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W H ITE PA PER | 2 0 0 4
E-mail Marketingas a Relationship
StrategyThe Four Steps to High Im pact
E-mail Marketing
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2
Ma rketers agr ee: Toda ys business lan dscape has dram at ically chang ed. Faced with
consumer frustration over spam ,comp etitive e-marketing technologies and recent legislation,
companies are struggling to establish the right mix,m edia and messaging to effectively con-
nect w ith p rospects and custom ers. For e-mail marketing in p articular, new rules signify th e
end of m arketers si t t ing on t he fence,w ait ing unt i l next q uarter or next year to im prove
e-mail init iatives.
For years, m any decision m akers knew th ey shouldpay more attention to t heir e-mail cam-
paigns to capture ongoing value.But the channel was too po pular with custom ers,to o easy
to imp lement and com paratively inexpensive to m erit drastic action. Com panies were left
on their own t o determine to wh om ,w here and when to send e-mail marketing campaigns,
oft en relying on results from increased m essaging volum e or flashy creative. Organizations
now realize these strategies no long er wo rk.
Yet d espite new challenges,e-mail m arket-
ing remains a highly powerful customer
relat ionship m edium. Viewing the current
business environment as an opportunity,
success relies on t he abilit y to d ifferentiatean e-mail marketing approach by design-
ing i t in the context of a custom er-based
bu siness strateg y.Todays com panies must
focus on creating clear, strategic decision
cri ter ia around their e-mail market ing
efforts to ensure that they are not only
effective,b ut also intelligently building t he
custom er relationship.
E-mail Marketing as a Relationship Strategy is a guide for combining leading customer
relationship strategies with best practices within e-mail marketing. It begins w ith a look atth e mod ern e-mail marketing landscape and an examinatio n of its sharpest challenges.This
is followed by Four Steps to High Im pact E-mail Marketing, designed to help d ecision
makers surpass the challenges and achieve success.Throughout the report are examples
of b est-in-class e-m ail marketin g app roaches,in cludin g a case study from Skechers USA,Inc.
E-m ail Marketingas a Relat ionship Strategy
CONTENTS
Tracking th e Trend s:The Ongoing Prom iseof E-mail ...................................3
Case Study:Skeche rs USA, Inc..................5
Four Steps to High ImpactE-mail M arketing
1. Think CustomerExperience...........................6
2. Make Privacy Protectiona Part o f Your BrandProm ise................................7
3. Ensure RecipientsKno w You ............................8
4. Mea sure Imp act ................9
Con clu sio n ............................10
Tools and Resources..........11
Glo ssary .................................12
200 4 Carlson M arket ing Grou p. Pepp ers & Roger s Group is a Carlson M arket ing Grou p co mp any. All ri gh ts pr ot ect ed an d reser ved.
FOUR STEPSto High Imp act E-mail Marketing
1. THINK custom er experience
2. M AKE privacy protection apart of your brand prom ise
3. ENSURE recipients know you
4. M EASURE consumer impact
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E-mail M arketing as a Relationship Stra
WHITE PAPER2004
200 4 Carlson M arket ing Grou p. Pepp ers & Roger s Group is a Carlson M arket ing Grou p co mp any. All ri gh ts pr ot ecte d an d re served .
The e-mail story is one of rapid global adoption and fast-
emerging oppo rtuni t ies. Thoug h i t had existed for two
decades in no n-comm ercial forms, e-mail caught f ire in the
1990s to become a universally accepted communication
channel.The year 1995 marked the arrival of the electronic
age as the quantity of e-mails sent outnumbered written
po stal letters.
Adopt ion, along with th e inherent benefits of e-maillow
cost, ri f le-shot m essaging, greater eff iciency, measurabil i ty
and high response ratesenticed marketers to seize the
comm ercial opportun i t ies of the channel . Opport uni t ies
rose as e-mail became capable of reaching prospects and
custom ers wh erever, wh enever and in whatever form th e
recipient preferred,from PC to wireless device,HTML or text
format. Full of promise, e-mail marketing grew into a mu lti-
bi l l ion d ollar industry.
A changing e-m ail landscape
That prom ise is still there, bu t m arketers mu st address severalchallenges. The sheer volum e of offers in th e marketp lace is
one. The average U.S. consum er is hit b y rough ly one m illion
m arketing m essages per year across comm unication s med ia,or
about 2,750 each day.1 E-mail marketers must break through
the d in to comp ete for a share of the customers attention .
Alternative e-marketing technologies are also impacting
e-m ail. For in stance, RSS (Rich Site Sum m ary or Really Sim ple
Synd ication) allows users to retrieve m essages from com pa-
nies that provide in formation feeds. These feeds bypass
e-mail f il ters that can p revent content from being delivered.
Enablin g p ull instead o f pu sh techno logy, RSS allows users tosubscribe on ly to m essages they want . Expert s estim ate that
RSS is a year aw ay from m ainstream use.
