Low cost high volume emails can be very temtping for marketers looking to push a short term message- but may do long term damage to building a loyal customer base. Matt Button, Head of Marketing Strategy at Underwired, warns against a ‘one size fits all’ approach to email marketing, and why segmentation could yield better results.
Email is easy to do compared to Direct Mail – campaigns are simple to develop and can often be built, tested and sent in a matter of days, if not hours. It’s much cheaper too – with no print or postage costs – even on a cost per thousand basis it’s very cost effective. It’s because of these reasons that email marketing is now a core communication channel for many businesses and not just online. Nevertheless, its speed and cost efficiency is both its strength and its weakness.
Objectives and results
The flexibility of email marketing often leads to it being used as very blunt weapon. For instance, it’s regularly used to hammer home short-term offers that are judged on a short-term basis. But what value does this really bring?
Campaign results focus on four areas: volume, opens, clicks and conversions. However, because it’s now so cheap to run campaigns, the return on investment (ROI) is usually always ‘positive’. Rarely do Chief Marketing Officers (CMOs) question the immediate results to examine the long-term impact of email programmes. Do the campaigns enhance customers’ perceptions and attitudes towards the brand? Is the channel used to achieve other objectives, for example, measuring satisfaction? Or research? Or enhancing customer knowledge? Or is the channel simply used to continually shout “SALE” at customers?
Most email service providers (ESPs) offer to manage campaigns for clients on a volume basis, so it’s in their interest to maximise the volume and frequency of contact with consumers. While the immediate cost to the client may be relatively low (certainly compared to media costs), the true cost of pursuing a volume-driven strategy is often hidden. It’s only apparent over time, but what this type of approach often causes is a slow but steady decline in the customer base as recipients cease to engage with emails and eventually opt out.
Understanding customers
It’s clear to see that understanding the impact on customers’ behaviour over time is critically important. For example, how does the overall rate of unsubscribers rise and fall? What is affecting it? Is it increasing or decreasing? Who is unsubscribing and why? And, at what point in their relationship did they decide to leave?
Knowing the answers to these questions is vital to help shape and control the volume/frequency of campaigns whilst informing decisions on messaging too. For example, do customers stop opening their emails after three months of receiving the same, weekly email newsletters? Armed with this knowledge it becomes easier to decide what messages to communicate in your campaigns. Nevertheless this knowledge still has to be combined with an understanding of who the customers are and what interests and inspires them.
Case Study: Fantasy Football League
One example of how a very simple use of customer knowledge can have a dramatic impact on campaign results is when we were appointed by News International to critique its eCRM strategies, in order to increase the engagement and revenue from The Sun’s Fantasy Football league.
It was already the UK’s biggest league but had a one size fits all, volume-based approach to its campaigns. Charged with improving the ROI we took a good look at the customer data and subsequently introduced a very simple segmentation, separating the two very clearly defined groups of customers.
There were the avid football fans who played the league with a single team which included all the star players of the league; they were playing because they loved football. Then there were customers who had multiple teams who were playing the odds in order to win the £1million prize.
After identifying these groups we adjusted the messaging of the campaigns accordingly: we talked to football fans about football and we talked to the prize chasers about spread betting with technical tips and about running multiple teams.
After moving away from a volume-based, ‘one size fits all’ approach to email, we saw a 32% increase in ROI and a 16% increase in Average Transaction Value, which nearly doubled the growth in revenue from digital channels.
Getting best results
Customer segmentation doesn’t have to be a complex process. It starts from acknowledging that not all customers are the same and by understanding that each customer group has different needs and motivations. Once you get to grips with this, you can tailor communications to make them more relevant, allowing you to boost your ROI.
While a volume-based, ‘one size fits all’ approach may appear simple and effective in the beginning, switching to a segmented, knowledge-driven marketing strategy will help to retain customers for longer and improves the efficiency and effectiveness of email. In turn this can help brands to boost customer loyalty and ultimately brand advocacy too.
By Matt Button
Head of Marketing Strategy
Underwired
www.underwired.com/
