While most marketers use email in some capacity, industry experts argue that many don’t maximize the channel’s value.
“Too many programs fail to incorporate customer data effectively, to deliver more targeted and relevant emails,” says Matthew Kirsch, senior manager of online marketing at DirecTV. “The challenge with social and other new technologies is that an emailer can expend time and money chasing the newest thing and fall further behind on the nuts and bolts that will make meaningful and measurable improvements in his or her program,” he explains.
According to the Direct Marketing Association’s (DMA) “The Power of Direct” study released in October, email brought in $40.56 for every dollar spent in 2011. However, the DMA projects that this year email will bring in $39.40 for every dollar spent, and by 2016 it will bring in only $35.02. Since the channel is working adequately, many marketers are missing out on opportunities to fully capitalize on its power and are ultimately leaving money on the table.
For Marriott International, it’s not enough to send generic emails to its customer database. The hotel chain, which drives a quarter of its website visits from emails checked on mobile phones, has to optimize its messaging for mobile devices. It also integrates emails with its Facebook page and the Marriott Rewards Insiders social platform to help increase engagement. This year, the company plans to apply an automated, data-driven, real time email marketing strategy to increase relevancy.
“Email is still the most cost-effective direct marketing medium, driving high internal demand, [but] resourcing is limited,” says Kristen Barletta, email marketing director at Marriott International. “We are building distributed email marketing platforms that enable self-service of email builds, targeting and reporting, while maintaining brand integrity and managing frequency.”
Due to its effectiveness and moderate costs, email is big business. According to Forrester Research’s “US Interactive Marketing Forecast, 2011 to 2016,” email is expected to bring in $1.7 billion in revenue in 2012 and grow 10% annually through 2016, hitting $2.5 billion by 2016. However, while email revenue steadily rises, its growth trajectory won’t keep pace with mobile and social media, which Forrester predicts will grow annually by 38% and 26%, respectively.
Despite the fact that tools for email segmentation, targeting and personalization have been around for almost a decade, some brands don’t use them. “I’m surprised at how many email marketers aren’t putting personalization and targeting into their campaigns,” says Heather Blank, VP of strategic services at marketing services company Responsys. “If you aren’t doing that, you’re completely missing the boat.”
Getting on the email boat
Ari Osur, principal analyst at Forrester, says a lot of email service providers are still trying to get their clients to leverage dynamic content in their messaging. “Even though the technology has been around for awhile, the data is not always in place to do it,” he says.
At Orbitz, targeting based on demographic and psychographic data is so refined that the company sends out campaigns to as little as 10 people.
Marketers who want to succeed with email should take a back-to-basics approach, Osur says. “Baking A/B testing into everyday operations is an area where email marketers can improve,” he says. “It is easy, powerful and can lift overall response rates significantly.”
Despite Osur’s observation, industry experts agree that the problem often goes beyond email basics. The problem can frequently span an entire organization.
“Brands are clearly losing money if they don’t have the whole organization on the email boat yet,” says David Daniels, cofounder and CEO of The Relevancy Group, a market research company whose 2011 Executive Survey “The Connected Marketing Campaign Management Imperative” found that only 51% of marketing departments share common goals across all channels. With so many different silos handling customer communications, brands sometimes lose site of the consumer’s viewpoint.
“Consumers see a brand name as one entity and they expect the same experience if they go to the store, go to a website, call the call center or get an email, but that experience is not always the same,” Daniels says.
While email marketing employees may get incentives for building their lists, many times the representatives who are interacting with customers directly are not; therefore, brands lose out on the opportunity to capture email addresses on other channels.
Daniels expects this to continue until brands are willing to change their organizational structures and incentives for employees. “Email marketers are still given incentives based on list size and list growth,” he says. “Even if half of the people on the list haven’t clicked, they don’t tell anybody.”
