ROI: Email Marketing vs. Other Marketing Mediums

Email marketing experts will agree that return on investment (ROI) is one of the most important email metrics for companies who are effectively using emails as a marketing tool to measure their success. Statistics show that the difference between return on investment for email marketing versus non-email-related online marketing is tremendous. According to the Direct Marketing Association (DMA), in 2005, emails blew other online mediums out of the water with the following statistics:

a.. The ROI for email marketing was $57.25 for every dollar spent

b.. The ROI of all non-email-related online marketing was $22.52 for every dollar spent

Despite those statistics, marketers only spent $300 million on email marketing campaigns compared to the $12 billion spent on non-email-related marketing. Shop.org, a network for online retailers, reported that email is delivering sales at an average cost per order of less than $7.00, compared to $71.89 for banner ads, $26.75 for paid search and $17.47 for affiliate programs.

Since 2005, the DMA has reported lower ROI for email marketing, but email marketing ROI is still leaps and bounds above the ROI for non-email-related marketing mediums. Last year saw an email marketing ROI of $48.56 based on marketers spending $500 million, and this year's reported ROI is estimated to be $45.65 based on a total spend of $600 million.

As email marketing becomes more prevalent among marketers, the uses for emails have become more numerous and varied. More and more companies are sending transactional emails, which are non-revenue generating emails, such as double opt-in and order confirmations. These kinds of emails could attribute to the dip in the ROI numbers, since they do not have a direct effect on revenue. However, while these emails may not have a direct effect on ROI, these emails are having an indirect positive effect on consumers and do contribute to the overall experience of email marketing.

Not only is the ROI that much greater with email marketing but it is also easily and proficiently tracked. Using the proper conversion codes within a marketer's website, it is easy to track how much was spent by a consumer after clicking their way through an email.

Email marketing proves time and time again to be a cost effective, high ROI-yielding, easy-to-track solution for marketers. However, many are not yet using email marketing to its full potential, and are subsequently missing out on stunning revenue opportunities. Our challenge to you for 2008 is to use these staggering ROI statistics to convince others in your organization of the benefits of email marketing.

Since time-starved consumers constantly look for ways to empty their e-mail boxes, marketers must break through the clutter and maximize the points of engagement. Consumers concerned about spam and phishing are more likely to mark legitimately, opt-in e-mail as spam. To combat this, marketers must improve the effectiveness of their current mailings rather than increasing their frequency.

Extend Your Lists' Profitability

Two of the best strategies to ensure ongoing e-mail list effectiveness are segmenting your lists and continually testing different aspects of your campaign. Segmenting your house file helps communications be more targeted. Divide customers by subscription age, online interaction frequency and recency, consumer interests, and revenue generated.

Develop promotions that extend consumer engagement at points when customers are focused on your company. Though most marketers send e-mail based on their promotional schedule and needs, few enhance automatically triggered e-mail messages, the ones to which consumers pay the most attention:

a.. Welcome messages. These are often underutilized. Also, use your opt-in confirmation e-mail and your Web site's post-registration screen messages. Extend this welcome message into a series to take advantage of strong customer interest during this early subscription phase. Paid content publisher Waterfront Media uses a series of engaging welcome messages to get readers to use its product.

b.. Trigger e-mail. Trigger e-mail is initiated by a customer action or event. From a consumer perspective, these communications are often expected and opened since they're focused on the customer's priorities (not yours). Leverage the opportunity to extend your marketing:

c.. Post-purchase e-mail. Take advantage of purchase confirmations, package tracking, and post-purchase thank-you e-mail to extend the relationship with your customer. Add relevant promotions to your transaction information.

d.. Birthday e-mail. Appeal to readers by sending a birthday greeting with a special offer. Retailers have done this for years, and it's still an effective promotion. This information can be requested at a later point or appended from a third-party data supplier.

e.. Forward-to-a-friend referrals. Use this opportunity to market to both the sender and the recipient.

f.. Abandoned shopping cart follow-up. Remind shoppers a few days after they've left products in their shopping carts. This can convert browsers into purchasers.

g.. Wish lists. Since customers use wish lists to track products they want, periodically send customers updates to get them to purchase.

h.. Customer service. Use both autoresponders and actual customer service response to engage customers. Remember to thank them for taking the time to communicate with you.

i.. Unsubscribe. Take a fresh look at the unsubscribe process. These readers are doing you a favor by actively unsubscribing rather than letting your e-mail go to a junk folder or, worse, reporting you as spam.

Test the following methods to improve your marketing:

a.. Use your unsubscribe page to let users change e-mailings' frequency and content.

b.. Give other communication alternatives, such as RSS and offline, if you have traditional direct marketing capabilities.

c.. Ask for user input to gather insights about readers.

d.. Thank readers for taking the time to unsubscribe. Depending on your offering, consider giving them a coupon.

e.. All these approaches to e-mail marketing can prove effective. The trick is to find the combination of timing, frequency, and content that works best for you.

Monitor E-Mail Effectiveness

To maximize e-mail ROI, measure the important metrics and track them over time. If you find results don't meet expectations, further analysis may be required.

Among the salient factors:

a.. House-file size. Since the challenge is to grow a healthy e-mail list, track new opt-ins and segment them by source.

b.. Churn. Monitor the percentage of readers who leave your list, as well as hard bounces. This can be another important indicator of your list's health. Note the distribution of unsubscribers' ages to determine ways to discourage any adverse trends.

c.. Revenue per e-mail. This metric is key for both publishers who monetize page views with advertising and e-tailers who drive e-commerce sales.

d.. Cost per e-mail. Campaign costs in terms of creative and deployment are relatively easy to assess. The opportunity cost of overmailing your list may be more difficult to measure.

Though e-mail remains a major strategy for engaging consumers for publishers and e-tailers, the challenge is building consumer confidence in your communications to ensure your messages are read. Unfortunately, deployment's relatively low cost may lead to less than optimal e-mail effectiveness and mailing frequency. To maximize your e-mail marketing ROI, consider how you can use every mailing most effectively to deliver real value to your readers.

references clickz.com