The projected growth of Internet Service Providers (ISPs)
creating default settings to remove HTML ads from e-mail
new sletters must also b e considered.M icrosoft Ou tlook 2003,
for examp le, already op erates th is way. Unless users choose
oth erwise, any e-newsletters received will no t d isplay HTML
graphics.Along with eliminating an eye-catching advertising
medium,this will prohibit marketers from accurately measur-
ing the receipt o f HTML versions of th eir newsletters.
Arguably the greatest challenge facing e-mail marketers
to day is spam. Jup iter Research repo rts that t he average U.S.
online consumer received 3,920 unwanted commercial e-mail
messages (UCE) in 2003.2 This deluge has made the job of the
legitimate marketer more comp lex.In a stud y conducted b y the
Pew Internet & Am erican Life Project,60% of respon dent e-mail
users say spam h as redu ced th eir e-mail use in a sign ificant w ay
and 52% o f respon dent s say spam has made th em less trusting
of e-mail in general.3
Spam has in turn dr iven
regulat ion, most notab ly the
CAN-SPAM Act , which went
into effect on January 1, 2004.
The act has helped to slow
unscrupulous marketers by
regulating th e use of e-mail tosolicit con sum ers. But CAN-SPAM and th e e-mail m essage
deluge has made the job of the legitimate marketer more
complex.Compliance is costing companies valuable resources
in the forms of t ime,m oney and p ersonnel.New technologies
such as filters and b lacklists are making deliverability m ore
difficult. As the legislation takes hold w ithin th e marketing
departments of legitimate companies,spammers are skirting
regulation and finding new ways around anti-spam tech-
nologies,such as zombie spam and ph ishing.
Posing solutionsSom e believe a do-no t-e-mail registry is th e answer.Alth oug h
a registry w as called fo r by CAN-SPAM, a Jun e 2004 repor t b y
th e Federal Trade Com mission stated t hat a registry wo uld n ot
stop spam. In fact, conclud ed th e FTC,t he registry could lead to
more UCE as spammers could use it to capture new e-mail
addresses. Rather, emp hasized FTC Chairman Timo thy Muris,
send er authen tication system s are required for det errence.
3
Trackin g the Trends:The Ongoing Prom ise of E-m ail
Nucleus Researchfound that companieswill experience $ 1,934in lost produ ctivity peremployee in 200 4 dueto spam, which is overtwice the 2003 level.4
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E-mail M arketing as a Relationship Stra
WHITE PAPER2004
200 4 Carlson M arket ing Grou p. Pepp ers & Roger s Group is a Carlson M arket ing Grou p co mp any. All ri gh ts pr ot ecte d an d re served .
In l ine wi th the FTCs cal l , the push to solve spam has
broug ht a series of authent ication tools from the p rivate sec-
tor aimed at separating th e spamm ers from legit imate mail-
ers. Com panies are turning t o op en-p roposed Internet stan-
dards such as Sender Policy Framework (SPF) to commercial
solutions such as Microsoft Caller-ID (which is slated to
merge into SPF to create Sender-ID) and Yahoo!s
Dom ainKeys.By storing record s in t he Dom ain Name System
(DNS), th ese tools identify w heth er a server is perm itted t o
send e-mail for a particular do main. Recently,fo ur to p ISPs
Microsoft, America Online,Yahoo ! and EarthLink jo ined fo rces
to create common technical standards around authentica-
tion. Nevertheless, states the FTC, authentication solutions
may take two years or m ore to t ake hold.
Meanwhile, compliance costs and the persistence
of spam threaten to sap the productivi ty of legit imate
m arketers. Nucleus Research found that despite regulation and
spam -blocking t echnologies,com panies will experience $1,934
in lost p roductivity per employee in 2004 due to spam, more
than twice the 2003 level.4 Mo reover, Jup iter Research revealed
that t he cost of erron eously blocked e-mail (messages sent t o
recipients who have given permission to receive it) will reach
$419 mi l l ion in 2008, up f rom $230 mi l l ion in 2003.
Creating opport unity
While th ese challenges are steep, th ey also offer op po rtu nities.
As th e regu lation du st sett les,and ant i-spam t echnolo gy catch-
es up w ith d emand, savvy marketers can act on new strategiesfor using e-mail to augment custom er relationships.And e-mail
marketing show s no signs of slowing dow n. Jupiter Research
projects e-mail marketing spending to reach $6.1 billion in
2008, tripl ing the 2003 num ber. By identifying custom er-
focused, e-mail marketing strategies, marketers will be in a
strong position to capitalize on t he next p hase of e-mail oppor-
tun ity,using e-mail as a powerful relationship tool.
Wh at is CAN-SPAM ?
Cont rolling t he Assault of Non-Solicited Pornography and
Market ing Act , a lso known as CAN-SPAM, became
effective Jan. 1, 2004. It has several provisions to clearly
identify e-mail senders while giving recipients control
over receiving f utu re messages. Som e specifics of t he
federal law include:
Prohibit s using misleading from or subject headers
in e-m ail m essages.
