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Welcome to second-generation e-mail

Geoff Linton
Vice-President, Inbox Marketer Inc.
519-824-6664 www.inboxmarketer.com

People spend more time in their Inbox than on a Web browser, but did you know that e-mail messages outnumber phone calls by 10 to 1? Or that there are 50 times more e-mails sent than letters? E-mail is now the world's largest direct communications medium and has become a powerful marketing tool.

The reasons reflect its three chief advantages. Compared to other communications tools: E-mail is faster (it's hard to beat 48-hour turn-around times on direct marketing campaigns); better (targeted campaigns typically generate 50% to 70% open rates and 10% to 25% clickthrough rates), and, cheaper.

But don't let these natural advantages mislead you. E-mail is easy, marketing isn't. At Inbox Marketer, we call the difference between blindly blasting messages and deploying with purpose strategic e-mail marketing.

In a January 2002 report on "Second Generation E-mail," Forrester Research cites the shift to using better targeting, dynamic personalization and sequentially testing e-mail offers and creative. Early adopters include JC Crew, which now generates more than 50% sales from online sources using these techniques. Procter & Gamble is another traditional marketer that has adopted e-mail with a vengeance, using it to effectively build relations with many diverse market segments.

Unfortunately, P&G and a handful of others are brilliant exceptions. Most campaigns are still very much "firstgeneration" e-mail, or broadcast messaging to undifferentiated lists. Few marketers write formal e-mail marketing plans with specific goals, contact strategies, benchmarks or annual forecasts. Even fewer track by customer segments or have conducted statistical database tests. The hope is that this will change quickly now that the industry— alarmed at collapsing banner CTRs—increasingly insists on performance.

E-mail marketing works best when used with planning and precision, and the ingredient that makes this possible is database marketing. Strategic e-mail marketing is the application of database marketing principles to e-mail.

Databases feed information directly into e-mail deployment systems, and email automatically populates and updates the database as the responses roll in. Patterns can then be analysed to generate more targeted marketing and sales programs, resulting in increases in marketing ROI. The combination creates a closed loop perfectly suited to knowing and serving customers throughout their lifecycle.

In fact, second-generation e-mail marketing can:

• Identify what your best customers have in common
• Target programs to prospects that share those characteristics
• Identify which market segments have the greatest long-term value
• Highlight buying "triggers"
• Calculate the average lifetime value of customers
• Reward most frequent customers
• Retain key segments

The process involves first identifying a likely prospect, gradually persuading that prospect of the need for your product, and then converting them to a repeat customer willing to refer you to other prospects of like mind. Although the cycle is continuous and concurrent, each phase demands a different set of activities, and different types of e-mail communications.

In this way, by selectively and strategically harnessing the world's largest communications medium, marketers can attain the promising results of the secondgeneration e-mail phenomenon.

You may be a "first-generation" e-mail marketer if...