Email Marketing in a Digital World

Richard C. Hanna, Scott D. Swain, Jason Smith

• Publisher: Business Expert Press
• Year: 2015
• ISBN:
  9781606499931
• Topic: Business
• Subtopic: Advertising
• Index: Business

Despite annual predictions of its demise, email marketing remains one of the most important tools for businesses and other organizations. The reason is simple. Other communication tools, including social and digital media channels, cannot duplicate or recreate the unique capabilities of email marketing. This book is for those who wish to learn more about how email marketing works, whether as students, teachers, or practitioners. The authors recap the history of email and email marketing and explain how it informs email today. They cover the fundamentals of email marketing, including types of emails, the elements of an email, email metrics, best practices for email for improving performance, list development, and the benefits of segmenting an email list. Also addressed are special topics in email strategy, including the psychology of email recipients, AB testing for optimizing email elements, integrating email with social media, and aligning email with big data sources.

CHAPTER 1

Email Still Matters

In the words of one senior marketer: “Email marketing is a license to print money.” Despite the rise of social and digital media, the evidence is clear—email marketing has capabilities that its alternatives simply do not. In a 2014 survey of 300 U.S. digital marketers, Gigaom Research (underwritten by Extole) found that email marketing was cited as the most effective digital marketing channel for customer retention in the United States, with social network marketing coming in a distant second. Additionally, a 2012 study sponsored by BtoB Magazine reported that 59 percent of B2B marketers say email is the most effective channel for generating revenue and that 49 percent of B2B marketers spend more time and resources on email than on any other channel.

This book will teach you how email marketing works. Our approach is different—whereas other books focus on low-level features of email construction and/or tips and tricks for growing an email list, we take a more strategic and theory-driven arc. We examine issues such as the personalities of email users, how email should be integrated with social media activities, the advantages of automating email and connecting it with buyer behavior, and how to run a proper email marketing experiment. But before we get started, let us review some of the reasons why email continues to be the dominant tool in digital marketing.

Why Does Email Continue to Dominate?

Georgia Aquariums, with the help of Silverpop Digital Marketing services (an IBM company), increased their email revenues by 60 percent in two years just by increasing the relevant content they send to their membership via email. Similarly, SmartPak Equine, an online provider of horse supplies and equine supplements, enhanced their email activity by adding automation and integrating customer behavior, and as a result saw a 50 percent increase in conversion rates.

Simply put, email remains the most effective way to target and communicate a direct message to a specified individual.

• Email allows one-to-one communication: Email is similar to sending a direct mail advertisement to a customer’s house. As a business, you can target individuals or meaningful groups and be sure that the message was received (but you cannot be sure it was read). In contrast, social media is like dropping a stack of pamphlets over a town and hoping people pass the advertisements out to their friends and neighbors. This approach does not generally result in very precise targeting. Additionally, initial targets in social media will only pass along direct mail pieces if they are excited about your business.

• Email converts browsers into buyers: The directness of email can prompt people to make a transition from search or deliberation mode into decision-making mode. Email can move people to action because it presents a direct and immediate marketing message. Such directness is not as efficient with other communication channels such as print mail or other digital media.

• High return on investment (ROI): Email marketing is very inexpensive compared to its alternatives. According to a 2015 personalities of email users report by the Direct Marketing Association, the median ROI for email marketing is 21 to 23 percent followed by telephone (19 to 21 percent) and other familiar media (see Figure 1.1).

Figure 1.1 Median ROI of select direct media

Source: Direct Marketing Association from an April 2015 study based on a sample of 485 industry responses.

• Email reaches a mobile audience: Email is among the most used mobile applications. Further, individuals often access email more frequently on a mobile device than on a nonmobile device. For example, Justine Jordan at Litmus reveals that “A whopping 66 percent of Gmail opens occur on mobile devices, with only 19 percent opened in a web browser. The remaining 15 percent of Gmail opens occur on desktop email clients.”

• Easily measurable: Email marketing has matured to the point that there are established metrics for assessing the efficiency and efficacy of individual emails and email campaigns. Examples of email metrics include the following:

○ Opens: How many people on your list opened the email? This does not mean they read it; this just means that it was not deleted before being displayed.

○ Clicks: How many people clicked on an element in the email to get more information or take action?

○ Click through rate (CTR):CTR is defined as the number of clicks divided by the number of opens. It is important to note that the CTR is not the clicks divided by total list size (doing so would underestimate the effectiveness of the items of interest since the quality and reliability of lists is imperfect and varies over time).

Addicted to Email?

Of course, email is not just a communication tool used by marketers. Rather, it is the most pervasive communication tool used by almost everyone, every day, throughout the day. It may even be fair to say that many people are addicted to email. According to the Relevancy Group, 53 percent of U.S. consumers check their email multiple times per day and 13 percent check hourly or more (see Figure 1.2). You may find it alarming, but a 2012 study of 503 U.S. workers (conducted by Opinion Matters on behalf of GFI Software) found that 59 percent of people check their work email while on vacation and at least 6 percent have checked their work email at a funeral (see Figure 1.3)!