Denise Poplawski Humphreys, director of partnership management at PGATour.com, says organizing across marketing teams is one of her biggest hurdles. “[Email] is a benefit to the Tour as well as a benefit to the fans,” she says. “We have to organize our calendars internally across the different teams [to ensure we don’t send too many emails to fans].”
Experts agree that it’s not always a marketer’s fault that their organization’s approach isn’t ideal. Most marketers deal with limited budgets and have a lot of data to manage. “Part of the challenge [during] the dawn of email marketing was that we were all starved for data,” says Jim Davidson, manager of strategic services at Bronto, an email marketing services provider. “Now that we have website analytics, point-of-sale data, social data and so on, the challenge is knowing which data to use and how to integrate it all together.”
Budgets are also tricky for email marketers. “It used to be so simple,” says Alan Talanoa, director of Web operations at GolfDiscount.com. “One channel would lead to a sale and you could budget accordingly,” he says. “Now you have so many factors working together and you have to consider search, mobile, social and trying to figure out allocation of marketing dollars.”
Jason Scoggins, senior email marketing manager at Freshpair.com, says that one of his big challenges is getting the message with the most impact out in a way that fits within a budget. “There are a lot of things we’d love to do, but we have a budget,” he says. “We are always looking at ways to increase our ROI (return on investment). Retargeting is a great way to increase ROI.”
Freshpair.com customizes its onsite experience based on email click behavior. “A traditional customer who buys basic underwear is very different from someone who is very fashion forward. We look at their purchase history and provide the best experience when they arrive at our site,” Scoggins says.
Email marketers can also stand to make improvements integrating their messaging with search and display, experts say. Brands can take keywords that perform well in search and test them in email subject lines and calls-to-action to help optimize copy. Marketers can increase ROI by running retargeting campaigns based on consumers’ online browsing behavior.
Online travel company Orbitz integrates email with display to match customers to a registration record. The tactic enables Orbitz to understand the interplay between email and display to ensure the company is taking the low-cost characteristics of email arketing and marrying them appropriately with high-cost retargeted display advertising, says Ted Wham, VP of CRM at Orbitz. “We are finding lift through this approach that is yielding higher efficiency,” he adds.
Orbitz also uses previous search and purchase information to target email messages. “In 2012 this will extend to data-mining principles to both identify specific-itinerary travel opportunities with particularly good pricing to the consumer, plus techniques to marry that to specific micro-segments of our targetable mailing universe that would benefit from knowing of these fleeting pricing opportunities,” Wham adds.
Marketers can also help increase email ROI by setting up automated campaigns such as a welcome series, birthday emails and triggered campaigns that retarget a customer after they have added products to a shopping cart but have failed to transact.
According to an October whitepaper from email marketing services provider Listrak, nearly 85% of the top 1,000 etailers are doing nothing to recover lost sales due to shopping cart abandonment. Listrak estimates that $18 billion is lost each year by retailers who don’t take advantage of shopping cart abandonment tools. This number will continue to grow if one considers that the average abandonment rate jumped from 71% to 75% during the first six months of 2011, according to the Listrak study. Brands as big as Gap and JCrew (both of which declined to be interviewed for this article) fail to send shopping cart abandonment emails.
Those brands that do implement triggered email messages see a return on their investment. After having success with cart abandonment emails, DirecTV is building out a number of triggered retargeting campaigns based on various behaviors that a customer makes on its website, such as cart abandonment and browsing behavior. “Our next steps are not as much building out dozens of new campaigns, but are instead focusing on improving the basic retargeting campaigns that everyone should be doing,” says Kirsch. “With more and better data, we can make better choices on what content to include in a given email as well as when to send it, or even if we should send it.”
Freshpair.com reworked its welcome email series last year to begin profiling customers after their first interaction with the brand. “We like to target based on purchase history, but obviously if they sign up before they buy, we don’t have the data,” says Scoggins. “We now use welcome emails to ask preferences, so that we can start that customization right away.”
