© 2007 e-Dialog, Inc. All Rights Reserved. Arthur Middleton Hughes Senior Strategist Chicago Association of Direct Marketing Sheraton Chicago Hotel and

© 2007 e-Dialog, Inc. All Rights Reserved.

Arthur Middleton HughesSenior StrategistChicago Association of Direct MarketingSheraton Chicago Hotel and Towers 8:30 – 9:30 AM Tuesday May 5, 2009

Surviving the Recession with E-mail Marketing


The recession is here

It will last for more than a year.

What should marketers do?

• Slash prices?

• Cut back on the marketing budget?

• Look for another job?

Answer: None of the above.

Better solution: make more effective use of e-mail to build relationships with customers.

E-mail – developed correctly, is the answer to keeping customers in a recession.

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E-mail’s Role Not Understood

In many companies, e-mail is not recognized as the marketing powerhouse that it is

It is somewhere off on the side, producing Web sales which are about 3% or less of total sales. Budgets are often based on online sales alone.

That may be the perception, but companies that think that way are missing the boat

Here is the reality…

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E-mail Influences all channels

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E-mail Offline Sales 3 Times Online

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Multi-Channel Buyers More Valuable

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JC Penney US Data


Lowest Cost Per Order

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The value of an e-mail subscriber

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Online & Off Line Sales Registration Year Year

Typical Retailer 52 Year 2 3E-mail Subscribers 1,000,000 830,000 697,200 Annual Unsubs & Undelivers 17% 16% 15%E-mails Delivered 47,580,000 39,707,200 33,535,320 Open Rate 25% 22% 19%Opens 11,895,000 8,735,584 6,371,711 Conversion Percent of Opens 0.8% 0.9% 1.0%Online Conversions 95,160 78,620 63,717 Off Line Sales due to e-mails 3.00 285,480 235,861 191,151 Total Purchases 380,640 314,481 254,868 E-mail induced sales from Online and Offline $144 $54,812,160 $45,285,267 $36,701,054

Operating Costs 50% $27,406,080 $22,642,634 $18,350,527Subscriber Acquisition Cost $12.00 $12,000,000Transaction E-mails Per Order 3 1,141,920 943,443 764,605 Total E-mails Delivered 48,721,920 40,650,643 34,299,925 E-mail Costs CPM Incl Creative $6.00 $292,332 $243,904 $205,800Database & Analytics $0.75 $750,000 $750,000 $750,000Total Costs $40,448,412 $23,636,538 $19,306,327

Gross Profits $14,363,748 $21,648,730 $17,394,728Discount Rate 1 1.11 1.15Net Present Value Profits $14,363,748 $19,503,360 $15,125,850Cumulative NPV Profits $14,363,748 $33,867,109 $48,992,959Value of an E-mail Subscriber $14.36 $33.87 $48.99

Tracking the value of 1,000,000 specific people over three years.

Once a week e-mails; open rate 25%

For every online sale there are 3 offline due to e-mails

Value of each e-mail subscriber is $48.99


If you want them to register, you must promote the idea on the website, in transactions, in print and direct mail and catalogs. Go all out.

Give them a reason for registering.

Compare these two approaches

One is tiny and hard to find.

The other gets results.

Which do you use?

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Gain subscribers by your website


Upgrade your POS system

Borders UK set up their POS system in May 2006 to collect e-mail addresses at the cash registers.

The POS system sent data every night to the Borders ESP. This triggered welcome messages to everyone who signed up the day before.

The messages included a discount voucher to prompt a second visit.

Results: 38% higher transaction values for e-mail subscribers compared to other members.

13% voucher redemption rate

E-mail subscriber base increased 630,000 in 17 months.

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Reward Staff and Subscribers

Once you know the value of an e-mail you can afford to incentivize subscribers and employees .

If each e-mail address is worth $49, you can give a subscriber $5.00 for her e-mail address.