Figure 1.2 Frequency of checking primary email account

Figure 1.3 Events where people check their email

According to a 2013 report published by the Radicati Group, the number of worldwide email accounts is expected to increase from 3.9 billion accounts in 2013 to over 4.9 billion accounts by the end of 2017. Roughly three-quarters of those emails are consumer accounts versus business accounts. Interestingly, the report also indicates that the majority of email traffic comes from business email, to the tune of over 100 billion emails per day. From May to June 2013, ReturnPath (an email intelligence company) analyzed the many billions of messages targeted at their panel of 3 million email users, and found that each person received an average of 416 commercial emails per month! And yet, people do not seem to particularly mind. According to a 2015 national survey of 2,057 U.S. adults (conducted by MarketingSherpa), “72 percent U.S. adults prefer companies to communicate with them via email, followed by postal mail (48 percent), TV ads (34 percent), print media (e.g., newspapers, magazines) (31 percent), text message (19 percent), and social media and in-person conversation/consultation (both at 17 percent).”

Of course, there are some caveats as to who checks all of these emails and when they check them. For instance, according to the GFI study, sales, media, and marketing professionals are more likely to check their email on vacation and are never likely to check at a funeral. In contrast, professionals in IT, telecommunications, and finance are likely to check at a funeral. The deeper insight is that predicting whether or when someone will check an email requires an understanding of non-email factors such as how the person manages work–life boundaries, which itself may vary depending on the work environment, organizational culture, the person’s personality, and more.

Today, most managers are worried about the time their employees spend on social networks, but the bigger killer to productivity may still be email! According to a 2007 article in the New York Times, an observed group of Microsoft workers took, on average, 15 minutes to return to serious mental tasks, such as writing reports or computer code, after dealing with incoming email. While checking their email, they also strayed to reply to other messages or browse the web. Writing for IT Business Edge in 2008, Tom Pisello calculated that the annual, per-person loss of productivity costs organizations approximately $1,250 in time spent dealing with spam, $1,800 in unnecessary emails from coworkers, and $2,100 to $4,100 due to poorly written communications.

Let’s Clarify What We Are Talking About in Terms of Commercial Email Senders

Before we go any further, it is important to think about how email senders differ with respect to the nature of their email enterprise. There are two key dimensions we can consider: the purpose of the email and the sophistication of segmentation (see Figure 1.4). With respect to purpose, most emails can be classified as an effort to educate or to convert recipients. Education-oriented emails are about spreading information, directing recipients to other informational content, sharing opinions, or providing some other type of educational value. Conversion-oriented emails are trying to drive traffic with a specific call to action, such as making a purchase of a new item or a sale item, signing up to participate in a conference or webinar, etc. With respect to sophistication of segmentation, emails can be classified in terms of whether they are targeted based on multivariate behavioral customer data and predictive models, versus being untargeted or only coarsely targeted with rudimentary information such as broad geographic location.

Figure 1.4 Types of email senders

Thinking about the two dimensions simultaneously, we arrive at a 2 × 2 scheme that is useful for identifying four main types of email senders in the ecosystem of email marketing.

• Tier 1 Commerce (Behavioral data-driven): Emailers are conversion-oriented and rely on fully automated programs assembled according to user segments described by 100+ attributes of segmentation. Their emails are often personalized and triggered by real-time interactions in physical stores or on websites or apps. Examples of Tier 1 emailers include the largest retailers such as Amazon, Hilton, Target, and Pepsi, all of whom engage in massive, data-driven email campaign enterprises. Tier 1 emailers must design emails in terms of general “creative themes” since there may be hundreds of dynamically created variations.

• Tier 2 commerce (Basic list-driven): Emailers are similar to Tier 1 commerce emailers except that their user segments are more predetermined and there are not any active, real-time, or automated triggers. In this case, think: “Let’s send an email to people who have been on the website in the last 6 weeks who looked at pet products.” The email may still include rich or personalized elements such as a name or a reference to a prior activity.

• Custom insight: Emailers are more education- versus conversion-oriented. They use email as a means of distributing custom insights that are tailored to the specific informational needs of their users. The custom nature of the content requires sophisticated user segmentation, which increases its impact on intended users but limits its usefulness for cultivating new customers who may have distinct informational needs (e.g., service-driven businesses such as research firms and large consultancies).

• Thought-leadership: Emailers are similar to custom insight emailers except that for them email is a way to establish a reputation for broader thought-leadership through timely articles and other forms of commentary. Since the content is intended to address broad audiences, thought-leadership emailers do not require sophisticated user segmentation schemes or databases. Less effective (but often used) content can also include internal firm news or event content. In this case, list building becomes very important. The concept is to use thought-leadership to cultivate perceptions of expertise and trust among an audience of potential customers (e.g., service-driven businesses such as law firms, accounting firms, or creative services).

• Pundit: Emailers are similar to thought-leadership emailers, but rather than representing a business organization, these emailers tend to be individuals. By providing interesting ideas, insights, or curated content, pundits ultimately hope to leverage their credibility to earn ad sponsors or entice their audience to purchase some of their products or services.

• Teacher: Emailers are similar to thought-leadership and pundit emailers but possess a more “pure” educational motivation. That is, the mission of these emailers is helping as many users learn rather than seeking to turn a profit from email communications. Some examples would be the Pew Research Centers, NASA, and National Geographic.

Five Fundamental Requirements for Sustained Email Success

As you read this book, five fundamental requirements for sustained email marketing success will emerge:

1. Make it personal by being relevant: A “relevant” email is one that is applicable to your audience. Because email allows for one-to-one personali...