Email marketing: Back to basics

Marketers wouldn't dream of launching a TV campaign without rigorous
research and testing, but when it comes to email, they're taking a
relaxed view and some are not even testing basic functionality such as
click-throughs to links.

Recent research by CheetahMail and Revolution found that 40 per cent of
UK companies are not employing even basic best-practice techniques for
email marketing; a scary thought when you consider that in the period of
Q4 2005 to Q4 2006, more than 1.2 billion emails were sent out to
consumers in EMEA alone.

The benefits of email marketing are obvious; it's a highly
cost-efficient medium that offers companies an opportunity to engage in
real conversations with consumers, while also getting an excellent
return on investment.

There's no denying the appeal from a financial perspective when a
company can send multiple emails for the same price as a postage
stamp.

However, without testing, brands run the risk of damaging their
reputation by bombarding consumers with irrelevant messages. That's
assuming the emails make it past the spam filters and avoid the trash
folder long enough to be opened, let alone read by the consumer.

Ask any expert about email marketing and they'll give you that old
chestnut about 'getting the right message to the right person at the
right time'.

But, one look at the lack-lustre performance of click rates, currently
at 9.1 per cent, and the steady decline of open rates - which fell to
29.4 per cent in Q4 2005 from 36.8 per cent in Q4 2004 - suggests that
message is not getting through to marketers. With more than 65 per cent
of UK companies planning to increase their ad budgets for email this
year, more testing is crucial to retain client spend.

Dangerous cycle

"The big challenge for marketers is that email works remarkably well and
they make an awful lot of revenue on the back of the emails they
send.

You get sucked into the mentality that, if it works, let's not break it,
let's keep doing it, but that's a dangerous cycle," says Simone Barratt,
managing director of email-marketing firm e-Dialog. "A lot of
organisations don't have an appetite for testing; perhaps the value
hasn't been proven to them, despite all the statistics suggesting
otherwise."

A Jupiter Research report found rigorous email testing, in addition to
targeting and segmentation, can improve campaign effectiveness by up to
80 per cent, so why aren't more firms testing? "There's a
misunderstanding among some marketers that because there is little or no
unit cost to sending an email, as there is with a postal direct-mail
piece, it doesn't need the same level of scrutiny of the results," says
Stephen Pratley, eCRM Manager at ipoints.co.uk, the online coalition
loyalty programme, which has a database of some 1.5 million people and
sends more than five million emails monthly.

Pratley says the growing cost of acquiring email lists is making it an
expensive asset, which organisations need to respect and not bombard
"with whatever messages you see fit".

He adds: "Poor email marketing will turn people off your message very
quickly and those customers are lost to you forever. Marketers who hide
behind tiny unsubscribe rates are not seeing the true impact of their
messages. Your customers are more likely to have all your emails
diverted to their junk-mail folders. Try watching a block of customers
recruited to your list in a given week or month, and see how many are
still opening your emails after 90 days - you might be shocked."

Testing practices

Matt Potter, head of client services at CheetahMail, believes the
research reveals a need for the market to return to basics and
re-educate itself on email marketing. "Everybody makes the assumption
that email has been around for a while and the discipline is well
tested. Yet, what we have seen is that people might not be looking at
the basics. Everyone wants to have the most interesting email campaign,
so they tend to go for more of the quirky angles, but they are missing a
lot of the basics, like testing."

According to Potter, it's vital that organisations employ some, if not
all, basic testing practices. Testing subject lines, days of the week
and time of day, demographics, behaviour and creative can have a
significant effect on the success of campaigns, particularly open and
click rates.

However, testing requires time and resources. Combine the often short
lead times for email campaigns with the fact that many companies run
email marketing in-house through small teams - sometimes with one person
responsible for all eCRM - and testing is the first thing to be thrown
out the window.

"The number of staff it takes to run successful e-marketing divisions
can be much greater than other advertising areas," says Ted Wham, senior
VP and general manager of European operations at Epsilon Interactive
International.

"If you've got to get x amount of campaigns out per week, and you're
jammed with work, you have no time to test emails."

With four out of five email suppliers being held accountable for email
performance and around half paid on performance, it's surprising that
more energy is not being put into making campaigns more efficient.
Industry standards vary, but response rates of 20-40 per cent are highly
commendable for an email campaign. However, that means 60-80 per cent of
people are not responding. No e-marketing specialist will tell you that
you can achieve 100 per cent response, but all insist basic testing will
increase effectiveness.

Rupert Harrison, data broker at Zed Media and chair of the legislation
and best practice hub of the DMA email marketing council, says marketers
need to treat email the same as direct marketing. "Test each variable
separately and gauge which is having an effect. Email is not that
different to direct marketing. It is viewed as the cheap, easy and
measurable medium, so there's no excuse for not making it as effective
as it can be."

Harrison is working with the DMA on an updated version of best-practice
guidelines, which it will launch in the coming months, and says there
are a number of simple things that organisations can do to improve
campaigns.

"Targeting and segmentation become nigh on hopeless if you haven't
tested before going on to a full email campaign. There are simple things
you can do like setting up an external email account and sending the
message there first to see how it appears. It can easily damage a brand
if an email doesn't render properly. You run the risk of ending up in
junk or bulk folders. Just including a link to a hosted version of the
email can increase your open rate by five per cent," he explains. E

Testing subject lines will not only boost open and click rates, but also
brand values and sales. "Testing the subject line is easy and has a huge
impact," says Wham. "Who cares about click-through rates when testing
the subject line alone can increase the profitability of goods sold by
more than 20 per cent."