“For FedEx, using transactional emails to cross- or upsell customers is a frontier we’ll put a lot of focus on this year,” says Bailey. “With transactional emails being extremely relevant to customers, what better touchpoint [is there] to offer highly relevant content?”
Keep an open mind
Focusing on driving sales alone will not necessarily make a good email program, experts say. Rebecca Lieb, digital marketing analyst at advisory firm Altimeter Group, says email marketers need to stop using the channel just to push direct response messages and think about how to use it to increase brand awareness.
“There isn’t enough experimentation with content,” says Lieb. “Marketers should be talking about the area they are in without the specific product. If you sell pots and pans, you might send content about cooking rather than just sending an email that says ‘buy our product.”
Davidson, of Bronto, agrees that marketers fail to take a big picture perspective when it comes to email programs. “A lot of brands are thinking about how they can make money with email, but they also need to think about establishing a foundation of who these subscribers are,” he says. “They need to learn how to market to them to drive a longer lifetime value.”
As if email marketing weren’t tricky enough on its own, Internet service providers are making it easier for consumers to ignore marketing emails. Many consumer email clients like Hotmail and Gmail created automated filtering and foldering tools to help users avoid commercial email messages. “If marketers aren’t aware of this and are proactively trying to drive engagement, they are going to see their engagement rates come down in 2012,” says Blank.
Another tactic that often gets overlooked is using different channels to build email lists. While most brands include opt-in opportunities on their websites, many channels for email capture are not fully capitalized on, including in-store customer opt-in or on the phone with call center representatives.
Some marketers find that social media pages are an ideal place to gather opt-ins. For example, PGA Tour uses social to help build its email list through promotions. In the fall, the company ran a campaign in conjunction with Electronic Arts, in which Facebook fans who opt in to the PGA Tour’s email list received access to a free video game. “We are planning on doing more contests and giveaways on Facebook, which is good for our partners and is the best way we’ve seen to get more opt-ins,” Humphreys says.
However, not all marketers think list growth is a good thing. Scoggins, of Freshpair.com, refers to list growth as a “double-edged sword.” “You constantly hear that you need a bigger list so that you can send more messages and make more money, but I believe in being smarter about the list you’ve got,” he says. “This is better than going out and trying arbitrarily to get more names.”
Aside from using Facebook to capture email addresses, some marketers add share-to-social buttons, and cutting edge marketers incorporate social graph data into emails to enhance messaging. For example, more advanced marketers send emails that include information about a recipient’s Facebook friends who have already “liked” the product that is being promoted.
Despite the rich opportunity, Blank says few marketers go beyond email capture on social media. “Facebook just began opening up some of this information and a lot of marketers don’t even know it’s there yet,” she says. “It takes some work to get it up and running and integrated on their website.”
DirecTV plans to use Facebook Connect functionality to add this kind of content to its emails in a move to make the messages more social. “[We] are hoping to potentially bring in Facebook Connect functionality that might allow a customer to see what movies her friends have recently recommended,” Kirsch says.
Exposing consumer recommendations and interests to friends across channel is the “Holy Grail,” Kirsch contends. “I don’t think the future of email, however, is to somehow seamlessly integrate everything. Email is a perfectly healthy stand-alone vehicle.”
Integration with mobile is another area upon which marketers can improve. According to email service company Return Path, 23% of email messages were viewed on a mobile device during the six month period ending in September of last year, which was a 34% increase compared to the previous six-month period. “There is no excuse for not optimizing emails for smartphones any longer,” says Lieb. “We are now at a point in time where smartphones have achieved critical mass.”
No matter what the approach and what kind of integration a marketer takes, it remains clear that email marketing is still a viable channel and has the possibility to help marketers drive revenue. “Email remains a remarkably effective and efficient marketing vehicle, but it will decline if we don’t make the improvements that are right at our fingertips,” concludes Kirsch.