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A packet can leave one computer and travel halfway around the world through many different networks and arrive at another computer in a second or two. To create an Internet packet, for example, the packet software (called a “client”) breaks up the message into packets of about 200 bytes. A byte consists of eight bits (a bit is a zero or a one). Each packet is put into a frame that contains extra bits with the information necessary for routing the packet from one computer to another.

The main advantage of packet-switching is that it allows millions of computers or mobile phones to use the same network of communication lines. Sharing allows for very efficient use of the worldwide network.

With the Internet, computers aren’t connected directly to other computers. Instead, each packet is independently routed over common lines to its destination. When a packet is ready, the host computer sends it over a telephone line or cable to a router. The router examines the destination address in the frame and passes the packet along to another router, chosen by a route-finding system.

A packet may go through a few or thousands of routers in its travels from one computer to another.

When the packets reach their final destination, they are reassembled in the correct numerical order at the destination computer.

An example of one of the billions of electronic packets that whiz constantly through the internet

This figure illustrates one of the billions of electronic packets that travel every minute of the day all over the world on the Internet. The packet begins and ends with an electronic flag so that the routers can know where each packet begins and ends. It has an electronic address of the destination computer and a packet number with control bits to ensure that the data in the packet is not corrupted. The payload is a group of bits that contain the information that the packet is transporting from the source to the destination computer. This information may be a little section of a Web page, of a TV picture and sound, of a VoIP voice conversation, or of an e-mail.

All packets travel at close to the speed of light: 186,000 miles per second. Because of the various lines and routers involved, a packet may take a few seconds to get where it is going.

How HTML Works

HTML (hypertext markup language) is the language used to create the colorful e-mails and Web sites we are all familiar with. The images shown in a typical HTML e-mail or Web site as they appear on your PC or mobile device may not actually be in the e-mail itself. They may be located on the server of the company sending the e-mail or Web site images. Each image has its own particular internet address called a URL (uniform resource locator). When you open an e-mail or a Web site, your computer sends a packet to the URL asking for certain images in the e-mail or Web site. Each packet has information that says, in effect, “Arthur Hughes has just opened the e-mail we sent him and wants to see this image.” The packet races through the Internet to the location (the URL) where the image is stored. The sending company’s server sends the image back to Arthur in one or more packets and also notes that “Arthur Hughes has just opened his e-mail.” When the packets with the images arrive at your PC, the HTML code converts them into a picture or drawing which you see on your screen.

As you can see, two things happen at once: the delivery of the images and the knowledge of what the e-mail or Web site viewers are doing. The packets sent back to the company contain the address of your computer or mobile device. The address is essential so that the image can be sent back to the PC that is requesting the image. Because of this address, every time a user opens an HTML e-mail or Web site, the sender knows the e-mail or Web site has been opened, who opened it, and when. When you click on a link in an HTML or text e-mail (e.g., to see a different page or section of the e-mail), you see new information because a packet has been sent to the server asking for the new page. The server sends it and records the fact that you clicked on a link. Packets sent back may also include your input (such as your name, a product order, or your response to a survey question).

Many times the recipient’s messaging client (such as Outlook) is set up to protect the recipient’s privacy. If this is the case, the user may see a yellow line at the top of the e-mail that lets the user know that the images have been blocked. When you click on that notice to unblock the images, you are also sending a message to the e-mail sending company that you have done something with the e-mail (opened, clicked, downloaded, etc.). The messaging client (such as Outlook) puts the subject and from line of each e-mail in an in-box—a list of all messages that have arrived for you. The in-box displays the message headers: who sent the mail and the subject of the mail. It may also tell you the time, date, and size of the messages. You can use the header to select the messages you want to read, to skip, to delete, or to mark as “junk” or spam.

Think of how different all of this is from direct mail. With direct mail letters, postcards or catalogs, you have no idea of what your customers are doing with them. They may have read them or chucked them out. Or the postal carrier may not have even delivered them! With e-mail you know that your message has been received and opened (if it was) and that the links were clicked on (if they were)—by whom and when.

Arthur Middleton Hughes is VP of The Database Marketing Institute. This article is taken from his new book from McGraw-Hill: Strategic Database Marketing 4^th Edition. The Institute is engaged in consultation with companies throughout the world in e-mail and database marketing projects. Arthur can be reached at Arthur.hughes@dbmarketing.com.

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First, how many hard bounces are there in a typical commercial e-mail situation? We found that the number is much lower than we had anticipated.