Subject line

As the first thing a consumer sees, the subject line is key to a
campaign's success, and must be engaging and motivating. Marketers also
need to be wary of words that will trip spam filters and send emails
straight to junk mail. "Get your subject right: if you don't have an
engaging subject line, people won't open your email, no matter how
creative is," says Andrew Thomas, e-business director at parenting site
Bounty.com.

Bounty.com sends more than two million emails per month to a database of
1.5 million members, in addition to another one million people through
third-party databases. Thomas says testing is vital and is an ongoing
process, not a one-off. Bounty.com uses sample testing by splitting its
database into groups. It then changes variables in the emails and sends
them to small groups, monitoring which are more successful and making
the necessary changes before sending the email out in bulk. Most
marketers recommend this method for strong AB variable testing, which is
simple and effective.

"Rather than focusing on your creative, make sure your email contains
the right offer for the right person at the right time in a credible
way. It's irrelevant what colour or type you used if no-one opens your
email," says Thomas.

EDialog's Barratt agrees: "If people aren't even opening your emails,
you haven't even gotten past first base." He adds: "Creative is seen as
'what does the email look like?', but it should actually be seen as
content, both function and form. It should not be just 'have I got a
pretty picture in there?'. Yes, that's important, but if you have a
beautifully creative, appealing piece and it's actually the wrong
content, that isn't going to help."

Good creative that is well tested will perform 100 times better than one
that hasn't been tested, but the crux of a good email is to have real
goals, reckons Andy Stockwell, account director at online marketing
agency RedEye. "You have to have goals and targets beyond open and click
rates.

It's all about getting the right people to open emails and then buy the
products you're selling, but it's also about bringing the right
customers to the store," he explains.

Stockwell suggests using analytics and overlays to see how people use
email marketing. Companies should test what people are doing with their
emails - which customers are clicking, which are buying - and then bring
these people to the store by creating a route to purchase. "Targeting
and segmentation is vital. Understanding what people are doing online is
a valuable tool. Selling travel offers to someone purchasing suntan
lotion is a valuable service to consumers and companies. Amazon has
reaped the benefits of recommendation marketing and people trust it.
Marketers need to realise that consumers will open your email if it's
useful and they know there is going to be helpful information," adds
Stockwell.

But, before marketers can get real value out of these more advanced
targeting and segmentation techniques, they need to get the basics
right. With spend on email marketing predicted to rise from this year's
£128 million to £1.8 billion in 2010 (Forrester), getting
cut-through in increasingly crowded inboxes is going to be even harder,
meaning that thorough testing will be even more vital than it is today.
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Top tips for email marketing

1 - Remember that email is not free. Consumers and business prospects
expect a higher standard for email than direct mail. Email must be
opt-in and relevant.

2 - Use a clear 'sent from' address, such as the name of your company or
an individual, if your consumers know your sales reps.

3 - Test subject lines: they are key to identifying which emails will be
sent to the spam folder.

4 - Ensure the text, graphics and messaging used in the 'above the fold'
preview area are effective at getting people to read on. More than half
of B2B email users regularly use the preview panel to determine which
emails warrant reading.

5 - Test whether response and purchase rates increase when email is used
in conjunction with direct mail, ads, etc. Use multi-channel campaign
management tools to automate the creation of valid test and control
groups, as well as closed-loop measurement.

6 - As 30 per cent of email lists decay each year, ensure you capture
bounce-backs and automatically clean your email database.

7 - Track all your marketing initiatives, creative, offers and results
and keep a record of what works and what doesn't.

8 - Use seed campaigns to ensure your emails are being delivered.

9 - Pay attention to the creative elements and test them. Many email
clients, especially in B2B, automatically block images in emails, which
reduces the effectiveness and return on investment of your graphics.

10 - Use email to get critical feedback to improve your campaigns.
Provide alternate response mechanisms and incentivise customers to
provide you with information to serve them better.

Source: Carol Meyers, head of marketing, Unica

Virgin Holidays builds off brand

Virgin Holidays wanted to begin regular and creative communications with
its customers to drive them to direct channels, increase bookings and
brand-build.

It turned to its direct marketing agency, Kitcatt Nohr Alexander Shaw,
and digital agency Underwired. The brief was to create an eCRM campaign
that was unlike anything else in the sector, but true to the brand.

The agencies used buying behaviour and purchasing cycles to define
customer segments, and then created a testing framework.

While research suggested destination was key to the travel market,
Virgin decided to play to the brand and take a different approach.

Research showed the average consumer takes up to nine months to decide
to take a holiday, so Virgin decided to communicate with them during
this cycle.

Database and relationship marketing were used to enhance the relevance
of communications, enabling Virgin to recognise where the
customer/prospect was in the planning/booking life-cycle, and recognise
their preferences.

Virgin was then able to manage the data over time.

The email campaign built off the Virgin brand to create a distinct tone
and look in the market and distinguish it from the competition.

In the first month, the push generated £3 million in sales for
Virgin Holidays, against a spend of £35,500. It also recorded open
rates of 57 per cent and click-through averaging 37 per cent.

The campaign was also rewarded with silver in the Email Marketing
category at the DMA Awards last year.