Relationship Building, Email Style

Author: Timothy J. Hull

January 2008

Is email marketing finished or are the prognosticators out of touch with the marketplace? E-mail marketing spending scored the lowest projected spending increase among popular online marketing tactics and finished with the highest projected decrease in spending over the next three years, according to a 2007 study that appeared in The McKinsey Quarterly. It appears that, on a whole, online marketers are planning to pull back on email spending. However, consumers are still signing up to receive newsletters, promotional emails and new product and service announcements at a steady rate. Long story short, no matter what online marketers say, consumers are still asking for "relationships" with the brands they love and email is still a big part of that relationship.

Over the recent past, consumer patience with non-solicited email (spam) has fallen to an all-time low. There has been a continued rise in the use of spam blockers, and there has been a steady increase in the adoption of more efficient information delivery methods such as RSS. One would think that these forces would indeed put negative pressure on overall email use by marketers. However, Penton Media Custom Research reports that of the online marketing tactics used by US marketers in February and March 2007, email marketing and email newsletters were used more often than any other tactic including banner ads, blogs, viral campaigns, search engine optimization and podcasts.

Adding to what Penton found, we are seeing an increase in the rate and the volume of website visitors signing up for email lists that promise product or service information updates, discounts, "how-to-use" educational material and newsletters highlighting favored brands. It is important to keep in mind that these are opt-in or permission-based mailing lists where the recipient requests and even looks forward to receiving the email communication. Our experience indicates that once a month is not too
frequent for sending emails to opt-in lists and some clients are even finding that occasional twice-a-month emails are acceptable if the information is worthwhile to the recipient. Open and click-thru rates for opt-in emails are still rock solid and actual order rate increases resulting from the email reinforce the use of this effective marketing tool.

Consumers as well as B2B recipients are looking for relevant, targeted, personalized content related to their favorite brands. Far beyond tolerating email communication, they are asking for it. Brand supporters seek dialog with preferred suppliers and are looking to build or reinforce their relationships with their favorite brands. The key word here is relevant. According to JupiterResearch, more than 50% of those who  opted-out of an email list indicated that the reason for doing so was that the information being received was no longer relevant.

According to Silverpop, retail marketers understand that building a relationship with consumers is important and leads to long-term sales. As such, retail marketers are making it easier to opt in and out of campaigns,and they are learning to ask customers for more than just e-mail addresses to help craft personalized messages. Nearly two-thirds of email optout links in 2007 led to a page that allowed registrants to easily and quickly make changes to their preferences. In 2005, only 12% of e-mail marketers provided an opt-out link to a change of preferences page. Not only does "ease of opt-out" help build a trusting relationship but taking recipients to a preference page instead of a simple opt-out may convince consumers that the company has something else of interest, even if they no longer want the communication currently being received. Recipient preferences rule and the brand managers that not only respect but also encourage recipients to update their information will continue to see outstanding
open and click-thru results from outbound email communications.

Not only is it important to communicate with consumers when and how they want, but it is also important to build trust from the very beginning. One of the biggest mistakes is to ignore someone who has opted-in to a promised email communication. eMarketer reports that Mike Weston, managing director of Silverpop, believes effective email marketing tends to resemble polite conversation. "There are rules of conversation," Mr. Weston said. "Companies that fail to respond when someone gives them an e-mail address are doing the equivalent of ignoring them face to face." No company can afford this grievous error in the competitive marketplace of today.

If customer and prospect desires aren't enough to convince you to continue the use of email communication, listen to online marketers who reported to MarketingSherpa that more than one-half of US marketers stated that email marketing produced the second best ROI of any marketing tactic. Only search engine optimization was more highly regarded for ROI. Yet, eMarketer predicts that US e-mail marketing spending will only reach $1.65 billion in 2011, up from $1.5 billion in 2007, so the annual
growth rate will slow from 5.6% in 2006 to 1.5% in 2011. Consumers are asking for relationships with brands and the ROI payouts are there, so why is email spending predicted to decline? Researchers believe that while the number of emails sent will actually continue to increase steadily, efficiencies in email delivery will offset those larger increases in the number of emails sent by reducing costs. As such, email spending will increase at a slower rate than the rate at which the volume of outbound emails increases.

Many people believe that email marketing is dead or is in the process of a slow death. However, customers and prospects are still asking for communications that build or strengthen brand relationships. These desired communications are readily feasible for both large and small businesses using cost effective, opt-in, outbound email programs. While I would highly recommend against using email as your only means of communication with customers and prospects, this marketing tool should not be
ignored, despite the negative publicity. Many times, marketing aficionados are too quick to dump one trend and jump on another without thoroughly evaluating the desire of the customer.

If customers are requesting relevant email communications and the ROI has been proven repeatedly, which it has, why not stick with email? Will the use of email continue or even expand in 2008 or will 2007 mark the demise of email as a marketing tool? Why not ask your customers.

Timothy J. Hull is President & CEO of TDH Marketing, Inc., a Dayton, Ohiobased marketing firm with alliances and joint ventures in the U.S., England, and Singapore that support its global client base. The firm provides strategic, marketing, operational, and communications planning and implementation for both large and small corporations looking to develop profitable, technology-driven business growth.