As you can see, the average rate is 2.85% and the median (the one in the middle) is 3.15% per year. Many are quite low, But some are as high as 20% loss per year.  What are the determining factors?  Is it possible that some subscribers are doing something to stop the flow because they are upset at the number of e-mails that they receive and, instead of unsubscribing, are taking the drastic step of changing their e-mail to get rid of it?  Of course, when they do this, they cut off all commercial e-mails –not just yours.  Here is what we found:

You can’t argue with these numbers. There is a definite trend. Despite the dip at 15-19 and at 30+, it is impossible to escape seeing that something we have done (sending more e-mails per month) correlates with the permanent bounce rate.

If this is true, what can you do about it? You can do the same thing that we recommend for the unsubscribers.  We can get in touch with them to see if we could turn them around by offering to reduce the frequency of their e-mails. But how can we do that, when the subscribers’ emails are undeliverable?

The answer, of course, is to apply ECOA to these undeliverables.  Fresh Address has an excellent record in finding new addresses for undeliverables. It is possible that our subscribers did not intend to drop our promotional e-mails. They were just trying to eliminate someone else’s frequent e-mails.

What would it cost and what would it be worth for us to do that? Fresh Address takes the e-mail addresses we give them, looks up the new address, and asks these folks whether they want to continue to receive promotional e-mails from us.  They charge only for those who say yes. Not for those who say no.  So we are not risking much by asking them to do this.

Suppose we have done our subscriber lifetime value analysis. We have determined that each deliverable subscriber produces an average $20 in three year profit – a typical result.  If Fresh Address charges $0.50 for each new opt-in address, we will make $19.50 for every recovered address – a pretty good return on investment.  It is worth looking into.

Then, as soon as we recover them, we send them an e-mail asking them if they feel they have been getting too many e-mails and would like to reduce the frequency of their e-mails. Better to send them only two or three a month, and keep them, that continuing to send them more than they want.

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Arthur Middleton Hughes is Vice President of The Database Marketing Institute that does research and consulting for e-mail and database marketing companies. He would love to hear about your problems. Perhaps he could help.  He can be reached at Arthur.hughes@dbmarketing.com or 954 767 4558. His new book Strategic Database Marketing 4^th Edition is due out from McGraw-Hill this year.

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There are always exceptions, of course, but the trend is quite visible. The more e-mails that your subscribers receive per month, the lower their HTML open rate.  The only exceptions are e-mailers who send less than one e-mail per month.  Their low open rates could be because the subscribers had forgotten about them due to the low frequency.

It is important to recognize that none of these e-mailers had open rates of over 20%. This means that 80% or more of their e-mails were never opened. The average open rate of all these 181 companies was 14.1% opens – meaning that 85% were never opened.

Actually, the open rates were even lower than this chart appears to indicate.  Because many subscribers use a reading pane, many of these opens are not really opened at all. As the subscriber moves down her e-mail inbox with her mouse, a portion of each e-mail shows up in a reading pane to the right of her screen.

As you can see, the start of an article from the Wall Street Journal is visible.  When this happens, a packet is sent back to the Wall Street Journal that says in effect, “Arthur Hughes has just opened the e-mail that we sent to him.”  Actually, I just moved down my inbox. I really did not open this e-mail at all. I went on to the next e-mail on my list. It counts as an open, however.  So we have to discount these open rates by a significant percentage. No one knows how much.

The real test of an open is the click rate.  When an e-mail is actually opened, the subscriber starts reading it. As he reads, it he may click with his mouse on something interesting.  That is a real open. In the case of the Wall Street Journal article, there is a link for the article about Apple.  Here is what happened when I click on this link:

This page showed up because when I clicked on the link for the article, a packet went to WSJ saying “Arthur Hughes wants to see the article about the Apple iPhone”. WSJ sent me the article so I could read it. That is a real open.

How many e-mails are clicked on? This is another convoluted story. We looked at a similar large number of companies to track their unique clicks as a percentage of their opens. Here are the results:

These numbers are fairly consistent. Between 15% and 25% of opened e-mails are clicked on.  If we can count a click as a real open, then the number of real opens is 22.52% of 14.1% or 3.175%. That is the average number of truly opened e-mails.  This means, of course, that more than 96% of all e-mails, on average, are not opened.

