July 15, 2007

Multichannel Retailing Week: E-Mail Marketing

The multichannel e-mail marketing manager faces a unique set of challenges that are not well understood by those not working in multichannel retail e-mail marketing.

Within the e-mail marketing industry, the focus isn't always on driving increased sales through brilliant merchandising or creative presentation. The multichannel e-mail marketer learns about the importance of targeting strategies, plain text vs. html, double opt-ins, unsubscribes, trigger-based messages, alerts, spam filters, rendering issues, personalization, preview panes, blacklists, preferences, animated GIFs, open rates, click-thru rates, conversion rates and a veritable plethora of technical terms plague the e-mail marketer every single day.

Those who are not actively involved in e-mail marketing at multichannel retail organizations could care less about any of the issues that consume the time spent by multichannel e-mail marketing experts. They believe that it costs essentially nothing (after accounting for fixed costs) to send an e-mail campaign to a customer.

Merchants want e-mail marketers to feature their specific product or department in every single e-mail campaign. They want all customers to see their product, multiple times per week. They want to "expose" the customer to the merchandise they are offering. Targeting is a compromise, one that drives increased sales and profit. But targeting doesn't make merchants happy, because their merchandise is not being featured to the entire audience.

So the multichannel e-mail expert does their best to make compromises, and spends considerable time explaining targeting strategies. Merchants blame multichannel e-mail experts if the merchandise doesn't sell well, believing the wrong customers were targeted.

One of the biggest problems facing multichannel e-mail marketers is what I call "integrated measurement". E-mail marketing systems are often set up as separate systems from the rest of the database marketing infrastructure. This creates significant challenges for the multichannel e-mail marketer.

First, e-mail marketing does drive sales to the retail channel. The e-mail marketer is given access to open rate, click-thru rate and conversion rate information over a short period of time, say twelve hours. The e-mail marketer generally sees these metrics for only the online channel. Response that occurs in retail stores, or even the telephone, are often not measured by e-mail marketers.

Worse, response to e-mail campaigns is "terrible". We always hear that e-mail ROI is far better than in any other marketing channel. That will always be the case when the incremental cost of sending an e-mail is essentially zero. Multichannel e-mail marketing expert knows that only one in seven-hundred customers who receive an e-mail actually buy something. An e-mail campaign will drive between $0.15 and $0.35 of sales per e-mail. A catalog will drive $1.00 to $10.00 of sales per catalog. This really hurts the multichannel e-mail marketing expert. Merchants know that other forms of advertising drive better sales volumes --- and consequently, treat the multichannel e-mail marketing expert with less respect than is deserved.

Over the next ten years, the multichannel e-mail marketing expert will be well-served by integrating with the rest of the organization. Test/control measurement techniques will reveal that e-mail marketing drives equal amounts of sales to the online and retail channel --- causing multichannel e-mail marketing experts to realize their campaigns are twice as effective as previously believed to be. Measurement will focus more on the long-term relationship building aspect of e-mail, less on the impact of re-shuffling sales into a twelve hour period of time following the delivery of an e-mail campaign. As online marketing becomes more expensive, as catalog postage rockets skyward, the multichannel organization will better appreciate the potential of e-mail marketing. The multichannel CFO will invest in database marketing integration between catalog, online and e-mail marketing. Personalized and dynamic e-mails will eventually become the norm --- and ultimately, e-mail and RSS will become essentially the same marketing tool.

Strategically, the multichannel e-mail marketing expert will spend less time with his/her "flock" of professionals across the industry. The multichannel e-mail marketing expert will learn the communication style necessary to be highly effective, and will earn more respect within a multichannel business. Communication will focus more on the annual contribution of e-mail campaigns (which is significant), less on the campaign contribution of e-mail (which is largely insignificant). Communication will be holistic, so that store employees understand that they are benefiting from e-mail.

Eventually, we multichannel retailers will learn that e-mail is a great tool for communicating events and product introductions, and a good tool for complementing sales of individually advertised items. With luck, we'll get away from using e-mail as a "sale", "promotion", "free shipping" and "%-off" marketing tool. We will instead invest the time in developing unique merchandising strategies and creative presentations that truly increase sales, and set our business apart from others employing "best practices" that result in a feel of "sameness" across retailers. When this happens, multichannel e-mail marketing experts will be revered.

Your turn. What are the multichannel e-mail challenges that you face in your multichannel retailing organization?