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Editor's Note: This is episode 2 of 3. If you are just jumping in, you might want to start with the transcript of episode 1.
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Mike Moran: Hi, I am Mike Moran author of two books on internet marketing, Search Engine Marketing, Inc. and Do It Wrong Quickly. I’m pleased to be your host for the second of this three part Podcast series from Pearson Education with Simms Jenkins the CEO of BrightWave Marketing and the author of the new book, The Truth About Email Marketing.
MM: So, Simms is an email marketing expert. Simms, I think one of the things that people want to know about email marketing (and I know that it’s something you cover in your book) is how do you calculate return on investment in email marketing? I think everybody throws ROI around like it’s some kind of mantra, and I think most people really don't know what it's about. So how do you take something like email marketing and figure out how you can tell a hard nose business executive that this is something that he’s really going to see return on his investment?
Simms Jenkins: Right, Mike, that's one of the most important challenges as well as probably the biggest opportunities that email marketing professionals have. Because email is seen as a nice effective of tool, but at the end of the day it often doesn't get quite the respect or recognition by the corner suites: particularly the CFOs want to know, “Yeah, email is nice, but what is it doing to impact our business?” Email, according the DMA, delivers almost a $50 return on investment for every dollar spent. That's unmatched in terms of direct marketing. It's really strong and the DMA calculates that based on the investments in the email which can be staff and creative development, delivery cost, list acquisition cost, and return on it. The return is generally going to be sales and revenue as a result of the email, and for different types of companies that's going to come through their websites, through their retail stores, through their 1-800 numbers, and through their catalogue.
So that's the thing about email that's often overlooked as well is that email doesn't have to be: send an email now; if they click and buy, it's a success or a failure. Emails often get to play a part of relationship building and drive a subtle response that often results in sales. We do work for a major restaurant client that has a national network of restaurants. We’re not selling burgers over the internet; we’re trying to stay top of mind, building the relationship with their customers, and using email as really just another communication hub so that the next time they’re thinking about where to dine with their family or go out to lunch with colleagues that they choose this restaurant.
Email is going to help get that done, and we’re able to it because we have some different programs tied to email and delivering special offers on their people's birthdays as well as the occasional promotional offer. We’re able to tie directly the revenues associated because of that email back to the cost which is kind of the original question, Mike, of ROI. We know how successful the email program is and to a dollar how much revenue has been generated because of the email program that has been sent.
MM: So, how do you get a customer to tell you that they have come from your email program? It seems to me that part of what you need to do is to craft an experience that's going to cause the customer to engage in behavior that will show you that they came from that original email. How do craft that kind of experience and make it something that feels natural for the customer to do?
SJ: Right. There are different ways to do that and sometimes the easiest way is to have a “print this out and bring it into the store or the restaurant” and have a robust POS system that's going to be able to track that, but of course not every company is setup like that. We’ve worked for some companies that have multichannels and so many different marketing programs going on that they track email’s influence based on: they know what that person bought and they’ll go back and look at their email metrix; if that person opened an email, they’ll give that email part of the essential success rate for getting that person to buy whether it was in the store or over the internet or over the phone. But that’s sometimes misleading because email is one of those things that can play a secondary role. Too many people rely on email to be the sole driver of sales, and a lot of companies often have the mode (particularly retailers) of, “It's a slow week, let’s send out another email.” even though they might have sent an email two days ago, and that can really hurt the overall relationship with your customers. You can deliver email fatigue, which while there might be some short term gains from that, long term you’re going to have people start to drop off the list or maybe become emotionally unsubscribed, or they’re just going start tuning out your email. So it's really a fine balance of driving sales and building relationships, but also respecting that you can't go too frequently on emails; people do get annoyed or unsubscribe.
MM: Do you find that companies that have a background in direct mail (either catalogues or maybe those direct mail letters) have a better ability to setup the experience so that they can track the return on investments than a company that maybe doesn't have that kind of direct marketing experience?
SJ: That's a good question Mike. I’ll probably upset some people by saying it, but most traditional direct marketers I think do a pretty poor job on email. They might have some good systems setup, and they have some real strong analytical infrastructure setup to view the back end of how successful email is, but on the front end (which is what I mean by actually crafting and delivering a message that's going to show up properly in the inbox and get a response) most catalogue direct mail type companies do a pretty poor job because, again, direct email is not direct mail online.
Direct email and direct mail are completely different ballgames. A lot of people are just taking their direct mail pieces, scanning them, and converting them from a JPEG to an HTML email and sending it; it doesn't work that way. We see way too many catalogue companies sending emails that mirror their exact catalogue cover, and while it looks very pretty if it actually renders itself the way that was originally designed in your inbox that's great, but over half your audience is probably going to have images turned off or not be able to support large images and not be sure where the links are and what they’re supposed to do. So that approach of: if it works in direct mail or your catalogue, put it in the email and fire it off; that doesn’t work well. So the first part of the answer is that they do a good job of measuring success, but they don't set themselves up to really capture that success.
