Author Archives: Tim Roe

Tim Roe

About Tim Roe

Tim Roe is director of data and deliverability for RedEye, a member of the DMA Email Marketing Council and the Best practice and legal hub. He also contributes to the DMA Cookies Working Group. Tim has over 20 years of offline and online marketing experience and has been with RedEye since 2004. Tim helps clients improve their email deliverability and develop online engagement segmentation strategies to improve ROI from email.

Three stages to developing an email marketing strategy

Developing a good email marketing strategy can be a daunting task. To help you get some perspective, here are 3 key stages to keep you on track.

Develop a customer centric communications strategy.

I know this can be a bit of an overused statement, but to make the email channel work in the modern environment of priority inboxes’ etc it is vital. Focusing on the needs and motivations of the customer as they would relate to your brand is a great place to start. If you are going to be talking to the customer and expect them to engage, purchase or become loyal as a response, you’ve got to say the right things. This can’t be done at a campaign tactical level, when the heats on to get more sales to hit target; it needs to be part of an overriding communications strategy. This strategy will set out more than just how many promotional emails need to be sent to achieve revenue objectives. To develop this email communication strategy, these are some of the key elements.

  • Understand how your customers perceive the brand and its products or services.
  • Research the motivations and needs that engagement with your brand satisfies.
  • Research the strengths that define your brand equity.
  • Define your customer lifecycle and set business rules to identify where each customer sits.

Focus the strategy on increasing LifetTime Value

Once you have got a clear idea of your customer and the stages the customer goes through in their engagement with you (from discovery to defection), you can start to plan. One key objective of any email communications strategy should be to increase revenue by increasing customer lifetime value. Now, don’t think this is purely a retention statement, it equally counts for acquisition too.

Acquisition

If you’re going to be focusing on lifetime value, it will have an impact on which sources you target for acquisition. Customers coming from sources that provide a low lifetime value customer should be avoided, or the price you pay for acquiring the prospect should reflect their future value. In the case of an email address, they are not all worth the same, so the first task would be to identify sources of prospect email addresses that will provide good future customer value. A good place to start is to look at any results you have from past activity, and look at the overall sales achieved over time, from those customers.  The problem with email is that it is a cheap marketing medium that can be abused with little (apparent) cost implication. Good email prospect data, costs far more than poor quality prospect data, but can be far cheaper in the long term, as it produces good long term results.

Retention

Without the understanding of the customer (and you’ll only get this from the research suggested above) you won’t be able to sell to the customer what they want, how they want it. You’ll only be able to sell your product or service how you perceive it. Customer knowledge also allows you to tailor communications for each stage of the customer lifecycle. This will make your communications more relevant, more effective and more likely to meet business objectives. The strategy should be one that makes every marketing communication be seen as a positive experience by the customer, not a negative “interference” experience.   Ensure you do this by following these key rules:

  • Define the commercial objectives for each stage of the customer lifecycle.
  • Develop a customer communication plan that reflects the customer research and meets business objectives.
  • Ensure research and testing is part of the strategy, to promote future development.

 

Make it part of a multi touch, multi channel strategy

In a connected world, where people are hooked onto the grid in multiple ways, touch points come via multiple channels. Just to take one example of a device, the smartphone can deliver a marketing message via email, web, social and SMS simultaneously. Studies have been suggesting recently that someone is likely to be watching the telly or walking round a store while access their phone, so the potential for cross media confusion abounds. Add this to multimedia spamming potential, and it makes integrated marketing communications essential for each channel’s success. Email has an important role to play in future direct marketing, with its unique strengths, it can only be effective as part of an overall cross channel strategy. Complimenting other channel activity, email often drives an uplift on other channels as well.

Taking a strategic approach to the email channel can bring lots more opportunity to the party, ultimately allowing customer knowledge to drive content, timing and targeting; nudging that little bit closer to true one to one marketing.

Email permission, don’t play fast and loose.

I’ve got to admit, I don’t like spam. Not just professionally, it really gets my goat personally as well. It’s not that I’m a particularly sensitive soul when it comes to email communications, but I just don’t like being sent stuff I haven’t asked for. Ok, I acknowledge that most of the downright illegal and virus laden traffic is now being successfully filtered by the great work of the spam filtering businesses and ISP’s, so what’s left to Grinch about?

Email is a powerful marketing channel, and its superb revenue driving potential is now becoming widely acknowledged. Email hasn’t got to this position by itself, it has needed to be understood and strategies carefully put together by some pretty clever people to bring it to where it is today. Some recent DMA reports show that the public now acknowledge email as a marketing channel that provides value. In anyone’s book that’s an achievement, and it isn’t as if everyone is using the same strategies. However the similar thing about all the successful strategies is they are done well, with considerable thought and great execution. So in a channel that is going from strength to strength, why am I throwing my presents out of the sleigh about spammers?

