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The Pitch: Targeting Callers with e-Mail Marketing

Posted: 08/2000

Targeting Callers with e-Mail Marketing
By Tara Seals

International Data Corp. (www.idc.com) estimates there are 400 million online mailboxes worldwide–all potential destinations for an e-mail marketing message. But experts say getting results is not as easy as compiling a mailing list and pressing the “send” button.

Among benefits of e-mail marketing are heighten visibility, increase web traffic and improve customer communication, according to Robin Frank, marketing director for Digital Impact Inc.
(www.digitalimpact.com). The company has executed e-mail marketing plans for such clients as Gap Inc.
(www.gapinc.com), Egghead.com (www.egghead.com) and Preview Travel
(www.previewtravel.com). It sent 300 million messages last quarter.

“It’s successful because most people are online, and so it’s a fantastic way to reach people,” says Frank. She explains it can be used to improve branding and awareness, and HTML e-mail allows companies to include an image, logo or full-color ad.

Marketers agree; e-mail marketing is projected to grow to $4.8 billion by 2004, according to analysts at Forrester Research Inc.
(www.forrester.com).

In its most used application, e-mail marketing can increase customer retention and loyalty by providing ongoing communication relevant to a customer’s interests. Examples could be a special promotion from a favorite online store, a newsletter, or a time and event-triggered “reminder” message, according to Tory Pearson, spokesperson for Exactis.com Inc.
(www.exactis.com).

Exactis.com handles e-mail newsletters, order
confirmations and marketing messages for more than 100 corporate clients, including MSNBC
(www.msnbc.com) and Sony Corp. (www.sony.com). At a send rate of 30 million messages a day, it is the world’s largest e-mail service provider.

Pearson explains these messages are part of a customer life-cycle campaign wherein a customer may receive a “Hi, how’s it going” e-mail shortly after purchasing a new service or product. It’s likely the e-mail also will try to sell the next level of service.

However, these initial e-mails might be followed by one-month, two-month and three-month follow-up messages, or by a weekly newsletter containing complementary product offers embedded in articles containing service tips or similar content.

Throughout its life cycle the customer-vendor relationship can be enhanced, refined and, hopefully, prolonged using e-mail marketing, she explains.

“It’s a fantastic customer relationship and management tool, to really build relationships with your customer base, to up-sell and cross-sell, keep them interested in your company and your business,” Pearson says.

The Upside

While direct mail, faxing and telemarketing are used for similar purposes, they don’t come close to their electronic cousin’s cost-effectiveness and speed.

According to Jupiter Communications Inc.
(www.jup.com), the cost of direct mail is between $1.50 and $2 per piece. The response rate is typically from 1 percent to 3 percent. By contrast, Jupiter says e-mail messages cost from 1 cent to 25 cents, with a response rate that averages between 5 percent and 15 percent. Clearly, the return on investment is much greater, but e-mail’s quick time to market also is a great advantage in creating proactive and reactive marketing campaigns.

The lead time to mount a physical mail campaign can take weeks for the piece to be designed, printed and posted. In contrast, an e-mail blast can be written, assembled and sent in a matter of hours or even minutes.

E-mail also lowers the barriers to customer response. Direct mail and fax blasts typically expect a response back via an 800 number call, a fax-back or business reply card. This requires the customer to take several steps, from opening an envelope to filling out information to mailing it back. Telemarketing–usually a cold call–interrupts customers and infringes on their time, often leading to a chilly reception.

On the other hand, e-mail does not have these problems. A customer can receive and respond to a message from his or her desktop. The quick turnaround provides marketers with real-time reporting, which allows them to track, to analyze and
to act upon a campaign’s results in a short amount of time.

“With e-mail, the response time is 24 to 48 hours. That allows you to refine and evolve your approach according to the market in an up-to-date way,” says Frank. “You can even do testing by sending one promotional e-mail to one-half of the base, and another to the other half, to find which is more effective. And you’ll know in a day.”

The Downside

Of course before you can get started, you must create a permission-based mailing list. And, it could take some research to ensure that you utilize the demographic information needed to create relevant and targeted marketing messages. This could mean the fledgling e-marketer may spend a lot of time learning how to differentiate messages from the pack.

Despite the clear benefits mentioned earlier, recent developments in e-mail marketing compensate for, and point out medium pitfalls. For example, the backlash triggered by sending unsolicited e-mail, or spam, has precipitated a decline in general broadcast messaging.

The Council for Responsible Email, an offshoot of the Association for Interactive Media
(www.interactivehq.org), lobbies heavily against
spam, and in February passed six self-regulatory resolutions to protect users from unwanted communications.

To avoid spamming, marketers are moving to permission-based marketing, creating an opportunity for independent permission verification entities such as the recently launched
opt-UP.com (www.opt-up.com) and conferences such as Spam Summit 2000.

Permission-Based Marketing

A way to avoid spamming is to adopt an opt-out policy, which means providing a “removal” option for the recipient. Another way is to use an opt-in policy, wherein a recipient signs up to receive messages.

Which is better? A recent eMarketer
(www.emarketer.com) study shows that 59 percent of unsolicited messages are deleted without being read, as opposed to only 6 percent of permission-based messages.

The Direct Marketing Association Inc.
(www.the-dma.org) supports an opt-out policy to widen a potential market without becoming a nuisance. The organization’s public affairs director Stephen Altobelli explains that as the Internet becomes more sophisticated and developed, marketers will target recipients more carefully rather than to send blind, bulk e-mail.

