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E-Mail Marketing: How Online Retailers Can Make It Work for Them

Ask online retailers, and they will tell you that e-mail marketing is the cornerstone of their online marketing efforts. In fact, the most recent Shop.org study, “The State of Retailing Online v7.0,” found that 66 percent of retailers consider e-mail campaigns to their house list as either effective or very effective, more than any other online marketing tactic surveyed, including affiliate programs, banners and pop-up ads.

However, the e-mail marketing environment continues to evolve, and changes in technology, the proliferation of spam and changes in recipient behavior are forcing many online retailers to redefine e-mail marketing's role in the online sales process.

A few key issues influence the effectiveness of e-mail marketing, one being that the home page is no longer the starting point for most visitors. Most online retailers include links to specific category or product pages in their e-mail marketing campaigns. These links commonly bypass the home page and point customers to pages deep within the Web site.

As a result, most customers miss the key marketing messages traditionally reserved for the home page. An analogy in the brick-and-mortar world would be that of customers parachuting in through the ceilings and bursting in through the walls to look at the merchandise instead of coming in through the front door. Hence, category and product pages now play the role of the home page.

Given that an increasing number of visitors are coming to a site directly from an e-mail, combined with most e-mail marketing campaigns pointing to pages deep within a site, customers are being exposed only to a limited number of product and category pages.

Many retailers have template-driven Web sites, where each product or category page is identical in design and layout. To create a more compelling shopping experience, online retailers need to consider a model where these heavily promoted product and category pages behave more like a home page, exposing customers not only to the e-mail promotion, but also to secondary promotions, incentives and new merchandise. The goal is to give customers as many reasons as possible to click further into the Web site.

Finally, retailers need to redefine the role of e-mail in the Web site user experience by integrating their e-mail marketing messages into the overall online user experience. The most effective way to achieve integration is to consider the e-mail campaign as the first page in the site visit. This involves taking elements usually associated with home pages, such as prominent search, strong navigation and promotions, and incorporating those features into the e-mail campaign.

While online retailers contend with these issues, additional factors threaten the future success of e-mail marketing programs, one of which is spam filters. To measure their e-mail marketing programs, most online retailers use two metrics: click-throughs and unsubscribe rates.

Click-throughs let an online retailer evaluate the effectiveness of its campaign messaging; unsubscribe rates indicate whether customers are annoyed by too many e-mails.

However, the widespread adoption of filters seriously hampers the ability of online retailers to effectively manage their e-mail marketing metrics, as spam filters identify and eliminate e-mail before it arrives in the user's inbox. Measuring effectiveness becomes difficult because retailers no longer can be certain their customers have received the e-mail messages they send.

In effect, a low click-through rate may have nothing to do with the campaign message, and a low unsubscribe rate may not mean that customers wish to continue receiving e-mail. It may simply mean they did not read the e-mail.

In addition, e-mail marketing is more successful in customer retention, not acquisition, which is a secondary effect of spam software and spam legislation. Because of a shift in customer perception and legislation, e-mail marketing is becoming a subscribe, or opt-in-only activity. As such, many online retailers are using e-mail marketing as a tool for customer retention, not acquisition.

To mitigate these emerging threats, online retailers should consider the following strategies:

Help customers get past their own spam filters. The most effective way for retailers to ensure that their e-mail does not end up in a customer's spam filter is to instruct customers to manually add their company's e-mail marketing address to their address book. These instructions should appear prominently at the point where customers opt in to receive e-mail marketing.

Adopt new technologies that bypass e-mail entirely. In addition to e-mail marketing, consider adopting newer, non-e-mail opt-in technologies, such as Really Simple Syndication. RSS is a format for sharing content that lets customers opt in to receive notifications without using e-mail, while enabling online retailers to sidestep the headaches of spam-filtering software, unsubscribe requests and bounced e-mail.

By supporting RSS, online retailers can continue to measure the effectiveness of their marketing efforts. The greatest drawback to RSS is that it requires users to download an RSS reader, which many users do not have, to date. However, trends indicate that the installed customer base will grow in the next 12 months.

Promote all channels within each channel. To increase revenue, online retailers need to continue acquiring new customers, despite spam legislation and software limiting the ability of e-mail marketing to help with this effort. Though other online marketing options exist, such as search engine keywords and affiliate programs, the biggest impact a retailer can make is to convert its non-Web customers to multichannel customers. Companies such as Sears, J.C. Penney and Staples have found that multichannel customers are worth far more to the company than their single-channel counterparts, not just overall, but in each individual channel. Multichannel shoppers have proven to be a retailer's most valuable customer, spending on average 39 percent more than single-channel shoppers. Retailers have to evolve from providing similar features, products and prices across all their channels to actively marketing and selling the value proposition of each channel to the overall shopping experience.

E-mail marketing is the most powerful tool that online retailers currently have to drive business. However, the e-mail marketing environment is changing, and only retailers who understand the issues and the role of e-mail marketing in the overall sales process can succeed in their efforts.

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