The most fundamental practice and legal obligation regarding sending someone a marketing email, is that you need to have the person’s permission to do so. I’m not going to start splitting hairs about the pros and cons of opt in opt out etc, but it is pretty widely acknowledged that the person should know what they are signing up for. But that’s right isn’t it, you don’t want anyone on your list who doesn’t want to be there, right?

And if they unsubscribe, it means they want you to stop sending them emails; so you stop, because it would be crazy to carry on, wouldn’t it?

So… why have I been sent marketing emails from a company I’ve previously unsubscribed from, with text saying “we’d like you to subscribe to our newsletter”. No thank you. I’ve unsubscribed once – isn’t that enough? Someone even sent me an email Christmas card that automatically signed me up to marketing emails!

Those are two examples from a very limited sample size. It is possible I have been very unlucky, but it does demonstrate this issue exists. It wouldn’t take long for the trust that has been built up with the public over the last few years to be eroded. At a time when we should be encouraging as many subscribers to sign up to our email communications, playing fast and loose with email permission is not the way forward. New European legislation threatens to make permission and data use more of an issue for the online marketer, we need to develop the public’s trust, not damage it.

With the revenue driving potential of the channel, it is easy to see how some could be tempted to go against the express wishes of their customers, in an attempt to drive a few extra sales. But in doing so marketers must consider the cost to their reputation.

Email addresses DO have a “best before” date

One of the contentions that surround email marketing at the moment is the issue of when you retire an email address. Leading up to Christmas, when the heat is on, ambitious sales targets tempt even cautious marketers to push out the boat and send to everyone. If an email list is causing deliverability issues, it is quite common for a bit of a clean up to be suggested. It’s not a “stab in the dark” strategy, because when used correctly it can lead to a net increase in response and revenue.

However, you cannot ignore, when retired email addresses are mailed, they often produce some revenue. This almost flies in the face of the no response/retirement strategy, but in reality, some fine tuning is in order to squeeze all the value from your list.

To deal with this issue properly, you will certainly need response (sales) data for your customers, and need to know which email addresses the data relates too. In most instances the full picture of your list can only be achieved through wider knowledge of the customer.

All too often, the most responsive customers are the ones who have been opening and clicking your emails recently. But it’s also important to segment those who are no longer interested, from those that have disengaged from your emails due to a higher contact frequency than their needs require.

The first stage of the solution should be test the differing frequency of those people who haven’t opened or clicked for a while. Although a 6 month open/click window might be fine for some businesses, it might not suit those businesses with a longer sales cycle or a wider range of buying frequency. In these instances, sending mailings for twelve months or even longer might be better, but proper testing should help you decide when a customer is signalling defection.

Engagement/frequency graph

If you have transactional data, you can use the principles of RFM (Recency, Frequency and Monetary value) to build up a model which predicts your most responsive customers. In an ideal world you could marry up the purchase RFM data alongside the online engagement data, to see the point where Recency for online engagement (opens/clicks/visits) signals a lapsed customer.

Using email response data, we create two segments, those that are recently engaged, and those that are not (don’t throw any away yet!). The engaged segment can carry on receiving the main campaign emails at the normal frequency. The less engaged segment now gets a rest (for about three to four times the normal frequency of you campaign emails). So if you generally send weekly, rest this segment for a month.

What we are trying to do is identify a segment within the email database that has stopped responding to emails due to a mailing frequency that is too high for them. By responding to the users behaviour, you are able to make changes to the email frequency of this group.

If people from this lower frequency segment, respond, it is important that they don’t go straight back into the main campaign mailing frequency, but give them more of a rest between mailings.

What we are trying to do is to start down the road of mailing people at a frequency that suits them, keeping them engaged and encouraging them to buy more. Managing frequency is the easiest way to respond to behaviour (or lack of it) but if you have more resource, you could try content too. One of the other top reasons why people stop opening emails, is that the emails are no longer relevant to them. The difficultly with content relevance, is that it relies on a deeper customer knowledge, or web behaviour data.

Unfortunately there will be those email addresses in the list that despite your best efforts will never be responsive again. So, at some point you will have to bite the bullet and let these addressees go. It is important to accept that the damage that is done to the whole email programme (in the shape of poor inbox deliverability and reduction in response) will outweigh any extra revenue gained by mailing these inactive email addresses.

Is email getting the credit (budget) it deserves?

There’s no doubt there is a change afoot in the email marketing industry. Despite  all the best practice mantras (“must segment more”, “this year we won’t look like spammers”)  it is becoming plainly clear there is a divide growing between those who have stuck to their New Year resolutions and those who have not. Email is becoming the strongest digital media channel deployed by the modern marketer, but to make the most of it, you need to know more than how to push the “spam now” button.

