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Online Marketers spend huge sums on paid-for media, much of it driving orders from existing customers who also reside on the organisations email list.

There are enormous gains to be made by from investing in CRM via email for the long term.

It struck me recently, when preparing a presentation for the E-commerce Expo, that there is an inherent contradiction at the heart of online marketing.

That contradiction is; whilst owning a database of customers with email addresses who have requested to receive marketing communications from the brand in question, these organisations spend thousands on email marketing directly targeting these customers with information they want, but hundreds of thousands, if not millions, in driving these customer back to their site using PPC and Affiliate marketing.

At best this is short sighted. At worst, financial madness.

The simple logic should be that, once a customer or prospect gives permission for email marketing, then the job of the acquisition channels is done. Any previous purchases, engagement and behavioural data, now resides on the customer database/online digital marketing hub. The brand should then treasure and nurture this individual and work hard to make them a loyal customer.

The financial logic behind this is overwhelming. In the first place, cost per order for email is usually the lowest of all paid-for channels.

Secondly, this cost is both stable and the return on investment (ROI) flexible (i.e. the more you focus on email, the more orders are placed direct from email, meaning the average cost per booking falls and ROI improves).

Then there is the fact that ESPs are finally beginning to move away from volume based mailing price structures… ESPs have been overcharging volume mailers for too long. This is not, and should not, be a volume space. Income, Lifetime Value, Return on Investment – all of these are far better metrics for measurement and charging than how many millions of emails you can bang out per week.

However, the benefits of email, cost and flexibility, are also its downfall as they encourage a ‘blasting’ “mail the lot” mentality. This has to change, because customers get bored of this approach and email marketers must find new ways of keeping customers engaged for longer… and thereby growing lifetime value.

Email marketers have a lot of work to prove the value of email, but the good news is that email is also a virtuous circle. Permission and Deliverability force us to send better email. Better email gets better results. Better results forces greater focus on email. Greater focus on email drives better results and so on.

The answer is to stop trying to drive increase in income from email through volume and discounts and to instead grow income and improve ROI by focusing on relevance, segmentation and making the customer king. Basic CRM, really…

Matthew Kelleher

Published 7 November, 2012 by Matthew Kelleher

Matthew Kelleher is commercial director as RedEye and a contributor to Econsultancy.

27 more posts from this author

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Sean Sewell, Business Development Director at Performance Horizon Group - PHG

Hi Matthew
I’m an avid supporter of email, however you’re article highlights how incredibly narrow minded your view of online really is.

No one channel, no matter how optimised, managed and planned can mean a brand no longer has to invest in other acquisition channels such as affiliate and search. Airlines are a classic example, they are inherently strong in email however it’s a product and market that drives people to compare and that’s where search and affiliate and everything else kicks in.

Relevance, segmentation will always play a part, however so too will a consumers choice to search and compare against competing products and brands.

Also, you fail to mention how email can drive incremental revenue. If only ever target your database, you revenue is only going to grow, (if at all) so much.

Email will always be cost effective and relevancy is key, but it should always be part of a wider online strategy and not be on the online route to market.

about 4 years ago

Matthew Kelleher

Matthew Kelleher, Commercial Director at RedEyeEnterprise

Hi Sean,

Excellent points well made. Except for one small point - at no point do I say "a brand no longer has to invest in other acquisition channels such as affiliate and search", nor do I give any suggestion that I think acquisition channels are a thing of the past. I wonder what part of my blog makes you think I am some kind of mad email zealot blind to every other channel? Let me know...

I've re-read my blog, and I think I quiet clearly make the point that the contradiction I see is that acquisition channels are used to drive repeat orders from existing customers due to an under-investment in email.

I take exception to your comment about "how incredibly narrow minded your view of online really is". I am reassured, however, that whilst I'm not sure what article you have been reading, it cannot be my blog as your comments bear no relevance to what I wrote. And being savaged in such a way by someone for whom 'grammar' is clearly a dirty word is an event I am sure to get over fairly quickly.

Despite this, your comments are completely valid and I agree in full. But you don't need to resort to name calling! That's pretty pathetic and doesn't reflect terribly well on Performance Horizon Group.

about 4 years ago

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Sean Sewell, Business Development Director at Performance Horizon Group - PHG

Hi Matthew,
I must apologise regarding how my reply has come across, it certainly was not meant to be derogatory my any means. I actually read this whilst on the move and should have spent more time with my reply.

I do agree, Email is an under invested channel by organisations, by just taking the time to be relevant you would indeed increase sales, Daily deal sites and blasting random offers out are a great example of not doing exactly that.

As far as logic goes on effort, while search and others continue to drive the revenue and volumes of sales the challenge is to get email from out of the shadows and raise its profile and its ROI capabilities internally.