Comparing this 3.175% opened with the average number of conversions provides a really interesting story. I have conversion rates on only about 83 companies.  Here are the results:

This chart tells us that the 0.12% of the average delivered e-mail produced a sale.  These same e-mails have an open (clicked on) rate of 3.175%. Putting these two numbers together, on the average, 3.78% of clicked on e-mails produce a sale.  That is a terrific number.  It means that e-mailers should concentrate not on mailing so many, but on getting their e-mails opened and clicked on more.

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Arthur Middleton Hughes is VP of The Database Marketing Institute. (www.dbmarketing.com) His new book from McGraw-Hill, Strategic Database Marketing 4^th Edition will be published later this year. He can be reached at Arthur.hughes@dbmarketing.com.

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By Ken Magill

Don’t think lifetime value is a valid metric in email marketing? Well, database marketing expert Arthur Hughes has one word for you: nonsense.

Last week’s piece in which Chris Donald, vice president of marketing at email marketing services provider Inbox Group, criticized lifetime value’s use as an email-marketing metric prompted a debate in the comments section of the Magill Report.

The article was also retweeted six times to a collective following of about 10,000 people.

But the most notable response came from Hughes, vice president, The Database Marketing Institute. Hughes is one of database marketing’s foremost experts.

He’s written nine books on marketing. The fourth edition of his book Strategic Database Marketing is scheduled to be published by McGraw Hill this fall. It will cover database marketing as applied to direct mail, email and mobile marketing.

In email, Hughes contends, lifetime value goes beyond clicks, opens and purchases to determine if the program is actually making money.

In fact, according to Hughes, there are a several metrics besides clicks, opens and purchases that should be used to calculate the value of an email address, including unsubscribes and undeliverables.

But one of the most important metrics in calculating subscriber lifetime value is what Hughes calls the “off-email multiplier,” or purchases prompted by the email but not made through the email.

“The fact is that email produces one, two and three times as much offline sales as they do online sales,” Hughes said.

He used professional sports as an example.

“They don’t sell season tickets using email. People follow their teams using email,” he said. “They [the leagues] know that people following their teams will go and buy tickets. What the emails do is get people interested in the product in this case.”

He added that if, say, American Airlines sends an email touting a sale on flights, people don’t necessarily click on the email and buy.

“They talk to their wife or husband and say: ‘Hey, we’ve always wanted to go there. Why don’t we go on American because they’re having a sale.’ Then they [make a reservation] because of the email, but if you look at the shopping cart, it’s empty because there was no sale there.

“All emails have secondary effects and that goes into lifetime value,” Hughes said.

He conceded that in order to calculate the off-email multiplier, some assumptions must be made. However, there are concrete ways to gauge it, he said.

“Some retailers offer in-store coupons,” he said. “You don’t want to do that all the time because it’ll drive you crazy, but you can offer a coupon and extrapolate.”

Loyalty programs are another way to calculate the off-email multiplier because loyalty purchases are tracked by name no matter what the sales channel, he said.

“You send Arthur Hughes an email and you notice he didn’t buy in the email but that same Arthur Hughes came into the store that afternoon,” he said. “Are the two connected? Maybe they are. You have to do a lot of estimating, but that’s the kind of thing you do.”

Inbound call center reps can also be given incentives to find out which channel drove the order, he said.

Assigning different product numbers according to channel can help measure the off-email multiplier, he added.

“Let’s say you’re selling an indoor grill,” he said. “If you call it an A54 in the email and a B54 in the catalog, anyone who calls asking for an A54 can only have heard about it through the email.”

Figuring subscriber lifetime value “requires a lot of analytical work,” Hughes said. “You have to estimate and extrapolate. Most companies are not spending enough on email because they look at their shopping carts and say: ‘Email’s only producing 3 percent of our sales.’ They don’t realize email’s producing 10 percent of their sales because they haven’t done the analysis.”

Costs of the product or service being offered, such as buying and warehousing, must be factored into lifetime value, as well, Hughes said.

“Part of lifetime value is not only figuring out the sale, but the cost,” he said.

And contrary to the argument made here last week, Hughes said he is completely comfortable using the lifetime-value metric to explain the value of an email address to management.

“I explain to them that a lot of this is estimated,” he said. “You know it’s happening. You know that when people get an email they drive to the mall and buy a product. But how many do? And how much do they spend? You have to be willing to estimate what the offline effect is.”

He recommends calculating lifetime value according to how much the average address is worth over three years.

“In this case lifetime value is really a misnomer because in this fast-moving world, someone may be with you for 10 years, but we don’t really care about that,” he said. “We care about this year, next year and the year after that.”

Hughes also said that email subscriber lifetime value is a different concept than that of customer lifetime value in traditional direct mail.

