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The long tail of e-mail marketing

Chris Anderson’s book, The Long Tail: Why the Future of Business Is Selling Less of More, contains a lesson or two for e-mail marketers.

The theory of the Long Tail argues that when constraints of shelf space are eliminated, the opportunities for selling niche market merchandise are unlimited.

Although sold in small quantities, niche merchandise can be quite profitable because of falling distribution costs. In aggregate, these niche markets represent significant sales.

The Long Tail concept busts up the traditional “80/20 rule.” In the 80/20 world, you only stock merchandise to satisfy the needs of the 20 percent of the customers who drive 80 percent of your revenues.

With limited shelf space, it is virtually impossible to stock items to satisfy all your potential customers, especially if they are only occasional shoppers. With limited shelf space, the greatest amount of shelf space must be devoted to the group that will return the greatest revenue to you.

Constraints Shelved Online

In the virtual world of the Internet, the issue of shelf space is eliminated from the equation and minority interests can be served at no additional expense.

For example, Netflix, the world’s largest online movie rental company, carries 65,000 titles, including obscure movies that would never make it onto the shelves of your local Blockbuster. There is no 80/20 rule at Netflix.

Most marketing efforts rely on the 80/20 rule; 80 percent of our revenues come from 20 percent of our customers. We make budget decisions based on this ratio and create marketing plans that support this assumption.

Using the old rule, it follows that our direct marketing efforts focus on trade ads, brochures and mass mailings because we could not justify the cost of talking individually to every customer and prospect.

Yet e-mail marketing provides the tool that the Long Tail marketers have been waiting for, enabling companies to leverage their customer data and make it easier for marketers to talk to everyone as if they are the most important customer or prospect on the planet.

E-mail marketing is the perfect, cost-effective channel for communicating individually in a world where shelf space is unlimited, products have a niche market and buyers are unique.

Planning and creativity are required to collect and compile actionable data. Armed with a handful of well-maintained subscriber attributes, audiences can be identified and segmented, which provides creative teams with the information they need to develop appropriately targeted messages.

The finishing touches come through data-driven personalization, such as dynamic content, that make the message truly relevant at an individual level.

80/20…who needs it? We’ve got the Long Tail.

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