The email channel has arrived with many businesses now acknowledging the importance of the channel to their business model. But despite the importance of the media, there has not been uniform treatment when allocating budgets..

This has been borne out in the recent DMA email benchmark report, that concluded there are “two classes of email marketer; those sending simple campaigns and those splitting lists into multiple segments” concluding ”A major divide has opened”.

The “haves” and the “have nots”

The latest Marketing Sherpa email benchmark report backed up this class system, but seemed to suggested the reason for lack of budget was due to some marketers not being able to justify (or measure) overall ROI. It also suggested that the segment of marketers who were investing liberally were in a “strategic phase of maturity” where they could measure ROI and segment effectively.  Unfortunately the research also revealed only 36% of the companies surveyed measure response by list segment and just33% measure revenue per email .

So it would seem that those organisations investing heavily in email marketing, are those that are best able to measure its ROI and effectiveness, and are best placed to know is value. So, how do you get your email marketing to the strategic phase? And what moves can be made to pitch for extra budget to drive the revenue the email channel can really generate?

 

Measure email’s influence across multiple channels

Trying to convince the board to allocate more budget to a media that is cheap, that you don’t need to invest much money in to get a return, is tough.

As email marketers, we’ve probably all sat round tables where we have discussed spikes in call centre activity and website traffic following an email campaign. The problem is proving these increases in activity come from email. If these revenue streams are not attributed to email (at least in some part), the budget for developing the media further will never be available.

So, mirroring the findings of the Marketing Sherpa report, if you want achieve more budget for your email campaigns, you need to make sure you are measuring its true value.

The value of Influence

I know it’s a bit of a contentious subject in some circles, but the value of email communication moves far beyond the last bit of revenue that was attributed to the last email sent (and last click). it’s the measurement of that value that provides the greatest challenge for the modern marketer. Over the last couple of years I have noticed that when you directly relate a person’s revenue value, against their open and click behaviour, they relate very closely. So closely in fact, that in some instances 80% of online and offline sales will come from the customers who are regularly and recently opening and clicking your emails. An interesting thought; this means someone who opens and clicks an email, is worth more than one who doesn’t. Factor that one into the equation when working out the value of your email list, and you soon see the people who open and click emails are worth far more than those that don’t (10+ times the value is not uncommon).

 

Segmenting for Influence

If the recipient is reading your emails, they can be influenced. If they can be influenced, you can encourage them to buy more. And that’s the important difference; if you are only attributing last click revenue to the email channel, it will be reflected in a restricted budget. If you can attribute email’s influence on overall sales, you are more likely to get the money to achieve the greatest returns from email.

 

Why is this important now?

Thanks to the global economic slowdown, there will be less money in the customer’s pockets and the fight for conversion will be a tough one. Thanks to channel migration, (offline to online) online sales have been growing for several years, sometimes in the face of reducing overall sales.  This growth cannot continue and soon it will be back to the slog of battle for market share. Email will be a key weapon in the marketer’s armoury and your strategy and tactics will either be pulling customers from your competitors or they will be pushing them the other way.

I’ll leave you with a quote from Karin Von Abrams’s* perspective of the DMA benchmark report;

“Time, effort and insight can partially compensate for lack of financial resources. But companies that don’t find either time or money to devote to their email campaigns may soon face the consequences. It probably won’t be too pleasant at the bottom of a two-tier email marketplace.”

 

*Karin Von Abrams, Senior Analyst, eMarketer

Inbox filtering, a bonus for some, a silent list killer for others

There have been many announcements over the last few months regarding the various types of inbox filtering being deployed by various webmail clients. At first they look pretty harmless, with the rules that the ISP’s intend to use ranging from the ambiguous, to the algorithmic detail. If you take the metrics that Google claim they are going to use to identify “wanted” email, it seems they are trying to find out how interested the recipient is in the emails they are sent.

Google’s metrics

- Messages read then deleted
- Messages deleted without being read
- Messages replied to
- Frequency of receiving/reading

As marketers, the only metric we can really measure, is the frequency of receiving/reading the emails. (How many people reply to marketing emails anyway?)This  reinforces the need to focus on individual engagement.

Although there have been one or two conspiracy theory mutterings regarding what might be motivating these changes, you can’t get away from the fact that they will be improving the user experience. And this is what the ISP’s want. If you are happy with the clarity of your inbox, and the management of your inbound mail, you’ll most likely stay with your provider, allowing them to gain further behavioural data, and serve you targeted advertising (and make themselves money). Let’s face it, as a web mail user, it might be free to use, but the trade off is the advertising exposure and revenue.