“With email, only about 10 percent of your subscribers ever buy anything from you,” he said. “Most of them get your email and don’t buy anything. With customers, by definition, all of them have bought something from you.

“So you start off with someone who has bought one of your products and they are much more valuable than a subscriber,” he added.

Hughes said he calculated email subscriber value for 51 companies last year.  The values varied from 54 cents to $240.

“When I showed the 54-cent company their lifetime value they said, ‘Wow. We suspected that, but had no numbers to prove it,’” he said.

“So I worked with them to see what could be done with their almost worthless e-mails. We made many changes, and after three months, we had boosted their lifetime value to about $8. They were very happy and could put the results in the bank.”

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When email first came along, database marketers thought this new medium was ideal for building customer relationships. Instead of sending a letter once a month for $600 per thousand letters, we could afford to send e-mails every week or even every day for $6 per thousand e-mails. What a saving! What a wonderful way to maintain contact and boost sales!

Numerous studies have shown that segmentation of emails improves open and click rates. The Marketing Sherpa Email Marketing Benchmark Guide 2008 reported that for the mailers studied, open rates for segmented versus non-segmented campaigns are as much as 20% higher on average for the first 30 days. This rate drops to 14% higher in days 60 to 90. But many marketers don’t use segmentation in their email marketing programs. Why not?

I worked for an ESP that had about 200 clients. I urged our e-mail marketing clients to use dynamic segmentation. After a couple of years, we found that only about a fifth of the e-mail marketers were creating and using segments in their e-mail promotions. “What is wrong with the others?” we thought. “Don’t they want to improve their open rates?”

Frequency Vs. Segmentation
Actually, after we looked into the situation, we found that those not using segments in e-mail marketing are doing it for quite rational and economic reasons. It comes down to a question of frequency versus segmentation. Creating dynamically segmented e-mails (where the copy varies based on the segment of the subscriber) is expensive. To do it properly, you have to have a database that contains the necessary data, and hire the staff to dream up and write copy for each of your segments.

In the direct mail days, we typically sent one or maybe two letters  a month to each customer. If you had four segments, for example, there was plenty of time for your staff to dream up and write copy for each of their segments. They had two weeks or more to do it.

With e-mail, we soon learned that frequent e-mails are very profitable to send.  Go from once a month to once a week and profits go up. From once a week to twice a week, profits still rise. From twice a week to once a day, still more profits. Of course, by doing this you may be losing your most valuable customers who unsubscribe because they are sick of so many communications, but management seldom looks beyond this quarter’s sales. “Send more” is the watchword, so almost every e-mail marketer has been doing just that.

Of course, it is almost impossible to write dynamic copy for different segments if you are getting out e-mails on a weekly or daily basis. Creative segment managers are hard to find. They are expensive. Even more expensive is the appending of demographic data and building a database (rather than a mailing list) that is needed to support dynamic segmentation. Many e-mail marketers are worried that a 14% rise in open rates (which may mean a 0.2% rise in conversions) may not cover the cost of hiring many creative writers and building the necessary database.

Why Is It So Expensive?
Good e-mails are much more expensive to create than good direct mail pieces. A direct mail piece is what it is: a piece of copy with products, prices and color. A dynamic e-mail, on the other hand, is much more complicated because it is filled with links. You may be showing only a few products, but each product, if done right, contains many links. Each product should have ratings and reviews, each of which can be reached by a link. Links also lead to colors and sizes, and comparative research.

Each of these links has to work, and it has to lead to hundreds of other links. To get this right will take an experienced e-mail creative person at least full day.

Additional creative staff is also expensive. A typical e-mail development staff might consist of three people at about $150,000 per year. One of those people is the creative one. If you want to send two e-mails per week, and have eight different segments, you will have to create 16 different e-mails per week. It takes about a day, on average, to create a dynamically segmented e-mail complete with links. That is 16 creative man days per week.

So, to your regular staff of one creative, you will have to add two more creative people at a cost of $100,000 per year. They will have to be backed up by a professional database that holds all the segments, and the products that they are likely to be interested in. To do the segmentation, you have to append data to all your e-mail records. This is not cheap. The database for a large marketer costs a minimum of $1,000,000 per year. So let us assume that the additional cost of dynamic segmentation is $1,890,000 in the first year.

