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Why email marketing is about more than ROI

Author's avatar By Mark Brownlow 11 Aug, 2011
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Can email marketers learn from how social media marketing is evaluated?

In a recent article on evaluating social media, Jay Baer argues that our obsession with high-visibility numbers like "Followers" or "Likes" leads us to make false assumptions and wrong marketing moves.

At this point, some email marketers might feel the urge to smirk and point fingers at the supposed superficiality of their social media colleagues. But those same colleagues would silence the laughter with two words: open rates.

The metrics debate would then get out of hand, forcing the email marketer to pull out the big one: R-O-I.

Any self-respecting article on "why do email marketing?" doesn't take long to mention surveys showing the estimated ROI of email as somewhere north of 4000%.

This focus on profits and costs is admirable. But does our ROI obsession properly reflect email's value? And does it also lead to less-than-ideal decisions?

I believe the answers are no and yes: here's why...

When we focus on ROI, we largely focus on revenues, profits and costs associated with interaction with a single email: a direct response focus. It limits appreciation of what your email does to the short-term, measurable, direct response to each individual email.

That's partly the nature of the game: we focus on what we can see and measure. And email is primarily a direct response tactic for many organizations.

But that narrow focus can lead to decisions on email design, strategy, tactics and organizational management that neglect the other impacts email has.

You send email, recipients get emails

We tend to think of the next email or the next campaign as a standalone effort. It goes out, we get a response, we move on to the next one.

Recipients, however, don't receive each email as a first-time experience with your messages, unless you're maybe only sending one a year.

Each email they get is one of a series of communications from your organization, each contributing to a collective awareness, impression/image and response. This is hardly a new concept in marketing and it's often mentioned as part of the benefits of social media marketing, but  often a forgotten one in email.

There are various implications here for using email to help with branding, recipient "conditioning" and indirect response...

1. Branding

If you accept a role for marketing messages in driving perceptions of an organization, then every email clearly contributes in some small way to that perception.

This is why marketers talk about email style, layout, offers, colors, content and copy that match the sender's brand...that remain "on message". We also talk about setting and meeting the expectations set when people sign-up to our lists.

Control across all emails

This is all great and we can be proud of the carefully-designed marketing emails that do the "branding" job, as well as driving response. But it's not just each new marketing email that counts towards the series of emails each recipient associates with a sender.

So, for example:

  • Review your transactional emails (order confirmations, thank you messages, shipping notices etc.) Are they also "on message" or is the plain text confirmation written by IT rather spoiling the effect?
  • Review older autoresponder or trigger emails (welcome messages, cart abandonment emails, birthday greetings etc.) you "set-to-forget" in 2007. Are they "on message" or do they feature the old logo you replaced in 2010?
  • What other emails are going out to recipients? What other departments are mailing list members in some other capacity, and how does that fit with the overall image you'd like to present?

Put a sharper focus on design and delivery

The more email gets delivered, the more likely you are to get a response (surprise!). And the better your email looks in all the different display environments out there, the more likely you are to get a response (surprise!).

But we can get a little lax on those points, because you can get an adequate response and a high ROI even when delivery rates are not brilliant and your design looks a little broken on the iPhone.

Recalling the role of email in driving perceptions helps ensure we don't get lax. Recipients expect your email to arrive. And "on message" email design is only "on message" if it looks like you intended it to look: these tools can help ensure that.

2. Recipient conditioning

The stream of emails you send also impacts how people think about your emails. Well, yes, obviously. But there are implications here that rarely get attention.

Do we take that conditioning into account when we assess the results of an individual email?

If your recent offers were fairly banal, fewer people will give attention to the next one. So it may be a "superb" offer and email execution, but the response is less than deserved. It's not necessarily the subject, offer or copy that deserves criticism or failed, but the emails that preceded it.

Equally, if recent offers were fantastic, more people will give attention to the next one. So it may be a "poor" offer and email, but the response is better than deserved. Again, maybe praise is not due to the subject, offer or copy, but rather to the emails that preceded it.

This conditioning is also a problem when it comes to reactivation campaigns or email revamps. Familiarity works against you. You've trained people not to pay attention, so how do you prove that you deserve that attention with your special reactivation offer or improved email program?

I'm open to suggestions, but it's a tough nut to crack.

The advice from Loren McDonald seems pertinent here. He argues that the debate on how to define, treat and reactivate inactive subscribers is important, but really the focus should be on reducing the potential for new and existing subscribers to go inactive in the first place...

3. The nudge effect and "out of email" response

Each email you send out is a reminder that you exist and a reminder of what you sell.

Alchemy Worx have researched the impact of email's "nudge effect" on recipient purchase behavior.

They find, for example, a spike in purchases from list members immediately following a send. Well, of course! But this spike is also observed in list members who do not interact with the email.

In other words, responses to email don't always go through the traditional open-click-buy path. They might simply type your web address into their browser, or call your order hotline, visit your offline premises, or complete the catalog order they had half finished.

In an interview with SmartInsights.com, Alchemy Worx's Claire Rollinson said:

"If you think of each message as delivering a subtle yet powerful brand impression and that you have 12, 52 or more opportunities a year to put your message across you would start to realize that the unopened emails are as important if not more important than the ones that get opened! Particularly as we live in a multi-channel world."

Customer analytics expert Kevin Hillstrom highlights the role of email in driving search traffic to your website:

"A lot of folks learn that between 20% and 50% of their search program is caused by other marketing activities"

He argues that email should receive credit for pushing sales through search. But... also that it should be held accountable for the costs, for example when triggering searches that result in PPCSE ad clicks and produce no sale.

Email's impacts work both ways.

Email drives "outside of email" response, but it also drives additional costs (like those PPC search costs) and it gets credit for sales that might have happened anyway. I never renew my domain names until my domain management company sends me a discount offer. They'd make more money from me if they didn't send me promotional email.

Suddenly our ROI calculation based on direct email response is looking a little flaky.

A true understanding of email's value lets you make better decisions on investment in email and what you actually put in those emails. As Claire Rollinson notes:

"...if you sent an email on Friday with the Subject line "20% off all Australian wine in store this weekend" you would not consider the unopened emails as wasted."

But how do you get that understanding? How do you measure the true impacts? The answer, says Kevin Hillstrom, is through email holdout tests.

Author's avatar

By Mark Brownlow

Mark Brownlow is a former email copywriter and publisher of the retired Email Marketing Reports site. He now works as a lecturer and writer. Connect with him via Lost Opinions.

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