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It is frankly maddening when I hear marketers talk about how ‘valuable’ email is because it is ‘cheap’.

It says to me this marketer is likely to be banging out high frequency emails to produce orders without due consideration to the real value of email marketing in CRM terms.

To view email simply as cheap is an enormous mistake, one of monumental and, perversely, costly proportions.

There is a seismic shift going on in consumerism as high street and offline purchasing switches to online. Underlying this shift from off to online is also an on-going shift in how consumers interact with brands that they trust, through social media, mobile marketing and opt-in email.

A perfect window into this shift is the growth of email databases and income from this channel. Email is the fastest growing media channel, and we have witnessed year on year growth rates in income of anywhere between 45% and 200%.

But there is a tipping point, a watershed that a number of brands are now crossing or have recently crossed, and that is the point at which email become the cheapest cost per booking channel.

Or, to put it more succinctly, email isn’t valuable because it’s cheap, it’s valuable because these are your customers and, if you have got it right, email is the cheapest channel to drive repeat purchase.

To state the bleeding obvious, your opt-in email list is a list of your customers and/or your best prospects who have said to you “Yes, I am happy for you to contact me”. These are the people you want to invest in, where investment has a longer term value than simply the sale.

So why waste money on more expensive channels, such as PPC , when you could be investing the money in targeting people you know are interested in your products? I

One way of looking at it would be to consider if email generates customers at, say, £20 each and other channels vary from £30 to £50 then how many more customers could you generate if you invest more heavily in email and spend £30 per email order. You could take this difference as more orders and business growth.

So, if email is NOT your cheapest CPO channel, or will soon become so, my guess is you’re not using in correctly. With income from email rising, the secondary benefit for email is that costs are static, if not falling.

Organisations are moving large amounts of email to automated behavioural triggers, which are far more cost effective and provide much higher interaction because of the increased relevance provided by the behavioural data.

The outcome is a virtuous circle. Behavioural data provides greater relevance and stable if not falling email costs whilst also supporting rapid increases in income through better, more relevant email marketing. Costs per order/booking tumble.

The final outcome is that, in coming years, the most successful organisations will proactively shift orders away from expensive channels in which you cannot manage costs in the right direction, towards email. And why not? It has already cost you to recruit an opt in customer, why pay again every time they reorder…

Matthew Kelleher

Published 11 November, 2011 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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christine howell

a

almost 5 years ago

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Steve Corney, Senior Digital Marketing Manager at Lexis Nexis International

I certainly agree that email is effective but too often the cost of acquiring and converting a prospect to become an opt-in (and then becoming a valued customer record) isn't considered when email campaigns are fired out with little targeting (causing expensive and damaging 'passive' and actual unsubscribes). The real cost of email in that sense doesn't seem to get included in many discussions.

Also, doesn't this line of argument (comparing the cost of email to PPC in terms of customer orders) ignore the objectives of each channel and their place in the conversion funnel. PPC principally being used to find new rather than existing customers and email to nurture and market to those who, by definition, are already aware of the company? I don't think you can really compare the two directly with one cost metric on that basis.

almost 5 years ago

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Phil Capper

I see this happening constantly with organisations who feel they know who their customers are. Just because they have a list of Email addresses they feel that they should be sending out blanket messages as it is cheap to do so. You quite rightly pointed out that by doing this you will ultimately put your customers off and therefore de-value the data you have. I see it constantly where organisations have information on their customers but time and time again do not use it to segment their lists to make the messages more personalised and relevant.

I think once organisations start to do this then the logical next steps are to build in timely triggered messaging that further engage with the recipient in a more relevant way. The way I create triggers are based on both reactive and proactive circumstances such as a reaction to something the recipient has done online or proactively looking at the database to trigger messages to customers who have not bought for a certain period of time or to wish them happy birthday etc. I currently run trigger campaigns using Email, mobile and more recently physical triggered digital direct mail which is proving to be very successful.

All of these techniques improve customer engagement and further enhance the relationships organisations have with their customers. It is up to us as a service provider to educate our clients about how to make their communications more engaging. By doing so, they will see measurable benefits across their future communications campaigns.

almost 5 years ago

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andy moore

Thank you, Matthew, for a very encouraging piece of writing.

I am about to release my first site to the public within the next few days. As my marketing of this free training programme will involve mostly email, I find your article spot on.

I have been guided toward email marketing by my mentor who is absolutely perfect with his own email marketing campaigns. He only ever mails twice a week with mostly open information that not only marketers but all and sundry would find useful little tips. So I will do as he does.

I have come unstuck in the past by having a site selling training and a list of double opt-in interested people. I made the mistake of hardly ever mailing them. I was then surprised that I never sold anything to anyone! I was a complete novice then and now know better.

This lesson, your post and my mentor's advice will be remembered when I release my new site shortly.

Thank you for a very useful reminder.

Best Wishes
Andy Moore

almost 5 years ago

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Suzanne Jiggens-Johnson

I completely agree with your comments Matthew. A piece of analysis we often run for clients is to assign a value per opted in customer. This then puts real financial focus on the value of the database and more importantly what value is being lost through unsubscribe rates. It can really bring it home to see how much potental money is being thrown out the window when clients start spamming the base.

almost 5 years ago

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Jeff W

Matthew, thanks for dropping this email knowledge. It's practically gospel. In particular, your comments about behavior scoring are the most interesting to me.

In my experience, I bet most companies would be surprised to see their low click through rates and even worse open, download and registration metrics...

Most business to business marketing is boring, wouldn't you agree...?

JW

almost 5 years ago

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