Reasons Many Marketers Don’t Segment

1.   The type of analysis needed to properly segment can be above the heads of most e-mail marketing staffs. They have never calculated the lifetime value of their subscribers. They probably do not know, at any given time, their costs, their conversion rate, or most of these numbers.
2.   E-mail marketing staffs are not paid to do this type of analysis. They are paid to get out the e-mails so as to make next quarter’s revenue goal.
3.    E-mail staffs are operating on a fixed budget. Their goal is to keep the costs per e-mail down, not to increase them as this example shows. If they wanted to create a database, where would they get the budget? Who would run it?

Arthur Middleton Hughes ( Arthur.hughes@dbmarketing.com ) is the Vice President of the Database Marketing Institute. His new book, “Strategic Database Marketing 4th Edition,” will be published by McGraw-Hill later this year.

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Many people do not understand how valuable e-mails are. When management attempts to measure the importance of e-mails to the organization, they typically look at the revenue generated in the shopping carts of the e-mails. It comes to about 3% of total revenue. Nice revenue, but nothing to write home about. They are really missing a lot.

What happens when a subscriber opens and reads an e-mail? She may:

Click on the e-mail and buy something Pick up her phone and order something Check her catalog to see what else is on sale Print out a coupon and take it to a store Get in the car and go see the product Do research on Google for better prices of similar products Discuss it with her spouse or a friend, leading to a possible purchase Remember what she saw and buy it later

E-mail subscribers do all of these things. The fact of the matter is that the revenue from the off-line sales due to an e-mail are usually several times the revenue in the e-mail’s shopping cart itself. If you are going to determine what sales your e-mails are generating, you have to include an off-e-mail multiplier to get the full effect of the e-mail. How can you estimate the size of the off-e-mail multiplier? One retailer with 900 stores and a very active e-mail campaign did a study to prove exactly what happened. They did a test by sending direct mail and e-mails to a total of 140,000 their customers who they had on a loyalty database. They divided them into four groups of 35,000 each. Here were their results:

Grand Total Count Responce Rate Average Order Value Dollars Per Name Mailed Increase From Control % sales in store % sales in online Direct mail and e-mail 35,000 25% $71.71 $17.67 $3.35 79% 21% Direct mail only 35,000 24% $68.62 $16.39 $2.07 83% 17% Email only 35,000 23% $67.82 $15.71 $1.40 79% 21% Control Group No Mailing 35,000 22% $65.01 $14.32 82% 18%

This was a really great study. Notice that the response rate goes up from the bottom to the top. Direct mail works better than e-mail – but costs about 100 times as much. Direct mail and e-mail together beat everything. From this study, how can we calculate the off-e-mail multiplier? The answer comes from the last two numbers in the third row (E-mail only). From the e-mails sent, 21% of the sales were online – from the e-mail shopping cart or from the website. 79% of the sales came in the store. Simply divide 21% into 79% and you get 3.76. That is the off-e-mail multiplier. It tells you that to determine the non-e-mail revenue generated by an e-mail – for this chain of stores at least, you multiply the e-mail shopping cart sales by 3.76 to get the off line sales due to the e-mail. I worked with several other data sources to determine the off-e-mail multiplier in other retailers and other industries. Every time I got a number similar to 3.76, but often much higher. Why should it be higher? Because, if you study the chart you will see that the last column (% sales online) adds together sales in the e-mail shopping carts and sales on the website. Of course, most of the people who got the e-mail bought in the e-mail shopping cart – but not all of them. Some of them thought about it, discussed it with their spouse, and then went on the website to buy. This means that the percent purchased in the e-mail shopping cart was less than 21%, which means that the off-e-mail multiplier was higher than 3.76. OK. Now that you know about the off-e-mail multiplier, how can you use it to measure the true effect of your e-mails? You use a typical subscriber lifetime value chart. Here is the way it is used:

Row Email clothes and retailer Current Year Next Year Third Year 1 Subscribers 1,036,113 865,223 764,252 2 Unsubscribers 8.52% 138,252 73,717 65,114 3 Undelivers 3.15% 32,638 27,255 24,074 4 End of Year subs 865,223 764,252 675,064 5 E-mail Delivered 104 107,755,752 89,983,238 79,482,194 6 Opens 12.65% 13,631,103 11,382,880 10,054,498 7 Unique Clicks 18.75% 2,555,832 2,134,290 1,885,218 8 Sales per Unique Click 2.14% 54,695 45,674 40,344 9 Off E-mail Sales Multiplier 3.76 205,652 171,734 151,692 10 Total sales due to e-mails 260,347 217,407 192,036 11 Revenue due to e-mails $76.82 $19,999,875 $16,701,229 $14,752,196 12 Costs 40% $7,999,950 $6,680,492 $5,900,878 13 Subscriber Acquisition Costs $0.10 $103,611 0 0 14 E-mail Delivery Costs $4.00 $431,023 $359,933 $317,929 15 E-mail Creation Costs $1.39 $150,000 $125,260 $110,642 16 Total Costs $8,684,584 $7,165,685 $6,329,449 17 Profit $11,315,291 $9,535,545 $8,422,747 18 Discount Rate 1 1.11 1.15 19 Net Present Value $11,315,291 $8,590,581 $7,324,128 20 Cumulative NPV $11,315,291 $19,905,872 $27,229,999 21 E-mail Subscriber Value $10.92 $19.21 $26.28

