Three Steps to a Higher Return on YourEmail Marketing Investment

By Megan OuelletDirector of Marketing Listrak, LLC December 10, 2009

www.listrak.com • 1-877-362-4556 • Fax: 717-627-6087

M arketers will face another tough year in 2010. 2009 was full of budget cuts and reallocations with 71 percent of global CMOs reporting cuts – the majority losing over 20 percent of their budgetsi. The first half of 2010 will be

even leaner for many marketers, but the news isn’t all bad. The fat has already been trimmed. Marketers have moved away from expensive, yet passive advertising channels that push their messages to consumers and are embracing less expensive interactive channels that give them the flexibility to customize messages that lead consumers down specific paths individualized to their exact needs.

Budgets for traditional media, such as print, direct mail, and broadcast advertising are shrinking as marketers find higher returns in their email, mobile, search, and SEO initiatives. The diagram on the right from the Winterberry Groupii shows how marketers “followed the consumers” in 2009 by reallocating their budgets to more personalized, interactive channels. Forrester Researchiii has predicted substantial growth in these channels through 2014. (Click the charts for more information.)

The struggle that marketers will face in 2010 is how to implement the right interactive media mix in order to reach their goals. With limited budgets and resource constraints it can be tough to figure out which investments will provide the biggest returns. With so much at stake marketers must revamp their strategies quickly, but they must be careful to avoid the hype and only focus on areas that have proven results.

US Interactive Marketing Spend 2009-2014 Source: Forrester Research

2009 Marketing Budget Allocations Source: Winterberry Group

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Here are three tips on how to maximize your marketing investment in 2010:

1. Work smarter, not harder

“Do more with less” has been the battle cry of CFOs for the past 12 months. However, it’s time to put that cliché to rest. Laura Patterson gave a great example of how doing more with less doesn’t work in Listrak’s webinar Best Practices for Proving Marketing’s Valueiv. She said that a family could spend less at the grocery store each week but meals would be less substantial in both quality and quantity and the family wouldn’t be as satisfied.

The same is true for your marketing budget. If you simply cut your marketing budget and try to do more with less, less will get done. Instead of focusing on how to stretch the budget, align your strategy with alternatives that are less expensive but yield higher returns. In 2010, work smarter, not harder.

Email still provides the highest ROI across all marketing channels. According to the Direct Marketing Association’s Power of Directv economic impact study, email returned $43.62 for every dollar spent on it in 2009. That number is expected to dip to $42.08 in 2010, but it will still return nearly twice as much as the next highest channel, search marketing.

Email drove $26 billion in sales in 2009 and the DMA projects it will grow to nearly $28 billion in 2010. But, surprisingly, email still only accounts for a small percentage of marketing budgets. Email’s low cost of entry makes it easy for marketers to put their email marketing strategy on autopilot and still get a return. Because of email’s success on autopilot up to this point, marketers haven’t felt pressured to optimize it and instead have been spending time fixing what isn’t working in their strategies. Next year, when every dollar and every sale counts, be sure you have the right tools to succeed. Many companies are looking to increase their spending in social media and mobile marketing, which in 2009 resulted in sales of $14.3 billion and $2.1 billion respectively according to the DMA. Both channels give your organization a way to engage consumers, but, unlike email, neither are forums where you can directly sell your products and services. If you are overlooking email and relying on social media to increase sales and customer satisfaction, you will be disappointed.

Stats from DMA’s Power of Direct economic impact study

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2. Take your email strategy off autopilot

Before you think about what you want the outcome of each email campaign to be, think about what you want to do with your overall email marketing program. What’s important? Do you want to drive sales? Increase brand awareness? Engage your audience? Are you using email to populate your social media channels? Or are you trying to accomplish all of the above? Each of these initiatives has a very different strategy and a single email template won’t produce results in every area. Know what you want to accomplish before getting started.

Next, look at your current strategy to identify your biggest challenges. MarketingSherpa’svi 2010 Email Marketing Benchmarking report includes the chart on the right that shows the top challenges email marketers are facing. (Click on the chart to read an excerpt from the study.) In past years email deliverability held the top spot, but as more companies become certified senders and follow other best practices it is becoming less of an overall concern in the marketplace. Be sure your strategy is updated regularly to include solutions to your biggest issues.

Finally, talk to your ESP to learn how it helped other companies overcome similar issues. Your ESP can build customized solutions that will increase your results. If you are simply using an ESP to send email blasts to your entire list – STOP! That isn’t a strategy; that is an annoyance. ESPs like Listrak offer consulting and professional services, including design and content creation, dynamic message assembly, engagement tactics, split testing, and results analysis – everything you need to get the most out of every email you send. A small investment will yield high returns. Pay closer attention to your email strategy and your results will go through the roof.

