The Value of Email Marketing

Matt Mickiewicz

On average, email marketing generates an average return of $51.45 for every dollar spent in 2006, according to the Direct Marketing Association.

If that statistic alone doesn’t convince you of the value that email marketing can add to your business, nothing will! Of course, there are heaps of reasons why email marketing is so popular — it’s extremely cost-effective and timely, it helps build lasting relationships with specific segments, sub-segments, and even individuals within your audience, it integrates well with other marketing tactics, including viral marketing, and so on — but that statistic really should make anyone who operates online sit up and take notice.

Are you making that kind of money from your email marketing efforts?

This was the first question that came into my head when I read that DMA statistic in the opening chapters of the recently released Email Marketing Kit. I mean, we’ve been conducting email campaigns for more than six years now — longer if you take into account our electronic newsletters — and I think we’ve got it down to something of a fine art. This is not to say that we know everything and can write top-notch email first time, every time, but we do realize the value of tactics like test-sending emails, setting campaign break-even points and realistic response goals, tracking and analysing campaign results, and trialling different email types, among other things.

The thing is, we’re not making $51.45 for every dollar we spend on email marketing.

Now, that figure is the average — it’s not the ROI you need to generate in order to consider your campaign a success. But by the same token, it’s not the greatest ROI that was generated by the companies surveyed for the DMA report. It’s just the average.

Obviously, there’s room for improvement in what we’re doing here at SitePoint. And while I can see a few areas in which that improvement can take place (including the hiring of a dedicated online marketer), the very first chapter of The Email Marketing Kit provides a few hints that certainly gave me food for thought.

First up is that point about building relationships. Jeanne Jennings, the author of the kit (who, I might add, is a leading email marketing consultant with more than a decade of experience in this industry) points out that it’s easier to build relationships through email than through the more traditional channels. And this is definitely something that we try to do with our email strategy. But I think we could do better, particularly in terms of our Book Buyers’ Club, which usually gets second billing on the To-do list after book-specific email campaigns. We don’t really track the responses from that list as well as we could, either, even though the Book Buyers’ Club is often where our customer relationships begin — before purchase, with interested prospects.

Jeanne’s discussion about the fact that email is quick to produce highlights another area that I think we could focus on. Sure, when you compare it to a print ad or TVC, direct email can be quick to develop, test, and get to the customers. But then, if I compare that with our blogs, or the power of word of mouth in the SitePoint Forums, I can’t help but wonder if we’re really producing campaigns as swiftly and effectively as we could. Of course, the fact that email marketing makes audience segmentation so easy means that we see each new campaign as a great opportunity to test new things and hone ideas that we learned from previous campaigns, and developing those new concepts can take time. But even still, I think there’s room for improvement there.

Finally, chapter 1 of the kit makes the point that, as a marketing tool, email plays well with other tactics — it’s easy to use email to remind customers about a physical mail piece you’ve sent them, for instance, or to complement print advertising you’ve taken out. Practically all of our books marketing occurs online at present, so this suggestion really got me thinking. Would our campaigns be more effective if they were integrated with offline promotions? Our recent mentions in local newspapers here in Australia have certainly boosted our profile locally, so I’m seriously thinking about the possibilities for the United States and the UK, where our largest audiences lie.

Any marketing technique that generates an ROI like that of email marketing deserves our consideration. But you and I know that it takes skill and know-how to get those kinds of results. What are you doing to improve your email marketing campaigns at the moment? And, after reading this, are there any additional areas that you think you might have been overlooking?

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  • wwb_99

    On average, email marketing generates an average return of $51.45 for every dollar spent in 2006, according to the Direct Marketing Association.

    Having worked in the washington trade association for years, I can tell you that you should never believe anything a trade association says. Ever.

    Oh, and my big technical rant of the month on email marketing is that “open rates” are a voodoo stat. Fundamentally, one can only measure if certain images have been downloaded by client software. Given modern clients default to not downloading images, you are generally going to get too low a number. OTOH, if someone does download the image but just clicks on a message to delete it, and it loads in the preview pane, you are going to get a false positive hit.

    To quote someone famous: “There are lies, there are damned lies and then there are statisitcs.”

  • Sachin

    Email marketing does produce the result, but certainly not that good enough when compared to prime advertising.

  • http://www.JeanneJennings.com JeanneJennings

    Hi,

    Jeanne here, the author of the Email Marketing Kit.

    wwb_99, I could not agree with you more when you question that $51.45 figure — many of us in the industry question that as an AVERAGE return. That said, many companies are doing very well with email.

    One small company (the case study appears in the book) returned $13 for each $1 they spent on email marketing programs over the course of a year. Their best email campaign (total cost about $800) brought in over $28,000 — a return of $35 for each dollar they spent.

    Regarding open rates — they were somewhat controversial when they first went mainstream, around the year 2000. While they aren’t an absolute measure of opens (since there is some margin of error both ways) they are a good relative measure, especially when you are comparing them across the same list. And they are tremendously helpful when you’re testing to optimize from and subject lines.

    Cheers!
    Jeanne

  • http://www.sitepoint.com Mark Harbottle

    Very true Jeanne!

  • Ivy

    The problem with email is it’s not targeted to the user. I get emails from Borders and they are always sending offers that are completely opposite of my buying habits. I mean, they know what I’m buying when and it’s not kids’ books, but they continually send out broad specials just hoping it might click with someone.

    Please, please, Borders and all the other companies out there, take a hint from Amazon and give your customers targeted, relevant content.

    Here’s a full rant if anyone cares:

    End rant.

  • Sgt. Baboon

    The problem isn’t that email isn’t targeted, it’s that Borders isn’t targeting. Email marketing can be very successful if done properly, and targeting is a key ingredient.

  • http://www.mmamuscle.com pbradish

    I do not have an exact figure, but email marketing has worked very – very well for my ecommerce business.

  • http://creative.blog.listrak.com/ bshroyer

    I agree that a targeted relevant preference-based email campaign will always deliver better results. Check out our whitepaper on the subject entitled “How to Make your Email Campaigns More Relevant.”

  • http://www.virtualsheetmusic.com fabrizio

    Our e-mail marketing is a great success, every time we send our Newsletter our sales increase of at least 50-60% in the two-three following days.