In Row 9 you can see the Off-E-mail Multiplier. This number is multiplied by the e-mail sales to get the number of other sales due to the e-mail. The third year lifetime value of each of the 1,036,113 e-mail subscribers is $26.28. That means that each of these subscribers generates $26.28 worth of profit by the end of the third year – even though many never buy anything, and one quarter of them disappear over the three years. This is a number you can take to the bank and base your budget on. Here is what it tells you:

Every time you lose a subscriber, through unsubscribe or a hard bounce, you have lost $26. Knowing this amount, you can afford to spend money to acquire more subscribers. If, for example, you pay your catalog reps $5.00 to get the e-mail addresses whenever someone calls to order something from the catalog, you are making a profit of $21 on every e-mail acquired. If your e-mail marketing manager wants to add a couple of creative e-mail people to create better e-mails which will increase the open and click rates of his e-mails, he can prove that the costs are justified by the way that the better e-mails increase the LTV.

The sales generated by the e-mails are not 3% of total sales, but more like 11.28% (3 x 3.76). Any marketing effort that can prove that they account for more than 11% of total sales is nothing to be ignored – particularly when the cost of sending e-mails is so low in comparison with the costs of direct mail, print, or TV advertising.

Any e-mail marketing operation that has not yet computed their Off-e-mail Multiplier had better get busy and figure out what it is right now. Arthur Middleton Hughes is Vice President of The Database Marketing Institute that does research and consulting for e-mail and database marketing companies. He would love to hear about your problems. Perhaps he could help.  He can be reached at Arthur.hughes@dbmarketing.com or 954 767 4558. His new book Strategic Database Marketing 4th Edition is due out from McGraw-Hill this year.

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A website scoring system
In the past two years, I developed a scoring system for websites. The system determines how effectively the website welcomes and encourages visitors to sign up. It is amazing how many websites end up with a low score – meaning that because of the way the website is arranged, many web visitors come and go without signing up. Here are the results of scoring 122 websites:


The scoring system contains eight sections:

The e-mail marketing staffs at the 122 companies were all given these scores. They understood the scoring system. Those with low scores understood that changes should be made if they were to get more subscribers and what these changes should be. But, in many cases they could not get the changes made. Why not?

Why changes are not made
The answer is an interesting one. For historical reasons, in many companies, the staff that is responsible for the website is different from the staff that sends out the e-mails. Each has their own budget and goals. The e-mail marketing staff is interested in boosting revenue from sending out e-mails. The website management group is also interested in increasing revenue from their website, but may also have other objectives. Websites often fall under the purview of the advertising department, since, when websites were first created, they were conceived as a way to wave the flag, and represent the brand. Often websites fall under a committee representing different parts of the company. The advertising folks want to present an image of their brand. They use focus groups to get public reaction to the appearance of their site. Putting a box saying “Register here to get 10% off on your next order” does not fit into their high level picture of what their brand stands for. They may fight efforts to change the website to encourage registration.

Budget Problems
Even when the website folks are willing to make the needed modifications, there is often a budget problem. Who provides the money for changing the website to make it more registration friendly? The e-mail marketing staff has an annual budget which is based on the number of e-mails that they plan to send out. Say that there are 2,000,000 subscribers who will get two e-mails per week. At an overall cost of $4.50 per thousand, that is an annual budget of $936,000. There is no extra slush fund. If it costs, for example, $30,000 to make changes in the website, who has the budget for that? Even worse, if the money is found and it results in adding 1,000,000 to the number of subscribers (as is quite possible) where is the e-mail marketing staff going to get the extra $468,000 to send e-mails to these new people? They will have to go back to the CFO who may have already allocated all the money he has available for e-mail marketing this year.

