Email Optimisation for Maximum ROI

By Lara McPherson | 24 Jun 2010

At the recent Optimise and Thrive breakfasts in Melbourne and Sydney, guest speaker Jeff Clark, Managing Director of Engage Digital, discussed how effective email can be as a retail marketing channel – if you apply the appropriate strategy. Jeff shares his essential insights into how to maximise your email marketing ROI.

At the recent Optimise and Thrive breakfasts in Melbourne and Sydney, guest speaker Jeff Clark, Managing Director of Engage Digital, discussed how effective email can be as a retail marketing channel – if you apply the appropriate strategy. I spoke with Jeff after the event, who shared his essential insights into how to maximise your email marketing ROI.

Email has its fans and its detractors. What are the facts?

According to the Direct Marketing Association in the US, commercial email produces the highest return on investment of any direct marketing media and is still several times more profitable than any other direct marketing media.

So it’s little wonder email is a favourite amongst retailers. Send an email and get a return. And yet, as an important communication channel, it is often taken for granted and misunderstood.

When email marketing is done well it can dramatically grow revenue and, most importantly, a return on investment. The opposite is also true. Poorly executed email campaigns can cost a business in many ways – from lost subscribers, the cost to find new ones, poor deliverability, blacklisting and additional resource costs, through to a negative impact on brand reputation.

Let’s face it, email has been easy. Well, on the surface it may seem that way but things are changing. Inbox providers like Hotmail, Google and Yahoo have progressively moved to track the level of engagement (or lack of) of recipients to senders’ emails. If your recipients do not open and engage with your emails, the inbox providers start to look at the sender more suspiciously and ISP’s may blacklist senders.

So it’s important retailers get the fundamentals right and evolve as marketers. As organisations do this they see a dramatic increase in revenue, profit and subscriber loyalty.

So what examples are there of retailers using the three levels of email marketing well? What returns are they generating per email received?

Here in Australia there are a few retailers using what we call Level 2 tactics but not many using Level 3 tactics. Moving from a Level 1 mentality (using personalisation and blasting) to Level 2 (using segmentation and dynamic content) should not be a difficult step. Level 3 marketers however, are few and far between in this country. But those that are at this stage see significant returns through the use of user-generated content, trigger based emails, lifecycle communications, automation and web analytics. Relevant, targeted communication is the key to smart marketing and driving a return on investment.

The importance of relevancy in email campaigns is reflected in recent research from Forrester in the US, who found that using targeted segmentation (Level 2) tactics increased revenue by 4.8 times and monthly net profit increased by 15 times. Moving to Level 3 tactics, Forrester found that using sophisticated lifecycle tactics had a similar impact of increased revenue by 4.8 times and net profit by 15 times. And applying another Level 3 tactic (using website click stream tactics to automate emails based on website activity) delivered nearly nine times the revenue and 31 times increase in net profit.1

The interesting point around this data is that retailers are not limited to either one of these tactics. They can use all three and a few more at that. Imagine a retailer gaining nearly 19 times the revenue and a staggering 61 times increase in net profit they make today? This is possible when retailers start to apply a more sophisticated and individual approach to each campaign and their dynamic customer base.

How difficult is setting up demographic personalisation or individual personalisation and is it viable for a small business owner? What percentage of consumers do provide the necessary information?

Personalising and ensuring communications are highly relevant is not a difficult thing. Yes, it does come down to the data you have and how accurate it is, but there are many solutions that make the process of segmenting data and using dynamic content straightforward.

Is it viable for a small business owner? Definitely. If they are using an entry-level solution it may be more work, but they should still be able to send out highly relevant communications.

Useful and relevant data can come from a number of sources such as subscription sign-up, ongoing surveys as part of a lifecycle program or post purchase, transactional purchase history and web analytics to name a few. Some of the most successful programs start with only asking a minimum set of questions upon subscription sign-up, and then filling in the blanks over time with a series of small surveys. Transaction history is probably one of the most useful pieces of data for a retailer. It can allow a retailer to set up automated communications based on product purchased or the date of the last purchase, like a re-engagement program for customers who have not purchased for an extended period of time.

You need solid permission and acquisition practices to have a successful email program – email marketing is as much about what you send as who you’re sending it to. With many retailers there is certainly an unhealthy focus on list growth, with ‘quantity’ taking the focus away from ‘quality’. List growth has three components: (1) acquiring new subscribers, (2) reducing churn, and (3) increasing engagement among existing subscribers. Those last two goals will keep you honest as you pursue the first goal.

Retailer experienced a 40-50% rate of return to site when automating abandoned cart emails.  Does this work best for any particular segments of the market?

These sorts of figures are standard for retailers using cart abandonment tactics. Shopping cart abandonment programs work particularly well when they meet a need. There are many reasons why shoppers drop out of the purchase process, but a common explanation is that people get distracted or have to urgently attend to something. Think about mothers with young babies – while the baby sleeps they jump online to do some shopping. If the baby wakes up and starts to cry, they need to attend to the situation immediately. What’s really helpful is when retailers then send an email saying, “We thought you might like to continue shopping when you’ve got more time, here are the goods you selected in your cart”. Consumers are usually pretty pleased with this kind of follow-up. If it’s seen as helpful and done in the right tone, then it can work for any segment of the retail market.

How difficult is it for small businesses to ensure their email campaigns will not be treated as spam? What best practice techniques should be employed?

There are a couple of things to consider. Firstly, don’t send emails using Outlook. This sounds like an obvious point to make but you’d be surprised how many small businesses still do this. Outlook doesn’t allow you to collect any metrics on your campaigns and you have no visibility into whether the emails ever made it.

The second tip is ensure your emails are highly relevant and targeted and add significant value. By that I mean if you honestly believe you would like to receive the email and it would be valuable, then you are on the right track. If you question this then it’s probably not a good email campaign idea.

A third point to consider; provide choices when people subscribe to your program, set expectations at the very beginning and stick to them. How often do they want to hear from you? What news do they want to receive? Take note and don’t deviate from what you promise.

Finally, work with a solid provider where deliverability is not just a word they talk about, it’s a big part of their business and they have dedicated people, systems and technologies that ensure your emails are delivered and if something goes wrong they can fix it. Ensure you have a dedicated IP address for sending rather than a shared IP address. Many email programs use a shared IP address for all their clients which means your reputation as a sender is impacted by other senders. Having no control over this is dangerous.

1 Jupiter Research Executive Survey (3/05) Forrester

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