Email marketing is poised for strong growth this year at the further expense of traditional offline channels.
Having recently completed the survey analysis and report for FEDMA, here are some key excerpts. You can purchase the full report from FEDMA here.
In FEDMA’s first European Email Marketing Benchmark report published in April 2010, 19% of the respondent Email Service Provider (ESP) base expected their clients to increase volume of email marketing between a quarter and a half year on year; a continuation of the shift from offline to digital channels.
Hardly surprising when you consider the results of the Ipsos Mori poll for the Chartered Institute of Marketing’s report,The Shape of Digital to Come?. The question was asked which activities delivered the best return on investment. Top of the charts came CRM by some margin, followed by online advertising (12%) and email marketing (11%). Those activities considered to deliver the worst return were direct mail, sponsorship, and internal marketing, mirroring the evident shift in spend.
Econsultancy’s Email Marketing Census 2010 also predicts a net increase in email marketing over the course of the year, with the greater proportion coming from retention marketing, where 71% expect to ramp up their activities in this area, and only 1% expect to reduce activity on email marketing activity to their customer base. This reflects a growing recognition that email marketing is the perfect medium for customer management and development, and a key component within integrated multi-channel consumer engagement.
To that end, newsletter and related customer management activity is likely to be a key growth area over the next 12 months. This is reflected in the difference in click through rates reported in FEDMA’s Email Marketing Benchmark Report 2010 between newsletter and sales or product/service information campaigns, which average 17% higher.
Practitioners need to plan use of email marketing more strategically to gain greater payback from ongoing customer engagement and the up and cross sell opportunities arising. For example, 53% of respondents to FEDMA’s report do not use email marketing for customer or product (development) surveys. Where they do, they experience excellent results.
The majority of companies do not use email marketing for win-back campaigns following the loss of customers. The minority of respondents who do use email for win back see conversion to sale or action of between 2% and 5%. Nor do they systematically use transactional emails for cross and up selling.
In both cases here are clearly opportunities missed, which once again suggests that email marketing is deployed typically as a series of standalone activities, in some cases integrated with online and other channels, but generally not implemented as an end-to-end programme or integrated with other customer channels.
Poor visibility of conversions to sale and conversions to action, and the lack of testing around aspects such as creative templates and frequency suggests there is much more critical measurement and insight needed. Practitioners would do well to test more rigorously each element of an email campaign, beyond the generally adopted focus on subject lines, sender name, time of day and week, and spam filter scoring.
Continued growth may well be anticipated and planned for by the majority of respondents, but it should not be assumed at any cost. The future growth – and health – of email marketing will depend on some key factors:
- Better targeting, measurement and the use of properly permissioned and managed customer information databases and lists; the relevancy of campaigns and careful application of local/ EU laws.
- Careful stewardship of customer information, and developing its use further into the consumer/ buyer engagement process. The impetus to increase volume and activity can only be successfully achieved where it remains engaging.
- Delivery to inbox, which will be increasingly seen as a barrier to overcome, especially in B2C.
Whilst Deliverability rates are optimistically expected to improve or remain the same, this raises a key question of how deliverability is measured.
Most practitioners will determine deliverability as delivery to Internet or to mail server as the primary measure, but delivery to inbox or Inbox Placement Rate (IPR) is being seen as an increasingly key metric.
IPR is tied in with reputation. If reputation is poor, acquired through issues like indiscriminate use or poor targeting, large groups of consumers belonging to the same ISP domain, for example, such as GMail or Hotmail will not receive bulk email from that source into their inbox. It is estimated as a much as 7% of email marketing campaigns go missing, which historically has not been accounted for.
Marketers need to understand what their reputation is, and much in the same way they work to improve their click through rates, they need to monitor, manage and improve their reputation. If ISPs migrate from identifying sender by IP range to identifying the sender by their domain name, as some commentators believe may have already started to happen, this issue could become even more significant.