- Does The Channel Scale? The answer, undoubtedly, is no. For most businesses I work with, e-mail comprises somewhere between 2% and 10% of total annual sales ... usually closer to 2% than to 10%. You could really do a spectacular job of e-mail marketing, and you might increase sales a few percentage points. So this isn't going to be a channel that carries the freight. E-mail is a support channel, an important role, but a role of support.
- Does the channel do a good job of acquiring new customers? In most cases, the answer is no. The number of new customers from e-mail, on an annual basis, are generally under five percent of the total number of new customers ... and for many businesses, under two or three percent. This tells you that e-mail isn't a channel that you use to start new relationships (though it certainly could be if the right formula is discovered), and is probably not a channel you'd launch new businesses or product lines with. Your mileage may vary.
- Does the channel aid in profitable customer retention? Yes and no. E-mail doesn't dramatically move the annual customer retention metric --- without an e-mail marketing program, the retention rate might be 40%, with a program, maybe 44%. However, the channel has essentially no variable cost, so all the sales (if the channel isn't a discount/promo/free-shipping channel) flow through to profit at a high rate.
- Does the channel aid in customer service? Maybe a little bit, though certainly not in the way that folks use social media to solve consumer complaints. Because e-mail isn't a "human" channel, it fails many of the customer service tests that retail and call centers pass.
- Does the channel feed other channels? Yes, and other channels feed e-mail. Many businesses acquire e-mail addresses through their catalog channel and through their retail channel. So e-mail is utterly dependent upon those two channels for survival. However, e-mail feeds other channels. Retailers know that half of their e-mail generated sales happen in stores, so that's a big deal. And e-mail fuels paid search --- you send an e-mail marketing campaign to a customer, and the customer goes to Google to do some research. Google loves e-mail marketing! Finally, most catalogers know that up to half of their e-mail orders come from a customer who received a catalog in the past "x" days, so e-mail can feed the catalog channel. E-mail makes your online marketing executive look good! As a result, e-mail is an important link in the "channel chain".
- Does e-mail marketing generate profit? Oh yes! With essentially zero variable cost (don't give me that argument about the need to hire people to execute e-mail, all marketing channels have to hire people to get the work done), e-mail flows-through to profit at the best possible rate. I know of catalogers who break even on nearly all activities --- making all of their profit from e-mail marketing, even though e-mail marketing only represents ten percent of total annual sales.
- Does e-mail marketing educate customers? Yes again! In fact, if we're not using e-mail to educate customers, we're failing. E-mail marketing is maybe the most inexpensive way to teach customers about us. In many ways, we ruin e-mail marketing by trying to "sell" all of the time --- using our open rate and click through rate and conversion rate metrics to go to the lowest common denominator of free shipping and %-off promotions.
- What is the exit strategy for e-mail marketing? Oh, this is a delicious question. Under what circumstances would you shut down your e-mail marketing program? If I asked 100 of you this question, I doubt more than 5 would say that e-mail marketing should be shut down, ever But please, be realistic. If your e-mail list was declining by fifteen percent a year, would you consider shutting the channel down? If productivity fell to $0.05 per e-mail (as many of you tell me is happening), would you just stop wasting time and give up, allocating resources elsewhere?
- What is your R&D strategy for e-mail marketing? This isn't as simple a question as "we're testing subject lines". Do you have an R&D strategy that includes completely ending your current version of "creative", scrapping it for something so new and different that you'd frighten your e-mail marketing manager? How about the 80% of e-mail subscribers who don't click on anything ever --- why keep doing the same thing over and over and over and over 104 times a year, might this represent an R&D opportunity --- you're certainly not risking any sales here?! Anyhow, every Channel Advisor has an R&D strategy for e-mail marketing, whether the e-mail marketing manager wants to honor it or not.
- Does e-mail marketing lend itself to in-house expertise or vendor expertise? Oh boy. OH BOY! The answer is yes. Your in-house staff know how to work with merchants, they know how to work with that pesky inventory manager who wants to keep dumping overstocked goods in a third-weekly e-mail campaign. Your in-house staff knows that the CFO is demanding a 5% sales increase NOW and therefore you have no choice but to add the third weekly e-mail campaign that the inventory manager is waiting to pounce on. But wait! Your vendor knows the best targeting algorithms. Your vendor knows more about getting the e-mail in the inbox than anybody. Your vendor knows the right days of the week to send e-mails, and knows how many is "too many". Your vendor might hurt sales by asking you to reduce frequency or to trim your e-mail marketing list. So you're best off going with both in-house and vendor expertise, in my opinion.
Now, given this profile, how would you, the newly appointed Channel Advisor of your company, propose using e-mail marketing? How would you educate each and every employee in your company about the important (but support-level) role that e-mail marketing plays?
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