ROC: Email Marketing Strategy at a Crossroads


Marketers often lament that it's hard to interact effectively with customers given current marketing channels. But
many marketers are missing out on the advantages email marketing has to offer. It's a platform ripe for building customer value, yet many companies use it like a backhoe to destroy precious relationships in the long run.

According to the March Forrester Research report Email Marketing Comes of Age, 97 percent of consumers and 94 percent of marketers use email. "Consumers and businesses are raising their hands and asking for email," says Stephanie Miller, vice president of strategic services at email service provider Return Path. "No other communication channel does that. It's a huge opportunity."

Right now, however, the opportunity is forfeited. Seventy-seven percent of respondents to the Forrester survey say
they receive too many email offers, up from 71 percent in 2003. Seventy-two percent delete most email advertising
without reading it, and only 5 percent buy things advertised through email promotions. The problem: a lack of long-term customer strategy. "Many marketers think of email as a broadcast channel, not as a way to connect with
individuals," Miller says.

"Companies use the same tactics as they use with paper - newsletters, blanket coupons, etc. - instead of taking advantage of what makes email the greatest marketing tool in history," adds Chris Baggott, cofounder of email service provider ExactTarget. "When integrated with data like CRM, POS, and Web analytics, email can leverage customer data to have a real dialogue." Unfortunately, it's just not happening.

For instance, Baggott says a major airline sends him a weekly list of discounted flights, none of which originate near where he lives. "The result is that there is very little difference between unsolicited spam and this irrelevant yet opt-in email marketing." It's called "permission spam," a tactic many companies use when short-term revenue is on the line.

"Some people think more email equals more revenue," Miller says of the permission spam phenomenon. "That's a very short-term strategy. Over time, it becomes a negative. At some point, you can't send any more emails. We'll be forced by the market to become more relevant and valuable to our subscribers."

Sacrificing the long term value

What's really happening here is that companies are opting to try to make a buck today at the expense of making a lot
of bucks tomorrow. Once a customer sees messages as irrelevant and stops opening them, a company will never be able to get that customer to create value for your company again. Its ROC will drop to zero.

Vernon Tirey, SVP of Solutions at Click Tactics, believes every email a company sends should be relevant. The company must get the content, timing and channel correct. "Whether your communication is asking for an order, for information or for permission to talk again it must also build trust and long-term value. We have all seen far too many emails that create negative value."

Tirey describes how things should (and can) be for customers. "Imagine a financial services company that takes the time and effort to know what the best rates are for their markets as well as what a customer's product, service and communications preferences and needs are. It looks at its customer database every night and sends mass-customized messages to 2 percent of customers by morning, each one tailored and timely. Each one relevant. Customers open their email and it says: 'Good morning! You saved $17.54 today with the new loan you opened yesterday. Click here for the easiest way to take advantage of the transaction.'"

The customer perspectives

Customers break the strategy down very simply - delete or read. There's no in-between. "In this day and age, brand
can get you in the door, but what happens next is where it gets interesting," Baggott says. "Respect me, listen to me
and I'll treat you great. Ignore me, abuse me, waste my time, and there will be consequences. Customers have
powerful weapons ranging from just ignoring a company to flaming that company across the entire Web."

Miller emphasizes the importance of "prior value" - the value a subscriber felt she got from a previous email. That
value can be destroyed or enhanced via the next email. It's the top reason given for a subscriber to engage with an
email, according to a Return Path survey. "Each experience drives the next experience," Miller says.

Fixing the disconnect

With such obvious benefits, why aren't more companies changing their ways? Read some tactics that Miller,
Baggott and Tirey suggest to better connect with customers: Email Marketing at a Crossroads - Part II.