Needed: a CMO
E-mail marketing is often an overlooked stepchild in the marketing operation. E-mails produce sales not only in the e-mail shopping carts, but they also get subscribers to visit stores, order from the catalog, or go to the website. In most companies, the CMO is interested in boosting sales through all media. Recognizing that websites and e-mail marketing should work together it is up to the CMO to coordinate the budgets so that can happen.

Arthur Middleton Hughes is Vice President of The Database Marketing Institute that does research and consulting for e-mail and database marketing companies. He would love to hear about your problems. Perhaps he could help.  He can be reached at Arthur.hughes@dbmarketing.com or 954 767 4558. His new book Strategic Database Marketing 4^th Edition is due out from McGraw-Hill in 2011.

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Do you want to continue doing things the “old” way, and see results fade under the weight of email fatigue and new marketing channels?

Or do you want to turn your email marketing into a highly profitable, future-proof channel that builds strong and lasting customer relationships?

The answer is obvious, but most advice out there already promises help along these lines.

So does “Successful email marketing strategies” offer anything different or better?

The answer is a resounding yes. This book offers a unique perspective that genuinely helps you take things “…to the next level.”

The main premise of the book is to increase your email marketing success by building the kind of loyal customer relationships the corner store used to have. Not through force of personality, but through collecting, recording, appending, analyzing and using data.

The initial chapters set out the theoretical and financial argument for moving to a data-driven email model.

Most of the rest of the 373 pages then detail procedures and strategies that help you understand exactly how you might implement such a model.

Importantly, the authors talk about much, much more than “traditional” email data, such as open rates. Instead, they address the role of a wide range of appended data available from other sources (both inside and outside the business).

That’s where the vast majority of email marketers need help.

Topics covered include measuring “campaign” and “subscriber” performance, calculating the value of an email address, transactional emails, trigger emails, detailed segmentation techniques and using web analytics.

As such, it’s not a beginner’s guide. Nor does it cover the basics of email marketing. Instead, it’s the ideal book to buy after you’ve read one of those more general books.

And even if you’re not familiar with database marketing, the text does a good job of persuading you why you should be looking into the wider application of customer data.

Particular benefits
1. The book communicates very clearly the value of data and metrics. This might just be the kick you need to tackle that area in terms of day-to-day practices and long-term strategic change.

My favorite quote:

“Marketing is too important to be made subservient to the abilities of a few programmers”

2. The book is very different to existing email marketing texts and opens up many new perspectives not covered in such depth elsewhere.

For example, the authors argue that data is so valuable that it makes sense to sacrifice a few sign-ups for the sake of collecting more information: particularly the kind of info that can then be used to append consumer and business data from commercial sources.

3. While the focus is on direct sales, there is plenty of encouragement to think of email as a brand builder and driver of offline action. The authors even explore methods for measuring offline sales.

4. The benefit of focus is that the book goes into detail. Rather than vague enjoinders to “improve relevancy,” for example, you actually get a step-by-step plan for measuring and improving relevancy in practice.

5. The material covered is not stuff you can pick up free on the web in 700-word articles. Much of the information will be new to those in email marketing.

6. Many case studies and sample calculations really bring home the points being made.

Provisos
1. The target readership is definitely those looking to actively drive sales, with a strong focus on B2C. While many lessons are applicable to B2B and content-based publications, they receive little direct attention.

2. It’s a valuable read, but not always an easy one and is a touch disjointed in places.

3. The book is strongest in those chapters dealing specifically with data-related issues, but there is coverage of other (related) areas, such as subject lines, copywriting and frequency issues.

My summary: Not the first email marketing book you should buy, but absolutely indispensable if you know your basics.

[Also, you have to love a book that contains this line: "Every marketing email should be an adventure."]

The book is available from the publisher’s website.

Arthur Middleton Hughes is Vice President of The Database Marketing Institute that does research and consulting for e-mail and database marketing companies. He would love to hear about your problems. Perhaps he could help.  He can be reached at Arthur.hughes@dbmarketing.com or 954 767 4558. His new book Strategic Database Marketing 4^th Edition is due out from McGraw-Hill this year.

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If you’re like other marketers you’ve been focused on building more sophistication into your e-mail programs: establishing an e-mail preference center, creating a first-time buyer sequence, perhaps automating product recommendations in your transactional messages. These are all important steps towards moving your e-mail strategy forward. But once a year, we recommend taking a step back and examining the everyday aspects of your e-mail programs. Could they use a little spring cleaning?

