The contradiction of email at the heart of online marketing

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Posted 07 November 2012 11:37am by Matthew Kelleher with 4 comments

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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 is commercial director as RedEye and a guest blogger for Econsultancy.