Past email challenges will increase in importance in 2010. Source: MarketingSherpa’s 2010 Email Marketing Benchmarking Report

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3. Take the time to do it right

A MarketingSherpa report, shown on the right, proves that the more effort you put into your email strategy the more effective your campaigns will be.

Here are some things you can do in 2010 to do it right:

Organically grow your list – Email best practices begin with the opt-in process. While it might be tempting to purchase a list of email addresses, it’s not worth the risk. Purchased lists have the worst performance metrics. Even if you follow CAN-SPAM rules, recipients can report your messages as spam, which will damage your reputation and ruin your deliverability. Instead of spending the money purchasing email addresses of people who don’t want to hear from you, put that money towards an organic list acquisition strategy. You won’t capture the addresses as quickly, but everyone on your list will welcome messages from you – as long as the messages remain relevant.

Segment – The MarketingSherpa chart shows that relevant emails outperform all others. It’s no surprise – relevant emails engage subscribers by giving them only the information they want, the information that is most likely to convert.

There are a number of ways to segment your list. Even a simple segmentation, such as sorting subscribers by locations, preferences, past purchases, last open dates, etc., will increase the response rates of your campaigns. But the more targeted you get, the more relevant and effective, your emails will be.

The best way to create extremely targeted and relevant messages is to use dynamic content. Also called dynamic message assembly, it is a way to create individualized messages based on subscriber preferences and behavior. From a single template you can create hundreds of different versions of each message. A studyvii performed by Listrak found that dynamic content emails had click-through rates 41 percent higher than batch emails. Dynamic message assembly takes more time – you have to collect more data, develop more content, and set up the business rules so the email templates can populate on the fly – but the results are well worth the effort.

The more effort email marketers put into their campaigns, the higher the return. Source: MarketingSherpa’s 2010 Email Marketing Benchmarking Report

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Automate message deployment – Event triggered messaging is another way to increase the relevancy of your emails and improve response rates. At its simplest, event triggered messaging is an email autoresponder. For example, when someone subscribes to your list, you can have an automated welcome message that further engages the subscriber. Welcome messages have the highest open and read rates and provide a great opportunity to make offers or promote preference centers and ETM allows you to easily capitalize on this.

You can build ETM messages to be as detailed as you need them to be. For example, you can build different paths that lead subscribers through the sales cycle based on their responses, or you can automate follow up from trade shows or other events. ETM requires some pre-planning, but because subscribers trigger deployment, the messages always reach the right recipient at the right time.

2010 is the year of consumer engagement, and an integrated marketing strategy that follows the examples above will help you interact with your customers and subscribers in meaningful, beneficial conversations.

About Listrak

Listrak provides enterprise engagement marketing solutions and services. Our messaging solutions deliver marketing intelligence aligned to business goals to achieve greater efficiency and ROI. We are passionate about solving business issues by providing innovative solutions, sound strategy, and email marketing expertise. Clients like Navistar, Motorola, Waterford, and Quest Diagnostics rely on Listrak to help them accelerate and capitalize on intelligent messaging.

Our innovative messaging solutions help clients build one-to-one email campaigns that engage customers and prompt desired behaviors through our dynamic segmentation and message assembly engine, A/B and multivariate testing, geographical tracking and targeting, visual campaign analysis, micro-level drill-down reporting, and advanced automated workflow messaging solution.

Our professional services team becomes an extension of your business to maximize the performance of your email marketing. Our Account Managers provide the expertise to develop sound strategies, programs, and management of your messaging solutions to meet your business and marketing goals.

To learn more, visit www.listrak.com. You may also follow us on Twitter, Facebook, LinkedIn, and YouTube.

www.listrak.com • 1-877-362-4556 • Fax: 717-627-6087

i Forrester Research “Marketing Budgets Suffer Significant Cuts” report as reported in DMNews article CMOs slash marketing budgets in 2009, direct mail takes hit July 2009.

ii Winterberry Group is a global strategic marketing firm that helps advertising and marketing companies grow shareholder value. Find it online at www.winterberrygroup.com

iii Forrester Research is an independent research company that provides pragmatic and forward-thinking advice to global leaders in business and technology. Learn more at www.forrester.com

iv Laura Patterson co-founded VisionEdge Marketing a data-driven metrics based strategic and product marketing company.

v The DMA’s annual Power of Direct study is conducted by financial-analysis-and-forecasting firm Global Insight.

vi MarketingSherpa is a research firm specializing in tracking what works in all aspects of marketing. It can be found online at www.marketingsherpa.com.

vii Results from Listrak’s case study with DiscountBeautyCenter.com.

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