Look forward to the next blog.

about 4 years ago

Matthew Kelleher

Matthew Kelleher, Commercial Director at RedEyeEnterprise

Thank you Sean, we are in agreement, your comments are spot. I greatly appreciate you coming back. Sorry about the grammar comment, especially if you were writing over a mobile device!!

about 4 years ago

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Chris Wood

Sounds like applying the principles of Customer Lifecycle Management and understanding the Customer Buying Process should be key here.
Know your target customer, engage with compelling content (via the channel of their choice) acquire and onboard, build relationship and understand more about them - capture data, preferences, buying patterns into a CRM solution and re-engage with even more compelling content /offers as you build knowledge. If e mail is the best channel - or a mix of e mail and social (even dare I say it, Direct Mail) then great. Depends how you measure ROMI. By transaction or by CLV and CRV? Now there's a debate!

about 4 years ago

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Ken Binben

Econsultancy, I wouldn't get this guy to blog again. At the first sign of criticism he resorted to YouTube pathetic grammar attacks. Lame and for shame.

about 4 years ago

Rob Jones

Rob Jones, Head of E-Commerce at Astley Clarke

Hi Matthew,

I get what you are saying about email - clearly focussing on more personalised emails for contacts you already have makes perfect sense and should always be part of a customer management and loyalty program.

What I am struggling with is how you would cut your spend on other channels specifically so your email customers would not be targetted? Surely PPC and affiliate marketing is, by definition, public and visible to all? How then can we only present this type of marketing to customers who are not already on our email list?

Or are you genuinely proposing just cutting spend on acquisition channels in favour of email?

Forgive me if I have missed the point!

I think a lot also depends on the size of your business and email database. Not all businesses are large corporates with giant email lists of loyal customers after all...

Regards,

Rob

about 4 years ago

Matthew Kelleher

Matthew Kelleher, Commercial Director at RedEyeEnterprise

Chris and Rob, sorry for not replying sooner to your comments, I been travelling.

Chris, frankly I'd love that debate... it is not often enough that these topics are raised in relation to email. Certainly the role of Lifecycle Modelling is, I believe, very important to the growth of email, and provides context for more targeted email. I believe that the most compelling content for an email (most of the time...)for ecommerce sites is that customers most recent activity, whether it be purchasing, complaining or just browsing ... for instance, if someone browses shoes, then the likelihood is that they are thinking of buying shoes - think about how you browse, we rarely look at stuff we are interested in! A window of opportunity exists. This is something most ecommerce brands can get their heads around because it is about the next purchase, but it is a step by step process.

Once we are there, then its about adding the next layer each time, for instance cross reference this with copy and approach related to what loyalty segment the customer sits in, ie a single purchase customer gets a discount offer on those shoes they browser yesterday instead of a standard newsletter, and a loyal customer gets reinforcement on their choice of brand and how good will those shoes look with the trousers you brought last week!

As to measurement, which in your view is the most effective? Again, we are governed by what matters to our clients... so a simply return on investment, cost vrs income, or income per customer per segment. Too basic, I'd like to explore more!

Rob, good point. It's easy for me to bang on about an issue but not great to offer a solution. Firstly, yes, you have to have the individual on the database and there is a factor of volume. But email functions (or should do) at a lower cost per order than other channels which should create a shift in focus... but doesn't, hence the contradiction.

To specifically answer your questions; yes, PPC etc ARE open to all and ARE critical parts of the overall mix... they also are valuable because they reflect and engage with customer behaviour; no, if a customer doesn't sign up, then you can't influence them via email, but again here if email is more cost effective then greater effort should go into getting people to sign up; no, you can't cut off spending, I've not lost my marbles! and I'm not advocating that at all, but what I am advocating is a shift in emphasis, based purely on the stats... if it costs £15 to secure an order via PPC, and £10 via email, then shouldn't email recieve greater investment to grow email and save the business money? My issue is, I don't see this happening... Email is 5-10% of income for most brands, but in 3 years time it will be 20% for the most advance brands... but this won't happen without focus.

So, the solution is a gradual one. Over-invest in email to increase orders but do it in a way that does not increase AOV. To quote Chris above because he is fantastically concise in a way I wish I was, "Know your target customer, engage with compelling content (via the channel of their choice) acquire and onboard, build relationship and understand more about them - capture data, preferences, buying patterns into a CRM solution and re-engage with even more compelling content /offers as you build knowledge". I believe the tools to achieve this are behavioural data and real time engagement segmentation, because they achieve real relevance, reflected by increasing open rates from 15-20% to 50%+ (see our case studies for proof that this happens for major brands...). And if you have your customers reading your emails at this rate, then the likelihood of them using an email as their last click mechanism rather than PPC is advanced...

Finally, on your point about volume, I am very aware of your excellent site and some of your work, but there is still stuff that can be done to enhance even relatively small lists and make the case for the first stage in the process, growing the database.

about 4 years ago

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