Software

CRM and the real cost of e-mail

For every e-mail campaign your company does, you'll need to manage white-list listings, enforce e-mail formats and gauge performance. Here are some more details.

For every e-mail campaign your company does, you'll need to manage white-list listings, enforce e-mail formats and gauge performance. Here are some more details. 

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E-Mail campaign management is a tricky business. You sometimes walk a fine line between being a marketer or a spammer, but there are a few ways to make e-mail profitable for your company.

E-mail is one of the cheapest marketing tools out there. Transaction costs can range between less than 1 cent per e-mail to 4 cents per e-mail. What? You said you can do it cheaper by writing a little CDONTS spam gun? Before you start re-configuring your MX record, read a little further.

E-mail is a great tool for performing control group and test marketing. These procedures allow you to test offers of various values with a subset of your customer base before launching a large campaign. You take one of your customer segments and then create a group of offers such as X% off or $X off or Buy One Get One Free or Free Shipping.

Additionally, you can try different values for the offers. Across a statistically valid sample from that segment you send all the offers to different groups. What you may find is that a sub-segment of customers favors one offer over another. The offers may be of the same value, but the response may favor one type over another. Additional analysis of the result may show that the offer acceptance rate for a 20% off discount is just as high as the 25% off discount. Knowing this before launching the campaign can save you significant amounts of money.

The acceptance rate of the offer also helps you set a budget for that particular campaign. A 10% acceptance rate for a 100,000 e-mail campaign with an expected average shopping cart size of $100 with a 20% discount is $200,000. The other interesting things you can determine with e-mail that you cannot with other marketing campaigns include open rate, bounce rate, click-thru rate and purchase rate. All of these can be used to help you refine your message to make a better campaign.

Now for the operating pieces. When you send an e-mail campaign to a large customer grouping, you typically need to send a large number at a particular time. Ensuring that an e-mail from a several hundred thousand e-mail campaign arrives at 8:30 a.m. or noon on a weekday (two of the more valuable receiving times for solicitations) requires a ton of bandwidth and a pretty large disk array.

Aside from the performance implications, there are spam issues to deal with. If you don't have white list agreements with some of the major ISPs and e-mail companies e.g., MSN, Hotmail, Yahoo, AOL), once they see the volume you're sending from a set IP address, you will have your campaign blocked. MSN and hotmail have an interesting control on their system. They will only let 15 or so e-mails in at a time. After that number is reached, you have to reconnect and let another 15 in. For a large campaign, this will take hours.

Over time, even if you are white-listed, you need to have specific content in your e-mail and your e-mail headers need to include reply to addresses, unsubscribe options and information about your privacy policy. Additionally, there are a slew of words you shouldn't have in your e-mail subject of body that are constantly updated by the hundreds of spam blockers out there. Also, if the ISP continuously returns e-mail back to you and you don't  take measures to remove or address the bounces, you'll also be blacklisted. It takes a lot of work to get off of a blacklist.

Then, you need the system to measure the campaign performance. How many were actually delivered? Companies such as Habius and ExactTarget create various accounts in several hundred different ISPs and create what is called a seed list that will send every offer you send to these accounts. The companies can then tell you how many were delivered, how many triggered the junk e-mail filters, and which ones never arrived (or were blocked).

These e-mail outsourcing companies hire teams of employees to manage a client's white-list listings, e-mail format enforcement and performance management for their clients as well as provide campaign management tools. Still think the 1 cent per e-mail is expensive?

2 comments
faineill
faineill

Hi Jay, Thanks for the post. I enjoyed your peek into what can be an overwhelming sea of information about successful email marketing. A couple of things. First, it's "Habeas" not "Habius" and their domain is http://www.returnpath.net. :-) Second, After a lot of looking around and trying a couple of listserv providers we've been with Aweber (http://snipurl.com/aweber-test-drive) for quite a while now and we are very satisfied with their reputation in the industry, their service and their customer support. Deliverability is the key and they have one of the best acceptance rates in the industry with the major ISPs and e-mail companies you mentioned: MSN, Hotmail, Yahoo, AOL. I couldn't imagine trying to handle all the headaches of managing our lists that you mention. And we can't yet afford a big-budget service like ExactTarget. Aweber has been perfect for us.

Jay Rollins
Jay Rollins

Thanks for the correction. I'll have to look at listserv as an option, I had not run ino that in the past. Thanks for the link! Jay

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