Email ROI ?

 
 
 

The news about investment in marketing is not good as many firms cut their marketing budgets left and right.

Instead of taking an ax to your marketing budget, consider first how your budget is allocated and move some resources to marketing activities that yield a higher ROI.

One such low-cost, high-ROI marketing activity is email marketing. In fact, a 2008 Direct Marketing Association (DMA) study found that email’s ROI in 2008 was $45.06 for every dollar spent on it.

In addition, a February 2008 retailer survey by shop.org found that email marketing has the second-lowest cost per order (CPO) of any online marketing method. The email marketing CPO of $6.85 beat paid Web search, which yielded a $19.33 CPO.

 

Email Is Underutilized

Despite its low cost and high ROI, email marketing still accounts for a small fraction of most marketing budgets and sometimes is not used at all as a marketing medium. According to a 2008 Forrester study, “only 48% of small and medium-sized businesses (SMBs) have been using email for four years or longer. But now they’re beginning to embrace it with gusto.”

 

Those already doing email marketing for a relatively low cost could increase the amount of time and energy they put into their email marketing to increase ROI. This means striving to improve your content, offers, and making use of some features of your email service provider (ESP) that you may not be using.

 

For example, most ESPs enable you to segment your email lists by demographic or other criteria (e.g., city). In addition, many ESPs enable you to send out triggered emails based on various criteria, including set intervals from the day the user subscribes to your list (sometimes called “drip marketing”) and date-based triggers, such as a special-offer email sent on someone’s birthday.

 

Choosing the Right ESP

 

If you have not yet started using email marketing, this is a great time to start. You will want to evaluate ESPs—firms that host email marketing services on their servers. While you control your email marketing account and send out emails using a Web browser interface, the ESP’s servers and Internet connections do the heavy lifting.

 

Here are some tips for choosing an effective ESP. Look for an ESP that provides…

  • Delivery reports
  • Open rates and click-through rates (CTR)
  • Bounce handling (both hard and soft bounces)
  • An automatically placed unsubscribe link in each email
  • Feedback loops with the major ISPs (complaint management)
  • Google Analytics integration
 
 

Handling Unsubscribes. It is also important to clarify the different ways that someone can, intentionally or unintentionally, unsubscribe from your list with a good ESP. Note whether they can click on the unsubscribe link, or click on the complaint button (if they are using a service like AOL). This may automatically unsubscribe them through the feedback loop, or the email can hard-bounce (i.e., the email address does not exist any more).

It is very important for these features to all be in place, because if these subscribers are not unsubscribed immediately and you send to them repeatedly, you run a much higher risk of being blocked by one or more Internet service providers (ISPs).

IP Addresses. It is also important to choose an ESP that either gives you a private Internet protocol (IP) address or has you share an IP address with a relatively small number of other customers. The IP address, whether shared or private, is the caller ID of your emails. If too many ESP customers share an IP address, you can easily run into problems with being blocked by ISPs for mistakes made by other customers of the ESP. Most reputable ESPs do their best to keep out the spammers, but even legitimate email marketers sometimes get their IP address blocked by an ISP—and it can take some time to get the IP address unblocked.

Contracts. Finally, if you are in the process of choosing an ESP, it is a good idea to choose one that does not require a contract term beyond one month. That way, if you are not happy with the service, you can cancel it and switch to a more suitable ESP. Not every ESP is going to be a good match for your needs and a good value for you.

 
 

The ESP Evaluation Process

 

Start the evaluation process for finding the right ESP with research. Consider several firms then narrow your choices down to a few that seem to offer a good service at a good price.

Then do a free trial of each and upgrade the service you like best into a full account. Since you are restricting your choices to month-to-month services, you are not locked into a bad choice. You can switch ESPs, move your lists, and move your HTML and text emails over to the new service.

Having used one ESP, you will have gained some valuable experience that you can then apply to selecting and evaluating other ESPs.

 

Conclusion

 

Email marketing is a bright spot in marketing that has high ROI and excellent metrics. High-ROI marketing efforts are always a good idea, but they are especially valuable in times like these, when the economy is soft.


Keeping email marketing as a vital component of your larger strategy should help keep your overall marketing ROI healthy.

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