire to save money over the long run. The marketing team can find the seduction of "free" email hard to resist -- as can the CEO and CFO. And while it can be quite easy to document the savings, quantifying the cost of missed revenue opportunities can prove much more difficult. But it's imperative that you do so if you have a home-grown solution.
We've already discussed the high cost of keeping an email platform up-to-date with the latest features and functionality -- costs that a company would not have incurred otherwise. And since it's more likely that there is not an ongoing investment being made, the marketer ends up with fewer multichannel tactics and strategies to employ vis-à-vis his or her competitors. ESPs have the ability to leverage the cost of adding new features and functionality over hundreds of clients. Home-grown solutions do not. This lack of new features and functionality can only result in fewer conversions over time that you otherwise might have had. So, while difficult to put a dollar figure on this lost opportunity, it's there. On paper your costs are down, but what you don't see is your opportunity cost. And that cost grows over time.
A funny thing happened on my way to listing yet another reason home-grown solutions will make you cry -- turns out I was wrong! Well, at least some of the time. I have always assumed that companies sending their own email marketing campaigns would face delivery challenges and that a large percentage of the emails would not make it into the inbox. So with my friend G.B. Heidarsson, CEO of eDataSource, I looked at the numbers for several of the largest email marketers using home-grown solutions. What we saw was that the best of them matched the average inbox placement of the leading ESPs on behalf of their clients!
Heidarsson summed it up this way: "I think that anyone with an enterprise MTA can have as good a delivery as an ESP if they understand what they are doing. Keep in mind that it's probably easier to retain a reputation as a single brand than as a multi-brand ESP." I think the key words here are "if they understand what they are doing." Granted, we looked at some very large brands with very large volumes of email. I suspect smaller companies might not be getting the same results.
Of course, none of this would surprise Derek Harding, CEO and founder of Innovyx Inc. He's recently noted that inbox placement these days is more about doing things the right way rather than who you might know at the ISPs. (Hint: "They" have been replaced by algorithms.) While I don't completely agree with him, the eDataSource data certainly supports his point of view. Nevertheless, companies with a home-grown solution that don't have a good handle on their inbox placement are in the position of hoping they are getting good delivery rates. And hope is not a strategy.
So here's the bottom line: If you currently are using a home-grown solution, you should probably evaluate exactly where your system lies on the features and functionality curve. If you are lagging behind the solutions being used by your competitors, you are at a competitive disadvantage -- even if you believe you are "saving" money. The reality is likely that your savings are more than offset by the opportunities lost to your competitors. And if you are thinking of moving from an outsourced email solution to one proposed by your IT department, remember that you will be the one dealing with the consequences if things go south. And, as the above reasons demonstrate, that's a fairly likely result.
Chris Marriott is the vice president of services and principal consultant at The Relevancy Group. Click here to register for a free subscription to the company's "The Marketer Quarterly."
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Thanks for the shoutout Chris, I think you're spot on. The cost of using an ESP at an enterprise level is substantial and an attractive target for savings.If you have a clearly defined need that you're confident isn't going to change, have or can hire deliverability skills and send a high volume then the homegrown route could work out.However, as you point out, platform development is very expensive and doing deliverability right is not that easy. When you combine development, support, monitoring and a world-class deliverability team those attractive cost savings start to dry up pretty rapidly so in my experience the set of organizations for whom homegrown makes sense ends up being rather small.
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