So this rush to improve customer experience is unlikely to stop. The fact is it’s going to become increasingly difficult to send poorly targeted and conceived campaigns. These campaigns will likely see a gradual decline in response rates, initially blamed on recession (although you can open an email for free), but as likely to be caused by inbox filtering. No matter how good an email marketer you are, you can’t stop the effects of economic slowdown. What you can do is start thinking how you can improve the effectiveness of your email campaigns, and getting into (and staying in) the inbox, is a good place to start.

Sending an email campaign in this new future could become one of the most nerve wracking experiences for the modern day marketer.

  • What are my customers going to think of it?
  • What if most of my customers don’t open it?
  • What if these same customers haven’t opened for a while?
  • Could this email discourage my interested customers from opening the next few emails?
  • Am I going to lose them forever?
  • What if my competitors are doing it better?
  • Will I need to spend more money on acquisition?

And ultimately,  if you reduce the ability to influence your existing customers, sales will suffer, and with the costs of getting new ones up to 8 times higher, it’s going to hurt the bottom line.

But it’s not all bad news, in fact for some it’s going to be a big benefit as the inbox will become less cluttered. If yours is one of the “wanted” emails a recipient receives, the inbox filtering should help your message receive the attention it deserves. So for those that are prepared to invest in effective segmentation and targeting for their email campaigns, the future is bright, with email likely to become more effective..  So, we are back to recipient engagement once more, seen as a nice to have in the past, but now vital to protect the value of your email programme.

But it will mean the “one size fits all” weekly newsletter needs to be relegated to the past.

The ability to measure engagement has been with us for a while, and those in the email deliverability circle have been deploying this type of segmentation to successfully manage deliverability for some time. It must now be used to decide who wants to hear from you, those that need a rest for a while, and those who are sick to death of your emails. If the Marketer doesn’t do this segmentation, the Webmail companies certainly will, and once someone’s gone, there’s no going back.

More email equals more money!

I’m often asked about the right frequency to mail an email list and the risks involved in getting it wrong. I’m not surprised really. As a revenue driving channel, email seems to be going from strength to strength; It also seems to be gaining extra points now and as media attribution modelling is becoming mainstream, the influence of email (Halo) is proving to be strong.
So it’s a natural reaction for someone with a calculator to work out how much revenue they could gain if they mailed twice or even three times as often. Tempting, as long as you don’t think about the risks and pretend we are still in the early years of the century.

What are the risks?

I can’t deny, there is a compelling argument to say if you increase mailing frequency you will increase revenue too. The trouble is, by the time you realise that the response is dropping off, it maybe already too late to repair the damage with some of your list. There have been some changes over the last few months to the way many webmail clients manage email for their users. (Priority Inbox, Sweep, etc.) These changes effectively help the recipient categorise what’s important and what’s not, based on whether or not they read or respond to emails from you.
This means if you send emails to someone who doesn’t respond, they get de prioritised, and that’s where they stay. Or, in the case of “block” in the Hotmail client, that’s it, game over.
So, what can we do? We want to mail more because it makes more money, but we don’t want to burn out the list in the process.

Managing frequency

The solution is to accept all email addresses (or customers for that matter) are not equal. There is no average customer.
If you can increase your mailing frequency to your customer base and still get extra revenue, there is certainly potential to improve revenue by managing frequency. What this means is there are people on your email list who want more emails and will buy more products or services; the trick is to find them.
One of the simplest ways of doing this is to look at who is opening and clicking the emails you send and how recently they do it. The fact that a user has recently acted on your email communications is a good indicator they will act again if you send them an email. If you look on each open or click as a positive vote and each email sent with no activity as a negative vote, you are starting to view your list in a similar way to an ISP.
You can also use other metrics to enhance segmentation. Data, like recency of response or web visits can help you identify your valuable subscribers. In the simplest terms you now have a way of splitting your list into two segments, one recently active, and one not so.
You can use this to choose who to increase the mailing frequency to, and conversely you can rest the emails that are less active. If some of these “inactive” emails are inactive as a response to over mailing, you could find that a proportion become active again after this period of lying fallow.
The exact rules for these segments will vary from business to business, and it is important to test the business rules to determine the best recency of activity for your high frequency segment. But as a guideline, you could look at revenue as it relates to the different segments.

Monitor response closely

By isolating your most responsive emails, and increasing frequency to this segment, you have grouped together the most valuable assets on your list. You must now carefully monitor response. If people stop responding to your emails, or stop buying, it is important to move these people back into a lower frequency programme. Also, there will be another segment that are your most responsive, who might buy more, if you send even more emails!

Monitor unsubscribes and complaints, but beware!

It may seem like a good idea to monitor unsubscribes and complaint rates to determine if you have the frequency right for each segment, but it is generally accepted that if you are going into junk, or low priority, or blocked, you won’t get many unsubscribes or complaints.

In short, mailing more can work well. The key however, is to mail people who want to hear from you more, and those who don’t, less!