At home, I always start my spring cleaning with a checklist: clean the windows, sweep the garage, shake out the rugs. It’s a great way to tackle spring cleaning for your e-mail programs as well. Let’s examine where the dust may have collected in your campaigns, and how you can spruce them up.

1) Take a fresh look at your calls to action. Make sure your most important message or best offer is still above the fold, which in e-mail terms means the first 300 pixels. This is the most valuable real estate in any campaign.

By now you’ve probably also inserted forward-to-a-friend (F2F) functionality in your e-mail programs, an excellent way to grow your audience and add friends of your subscribers. Thanks to Facebook and Twitter, what was once a one-to-one message can easily become a one-to-many using share-with-your-network (SWYN) functionality. Now is a great time to leverage it. And if your standard promotional e-mail doesn’t seem to be share-worthy, focus on a fun and creative viral promotion that your readers can’t help but forward to friends or post on their Facebook page.

2) Put your subject lines to the test (and test and test). The return on investment in e-mail marketing remains high, but it’s getting more difficult to maintain alongside the emergence of other channels. Inboxes are overloaded with e-mails and social media notifications, which means the subject line is more important than ever. How do we compel the customer to open their e-mails and unlock the great marketing messages inside? The answer: test, test, test. Successful subject lines have a strong link to your brand and your clients’ expectations.

You’ve already done extensive subject-line testing and found some clear winners? Fantastic, but you have to keep testing. The same subject-line approach will quickly lose its impact with your readers. Plus, your competitors are most likely copying your winning strategy by now, so it’s time to find a new approach.

And don’t fall victim to marketing amnesia. Document your failures and successes, and avoid the trap of spinning your wheels testing the same thing twice.

3) Dress your e-mail in the latest brand fashion. Your store signage and your Website have been refreshed with an updated look and feel. But has anyone freshened up your e-mail template? Your customers expect a consistent brand experience regardless of the channel, so make sure your e-mail program maintains the integrity of your brand experience. Are you using a consistent voice? Everything from the font of your e-mail to the tone of your message should be consistent with the brand you’ve established. Offline and online customers may have different expectations of your brand, but that’s not cause for an identity crisis. Customers should be able to choose their preferred shopping channel without compromising the brand experience.

4) Cross your t’s and dot your i’s. Are your e-mail images rendering properly? Are all of your links functioning correctly? Are all of your copyrights and policies updated for 2010? Try unsubscribing from one of your e-mails and forwarding to a friend. Is your user experience fluid and error-free?

5) Evaluate how effective your Website is for acquiring e-mail subscribers. Your e-mail content may be a perfect 10, but what about your list? Acquiring e-mail addresses is as crucial as honing your e-mail program. And one of the most powerful tools for e-mail acquisition is, of course, your Website. Review the following checklist and see how your site measures up:

* Prominent registration, preferably in the upper right, above the fold. Don’t put all your eggs in that one basket, though; include the link throughout the Web, especially where you know you generate the most traffic. Give yourself a gold star if you have a link on every page of the Website.

* Promotion of value. Ask yourself, “Why would anyone want to register for our e-mail program?” Make sure you are communicating the value to your potential subscribers, whether it is exclusive offers, free shipping, or $10 off the subscriber’s next order.

* Painless profile. When someone takes the plunge and decides to register for your e-mail program, make the process as easy as possible. The key here is take it slow. Ask only for the basics at this point; you can always go after birthday, gender, and favorite brand later. Visitors are just getting to know you at this stage; don’t ask for so much information that you exhaust them or scare them off.

* Prompt welcome. Your welcome e-mail should arrive while the subscriber is still actively engaged. Any delay and you increase the risk that you are no longer top of mind. Also, be willing roll out the red carpet; your new subscribers are also among your best subscribers. They are more likely to open, click, and buy than someone who has been on your list for a couple of weeks or more. Thank new subscribers for signing up, confirm that they would like to receive promotional e-mails from you, and offer them a link to your preference center. You should also consider offering a token of your appreciation—a special offer that is available only to new e-mail subscribers.

Hopefully we’ve convinced you to take some time to vacuum under the couch cushions, clean out the gutters, and wash the windows of your e-mail program. Now you’re ready to get back to the fun stuff. It’s easy to take your eye off the basics when you’re focused on new, ahead-of-the-pack programs—but it would be a shame to lessen the impact of your e-mail simply because of a few dust bunnies.

Alanna Vallee is an account director with e-mail marketing services provider e-Dialog.

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