MM: Well that's fascinating to me, Simms, because I would have expected them to have a big advantage because of their direct marketing experience. But what you’re saying is that they have so much experience that they don't realize that they have things to learn, so they’re actually less open to understanding the things that are different about email marketing than just applying the things that they’ve known and worked in the past. I wouldn't guess that.
SJ: And of course there are some exceptions and there are many out there, but as a whole I find that definitely there’s a little bit of a legacy arrogance that carries over — the idea that email is easy; we know what we’re doing; we’ve been doing direct mail for 20 years. I am not a direct mail expert, but I think partially because of that I don't have carryover of certain expectations or false assumptions based on what can work there will work on email.
MM: Alright. I think we’ve seen a little bit of the opportunity of email marketing and return on investment. I think we’ve just started to hit on a couple of the challenges. One of the challenges is that if you don't have a direct marketing background, you’re unlikely to be very good at calculating that ROI. And if you do have a direct marketing background, you might have a blind spot for how you need to be relevant in permission based as opposed to what you did in offline direct mail marketing. So those are two challenges I could see. What other challenges are there in email marketing? What are the really big ones that a company that's going into this has to really keep in mind?
SJ: Well, we find the biggest challenge is that to do email well you need a lot of different resources. Whether that's a lot of different bodies on the ground, good partners, or a large budget, it’s really difficult to do email and give it everything it has. There are a few programs that are world class email programs. Forrester did a report a few years back and reviewed 53 programs, I believe, of 52 they gave failing marks. I think that's mainly because you have just a very disproportionate amount of resources and team members that are working on email marketing programs, that’s somewhat due to the reputation that email is efficient and that should be cheap, so you’re not going to throw a lot of resources at it. But I’ve read some other reports that said emails are victims of its own success. That because the perception that email's so effective and delivers such a strong ROI, that people aren't willing to commit more resources, which is kind of baffling to me to a certain extent.
But without a doubt, because of the cycle of never ending campaigns for most companies, people find it very difficult to make improvements in what we call the strategic optimization of email programs, which is really why we exist. It’s because there are very few companies whether you’re a director or vice president or manager or coordinator and you’re involved in an email program, there is always that next campaign that's coming right around the corner. It's not like direct mail or radio and some other things that once it's out, you can take a couple of weeks off to think about the next campaign that isn’t coming around for four months. In email, if you get an email campaign out on Tuesday night, the email that needs to go out on Friday has already started to be proofed and processed and coded and tested and things of that nature. So it's really hard to stop and focus on testing, making improvements, looking at your results to better future campaigns, and thinking in a strategic way rather than in an execution of facts, which is really what most people are focusing on probably because they just don't have the time and resources to that step back and look at the big picture.
MM: Do you find that sometimes people hold email and other kinds of internet marketing to a higher standard in terms of return on investment than they would for things like TV or print just because you can calculate the ROI and with traditional media you can’t?
SJ: I think, yes, absolutely. I think that certainly email and some of the other online marketing and search are right up there at the top; they’re probably the two most measurable, targeted and efficient ways to communicate to people and to deliver relevant messages. I think that there’s definitely a bias of old media, and a lot of the people that control the advertising strings of the world are trying to keep email and search kind of as niche plays when you think that they would get a little bit more attention because of the fact that they are so measurable and they are also targeted. And throwing a million dollar set of a TV buys, you’re lucky if five percent of your audience is paying attention to your message and maybe even less than that is actually interested in your product. Where generally marketing channels like email, these people have provided permission to you, and that means that they’re very interested in what you’re providing. So the general concept (and obviously I’m biased) just begs for more resources and attention because of the nature of what permission email marketing is versus the general mass media buys.
MM: Well Simms, I’ve already learned stuff on email marketing just from these broadcasts, and I am supposed to be an expert. I’m sure that there is a lot more stuff in your book that the folks listening to this Podcast will want to pay attention to. Tell me what you think the difference is between your book and other email marketing and interactive marketing books?
SJ: Well, Mike, I think that this book is really approachable, and frankly there aren’t a lot of books on the subject despite its importance in terms of marketing and consumers. But I think that this book will really be a appealing to people whether they’re a senior vice president of a big brand or they’re a small business owner that they’ll be able to really get a lot out of it as well as the people that are in the trenches of managing an email marketing program. I think that it will reaffirm some best practices of attention and efforts that they’ve worked on as well as getting some new ideas. So I think it really covers the gamut and really has a lot of value to people regardless of where they are in the email cycle of knowledge. I think we go into some key topics fairly in depth without getting too much into the weeds. I think it's really going to be a good read as well as helpful to a lot of people regardless of their background and level of expertise.
MM: Well that's good Simms. If it’s piqued your interest, I hope you’ll go to thetruthaboutemailmarketing.com and that you’ll check out Simms’ new book, which is called you might expect, The Truth About Email Marketing. I also hope you’ll give a listen to the other two segments of this Podcast Series. In our first segment, we talked about the basics of the email marketing, and this wraps up part two of our series. I hope you will comeback for our third part. We will talk about the winners in email marketing now and in the future. Thanks for listening.