You can give employees $5.00 for getting each new e-mail

When the new e-mail is entered, a welcome e-mail is sent out right away, asking the subscriber to click that she really wants to receive your e-mails.

If the e-mail is new, and valid, and she clicks “yes” you give the reward to the employee and to the subscriber.

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Incentivize Your Staff

When I took my car to one of those quick-lube places, I watched the attendant as he clicked through the screens for my transaction and just skipped the one asking for my e-mail address.

Why didn’t he ask me? Probably because some people, when asked in the past, grumbled about spam and peppered him with questions he didn’t know the answer to. Also, he must have had no incentive to capture my address.

These issues are very easily overcome with little cost; it just takes commitment and a clear plan supported at all levels. – John Rizzi, CEO, e-Dialog


Switch from Hunting to Farming

As the world population grows, hunting for wild animals has been replaced by domestic farming.

Hunters study their weapons. Farmers study their animals and care for them.

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Hunters Farmers


Most e-mail marketing is hunting

E-mails are so cheap to send -- $6.00 per thousand – that most marketers do not bother with a database

“Mail ‘em all. Someone will buy.”

Instead of studying the subscribers, marketers work to sharpen their e-mails

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Hunting is failing today

Subscribers are getting more e-mail than they want or can possibly read – batch and blast is in tatters.

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Direct mail is like farming

Direct mail costs $0.60 per letter or more

If you sent promotional mail to everyone in the US you would go broke

Instead you build databases and study consumers. You select the right lists, and demographics. The right list is your key (80%) to success.

It is very scientific and profitable.

E-mail marketing can be done in this same way

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How to switch to farming

Build a subscriber database

Include demographics (age, income, children, home, length of residence, etc.)

Plus web behavior (opens, clicks, purchases)

And preferences

Use this to create segments

Develop a marketing program for each segment

Make sure that each e-mail is relevant to the interests and lifestyle of each recipient

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Recognize status levels

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Actual e-Dialog retail client data


Create meaningful segments

Actual large retailer segment system with 16,000,000 customers


Understand your subscribers

Most e-mail marketers think that everyone is looking for bargains. Some people definitely are.

But others look for quality, helpfulness and service.

To send daily e-mails saying SALE! SALE! SALE! may turn some subscribers off.

Look at what Sears asks their web appliance buyers:

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How I feel about brands: 1. I typically buy top-of-the-line brand products. 2. I buy name-brand products at a moderate price. 3. I am always looking for a bargain. I will try any brand if the price is right.

How I feel about technology:

1. I buy products with the latest features and technology. 2. I buy products with mainstream features and technology. 3. I am not interested in technology. Keep it simple for me.


Result: more opens and sales

Jupiter research: segmentation can improve conversion rates by up to 355% and increase revenues by as much as 781%

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Making the most of your e-mails

Now that you have lots of subscribers, make the most of them:

Send out a welcome e-mail within minutes of receiving a “yes”

Put subscribers into segments and design e-mails for each segment.

Personalize your e-mails: goal is to have each subscriber feel that this e-mail is designed just for her. Include forward-to-a-friend.

Let’s begin by getting her to buy off line from you.

Let’s see what others have done…

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E-mail: Look in your mailbox!

Miles Kimball tested 20,000 catalogs in three mailings with a simultaneous e-mail: “Look in your mailbox”

Also sent identical catalogs to 20,000 others without the e-mail.

Those with the e-mail produced 18% higher sales.

E-Mails get people to do what you want them to do at very little cost.

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Borders store sales with e-mail

Borders UK set up their POS system in May 2006 to collect e-mail addresses at the cash registers.

The POS system sent data every night to the Borders ESP. This triggered welcome messages to everyone who signed up the day before.

The messages included a discount voucher to prompt a second visit.

Results: 38% higher transaction values for e-mail subscribers compared to other members.

13% voucher redemption rate

E-mail subscriber base increased 630,000 in 17 months.

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Cold Stone Creamery E-Mails

Cold Stone with 1,700 locations created a birthday club “Receive FREE Ice Cream on Your Birthday!” .

