E-mail marketing can be a cost-effective component of a successful customer relationship strategy. Each e-mail sent from your company is an opportunity to strengthen the bond between brand and buyer. Most marketers can see the potential, but making the move from promotional messages to engaging customers is a scary proposition.
What happens if no one buys?
Promotional e-mails are proven revenue generators. They are the best tool in a marketer’s workshop for correcting issues. A quickly crafted coupon promotion can remove sales dips caused by mail piece delivery delays, natural disasters and other anomalies. The response is predictable, because it is historically consistent.
But playing it safe rarely leads to innovation. After a while, all sale e-mails look the same to the recipients. Brand differentiation is lost in a sea of low prices. Continual sale promotions have a direct effect on profitability. The results of a one-year test of e-mail marketing strategies for a B-to-B company are shared in the sales and profit charts shown in the media player, above right. Top customer segments were divided into an A-B-C split.
Group A was the control. These folks participated in the promotional e-mail strategy. Their e-mails consisted of sales, coupons, discounts and the occasional new product promotion. This was the standard marketing program historically used by the company.
Group B participated in the informational e-mail strategy. E-mails to this audience consisted of educational, conversational and introductory content. There were no sales, coupons or discounts. Customers received targeted messages designed to match their buying preferences and patterns.
Group C was a combination of Group A and Group B. Approximately 60 percent of these e-mails were targeted messages without discounts; 25 percent were targeted with discounts; and 15 percent were the same promotions received by the rest of the company.
Sales results followed expectations. Promotional e-mails (Group A) generated the most revenue, for a total of $2.84 million. Combination e-mails (Group C) were a close second, at $2.59 million. Informational e-mails (Group B) came in 41 percent below the control, at $1.66 million.
Generating cash flow is good, but increasing profitability is better. The combination e-mails (Group C) outperformed the control (Group A) by 117 percent. Profits from informational e-mails (Group B) beat promotional ones (Group A) by 73 percent.
Individual customer reviews provided more insight into the effect of non-promotional e-mails. Customers in Group B and Group C were more active in their response and the number of orders. Their average order was slightly lower, but they were more likely to respond.
Does this mean that every B-to-B company should scrap its promotional e-mail program? No, but it indicates that price may not be the best motivator. The only way to know what will work for your company is to test.
Here are some tips to help you create the most effective e-mail marketing program for your customers:
- Encourage recipients to reply to your messages. The customers in the test who replied to e-mails encouraging comments or questions spent more over the course of the year. Use a real e-mail address instead of the “no reply” ones that go into a black hole.
- Provide a designated contact person for top customers. Test sending e-mails personalized with that individual’s address for the reply. People connect with other people better than they connect with an organization. While there may be challenges if someone leaves the company, the return more than offsets the costs.
- Invest the resources required to target your customers well. Look at the products and services they buy, their historical buying patterns, and the messages that drive response. The better you can adapt the message to the individual, the more successful the implementation.
- Include calls to action in every e-mail, regardless of type. Marketing e-mails have to require a response to be effective. Create a slippery slope that begins when the e-mail is opened and continues until the action is taken.
- The best e-mail marketing programs are a hybrid of direct marketing and social media. Use yours to create strong bonds with your customers. It’ll make it impossible for your competition to lure them away.
Debra Ellis, president of Wilson & Ellis Consulting of Asheville, N.C., can be reached at firstname.lastname@example.org or on Twitter at www.twitter.com/WilsonEllis.