“So even if the e-mails are unsolicited, they’ll be targeted and relevant,” Altobelli says. “Our point is that just because someone hasn’t requested the e-mail doesn’t mean they wouldn’t find the information or product of value.”

Some e-marketers feel this isn’t enough. For example, Pearson explains that her company’s client contracts contain spam and privacy policies, and all lists must be opt-in only.

“We really feel that if people are receiving unwanted e-mail, then it’s going to take away from the impact of the messages they’ve actually asked to receive,” she says. “We’re fighting against the desensitization.”

Cassandra Millhouse, an analyst at Ovum Ltd.
(www.ovum.com), concurs. “The reality of it is that most companies still operate in an opt-out scenario. There will be some small print somewhere that says you’re in, unless you tell us you’re out. Some actually require a written letter asking to be taken off. And the fact that you have all these e-mails makes it difficult to be able to prioritize them just by looking at the inbox.”

Pearson explains some people do request to receive the advertisements and promotional e-mail? “If it’s done right, it’s requested by the end user so they don’t have to go out and search the web to find the info that they want to get every day, like Christmas specials and cheap plane tickets.”

Some opt-ins aren’t so direct. If consumers enroll in a website or sign up for a newsletter, they often automatically give permission to receive promotions having to do with the site’s content.

Bull’s-Eye Targeting

Compiling a mailing list from a submission form on a website is the first step. Successful marketers collect a vast amount of demographic data in their quest to make customers happy to hear from them and drive high response rates.

For example, Digital Impact uses a mass personalization engine that tailors messages to the unique interests of each recipient.

“We have the capacity to send hundreds of millions of messages at the same time, and no two will be alike,” says Frank.

The company also provides adaptive intelligent marketing, a proprietary process that involves working with clients to enhance and improve each successive campaign. The process utilizes click-through and purchase information, a survey or a profile page clients may have filled out, and data mining analysis to send more targeted and relevant messages with each campaign.


Table: Pros and Cons of e-Mail Marketing

“If you’re a young adult male and you get an offer for pantyhose, chances are that you’re going to dislike that the person sent it to you. The ability to do sophisticated database targeting is good for us, for consumers and for advertisers,” says Geoff
Ossias, vice president of corporate relations for online rewards program MyPoints.com Inc.
(www.mypoints.com/company).

With an eye toward growing its customer base through targeted marketing, TALK.com
(www.talk.com), an ICP selling online, entered in June into an agreement with Quintel Communications, Inc. Direct marketer Quintel maintains an online database of 7 million opt-in consumers, which the
company compiled using lists from its Quintel Network.

The network is a marketing alliance of vending partners such as MultiBuyer.com
(www.multibuyer.com), skymall.com (www.skymall.com) and mortgage.com
(www.mortage.com). Quintel will use proprietary software to slice and dice extensive customer profiles and buying behaviors, to arrive at a condensed list of likely candidates for TALK.com offers.

It’s worked effectively in the past, according to Josh Gillon, Quintel’s chief investment officer.

“Quintel’s been in the direct marketing industry since the early ’90s, and we’ve delivered millions of customers to telecom companies over the years using targeting,” Gillon says.

Cybermarketing has the extra benefit of better tracking the response behavior. An
e-marketer can record to what extent recipients responded to an e-mail: whether messages were opened, what links were clicked and if and for how long the customers surfed the website after click-through. Moreover, that behavior can be linked back to the
personal profile.

Attention-Getters

As targeted e-mails become the norm, differentiating your message from a pack of similar e-mails can prove to be a hurdle. But even a targeted message from a catalog retailer may not make the cut against dozens of messages from coworkers, family or the stockbroker.

To break through the clutter, marketers are turning to a variety of applications–from event-triggered messages and rewards programs to newsletters and viral marketing. An example is Digital Impact’s E-mail Exchange, a cooperative marketing campaign that leverages its client network. The company gives clients the opportunity to participate in a themed message, centering around events such as graduation or the beginning of baseball season. Several vendors will come together to include an offer in the message, which will be sent to the combined lists of all participants.

The company also uses viral and reward marketing to move a step beyond ongoing customer relationships.

“Once people have started a regular e-marketing communication with their
customers, they start looking to acquire new customers,” says Frank. With the “Forward to a Friend” tactic, Digital Impact partnered with other online promotions companies to offer incentives to customers that pass the message on, such as passing it on to 10 friends earns the user a free gift.


Illustration: MyPoints.com and Sprint have an exclusive marketing
relationship

Another example is at MyPoints.com, where the average click-through rate is between 15 percent and 25 percent, MyPoints.com is looking to create transactions with its rewards approach. The company has consumers that have signed up to earn MyPoints. Advertisers are given the tools to reach those customers with targeted e-mail and web-based offers for earning points through purchasing and surfing behavior. Consumers can redeem their MyPoints for gift certificates and travel rewards. Currently, the company has nearly 9 million customers and expects that number to grow to 16 million with the acquisition of Cybergold.com, a cash reward program that functions similarly.

MyPoints.com also has an exclusive relationship with Sprint Corp.
(www.sprint.com). Members can earn 1,000 MyPoints for switching their long-distance service.

In addition, Sprint is one of the most popular rewards providers, letting members redeem MyPoints for phone cards. The relationship works well, says
Ossias. “It’s difficult to get people to actually buy things if you have nothing to differentiate your message, other than just to say that it’s targeted. And that’s where we believe that the rewards programs come into play. It gives us a
competitive edge.”

Tara Seals is agent channel editor for PHONE+ magazine.

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