In two years, 2,000,000 signed up for e-mails.

Birthday e-mails have open rates 62.5% higher than other e-mails. Click throughs are 350% higher .

Franchisee survey: “Overwhelmingly positive response… drives people into the stores… people don’t come in by themselves.”

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E-Mail : Go to your retail store

Blockbuster sent e-mails with news about movies to 170,000 members for six months.

14,000 members asked for the e-mails but were withheld as a control.

At that time Blockbuster did not have any online sales

Those who received the e-mails went to the stores and purchased 28% more over six months than those who did not get the e-mails.

E-mails get people to get in their cars and drive to a retail store.

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E-Mails drive clothing store sales

Goody’s with 322 stores sends coupons every 2 weeks to their e-mail subscribers.

Store clerks: “Please fill out your e-mail on these paper forms” Clerks type e-mails into Goody’s web site in spare time.

Barcode assigned to each coupon identified subscriber and source of the coupon: e-mail versus website.

Coupon redeemers have 50% bigger basket: $74 versus average for non-coupon shoppers of $50

Some customers print and use coupons twice! That is great!

Result: ROI of 150%. $0.68 revenue per e-mail sent per campaign.

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Triggered e-mail messages offer a three advantages.

First, they have very high open rates.

Second, they enable automated cost-effective communications.

Third, by including promotions below the fold, they deliver high ROI results.

In fact, it is not unusual for a triggered message to deliver upwards of five times higher revenue when compared to a standard broadcast e-mail.

Use triggers to boost sales


Birthday and Anniversary Trigger

Recognize customer milestones such as birthdays or anniversary of program signup

Results: 2x lift in revenue per net delivered e-mail


Transactions: your most powerful e-mails

Transaction e-mails (“Your order was shipped today”) have open rates of more than 60%

Here is an ideal opportunity to promote additional sales – because customers are reading them.

Many companies do not take advantage of this.

Their transactions are in text, not HTML, and often say “Do not reply to this e-mail!”

What a mistake!

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Netflix promotes via transactions

The transactionThe next product


A Terrible Transactional E-mail

Dear Valued Customer, Thank you for placing your order with BillBracket.com. We are currently

processing order 64854019. In-stock item(s) will arrive within 7-10 days

Please add one business day for orders placed after 3:00 p.m. Pacific time

and for gift-wrapped or inseamed items Monogrammed Items: If you ordered an embroidered item, please add one

business day to your delivery timeframe

For engraved items, please allow an additional eight to nine days For more information, click here. The status of your items is listed below: Item name Qty. Size Color Status Carpenter Jeans, Regular 1 34/30 Med. In Stock OES Casual Chinos Nano-Tex®--Regular 1 34 Khaki Avail. 12/07/07 If you haven't already, sign up today for a personal Bill Bracket Login Account and you can track this order, plus all future orders!] (Please note: it may take a day for order status to become available.) We look forward to your next visit,

Customer Service, Bill Bracket, Inc. BillBracket.com

Check out our new arrivals and find great savings at BillBracket.com.


Microsoft Blows an Opportunity

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Why don’t you make a note of this easy-to- remember number

So you can enter it here!

And read this easy number over the phone to them here!


Summary: Prosper in the recession

The downturn in the economy tells you: “Now is the time to do a better job with your e-mails”

You need to add millions to your subscriber list

Method: Calculate the value of your e-mail subscribers

Use that value to reward your subscribers and your employees

Switch from Hunting to Farming

Use transactional and triggered e-mails to build relationships and sell more.

Make your e-mails relevant, funny, interesting adventures

Finally: Use e-mails to fill your stores with shoppers.

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Keep up on your reading

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Order from www.dbmarketing.com or www.amazon.com

Documents

© 2007 e-Dialog, Inc. All Rights Reserved. Arthur Middleton Hughes Senior Strategist Chicago Association of Direct Marketing Sheraton Chicago Hotel and