Requires marketers to iden tify t heir ph ysical location
by including t heir postal address in the text of t he
e-mail m essage.
Requires an op t-out link in each m essage,w hich m ust
also give recipients the op tion of t elling senders to
stop all segmen ts of their m arketing campaigns.
Allows for suits to b e broug ht by ISPs, state atto rneys
general and t he federal governm ent.
Carries penalties of u p t o $250 per spamm ed e-mailmessage,w ith a cap of $2 million th at can be trip led
for aggravated violations.There is no cap on penalties
for e-mail sent w ith false or d eceptive h eaders.
Defend ants can also face up t o five years in pr ison.
150
200
250
300
2000 2001 2002 2003 2004 2005
E-M AIL ADVERTISING SPENDIN G IN THE U.S., 20 00 -200 5
(IN M ILLIONS)
Despite growing constraints facing e-mail marketing, companiescontinue to increase spending on e-m ail advertising, finding it avaluable customer relationship manag ement tool.
Source:eMarketer,April2004
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Skechers USA, Inc. prides itself on its young, hip l i festyle
brand. Known for i ts t rendy footwear, including oxfords,
sandals, sneakers and boot s, the Manhat tan Beach,
Calif.-based com pany sells pro du cts in departm ent, specialty
and outlet stores in more than 100 countries and via the
com pany s Web site.In 2004,e-mail market ing em erged as an
increasingly critical component of the Skechers business
model and brand promise by driving online sales as well as
retail store traffic.
E-mail marketing actually m atches with the b rand image
we are creating in t he m arketplace, says Geric Joh nson, th e
comp anys vice president o f direct marketing. That con-
sum er is Internet savvy and in to m odern form s of com mu ni-
cation.We felt a consum er would demand that a trusted andrelevant lifestyle brand must be considered a legitimate
source for apparel, so w e want to interact w ith consumers in
th e ways they p refer.
Building the Skechers brand
For Skechers, sim ply having an inform ational Web site w as
not sufficient enoug h to d ifferentiate the brand; e-mail mar-
keting actually became a brand statement.While we have
always had some basic form of e-mail com mu nication to con-
sum ers, i t became crit ical to ou r new business model w hen
we eliminated our catalog communication in the fal l of2001, explains Johnson.To continue grow ing business with-
out th e catalog,Skechers agg ressively emb raced e-m ail mar-
keting to d rive consumers to p urchase via the skechers.com
Web site or at retail stores.
Yet, Skechers existin g e-mail app lications and servers were
not adequate to support this growth mod el, fal l ing short of
serving consumer expectations.At the t ime, our in house e-
mail server would no t suppor t anything b ut a text m essage,
we h ad no camp aign analytics oth er than a tracking vehicle
that would allow Skechers to associate e-mail campaigns
somew hat t o an in crease in sales, says John son.I needed t o
know mo re information: How m any consumers were receiv-
ing, cl icking and op ening th e e-mails? What were they pu r-
chasing and wh at were th eir needs?
Beyond standard capab ilities;
beyond standard results
Skechers conclud ed it w as imp erative to upg rade e-mail mar-
keting to p rovide intel ligence and im prove commu nications
wi th th e consumer. The comp any chose RightNow
Technologies permission-based e-mail solution , RightNow
Outbo und. Skechers uses Outb ound with RightNow Service
to p rovide a consolidated view of all inboun d and out bou nd
consumer interactions.
Recognizing a need for a collaborative customer-focused
application t hat wo uld integrate Web service and out boun d
custom er com mu nicat ions, Skechers began i ts journey.
Johnson explains, In 2003, we emp loyed HTML, analytical
tracking and testing.These services wen t b eyond our existingin-house capabil i t ies. In Apri l 2004, we d ispatched ou r f irst
e-mail marketing camp aign, sent to 600,000 individuals.
The object ive of the campaign was to dr ive t raf f ic to
Skechers 125 retail stores as well as increase com m erce
throu gh th e site.
Johnson claims an impressive 25% open rate from the
camp aign. In addi t ion, the campaign was 25% more suc-
cessful in terms of resulting sales increases than the best
camp aign we conducted wi th our in-house appl icat ion, he
says.Today, Skechers permission-based datab ase of nam es
consist of more than 800,000 consumers registered atSkechers.com or collected at the point-of-purchase in retail
stores and subm itted via produ ct registration cards.
The secret to Skecherssuccess? E-mail marketin g com mu -
nications are meaningful and relevant, from a content, new
prod uct o r offer perspective, says Johnson.We cont inue to
make an effort to respon d to wh at custom ers want and need.
For us,e-m ail marketing is a true com pet itive advantage.
5
200 4 Carlson M arket ing Grou p. Pepp ers & Roger s Group is a Carlson M arket ing Grou p co mp any. All ri gh ts pr ot ecte d an d re served .
E-mail M arketing as a Relationship Stra
WHITE PAPER2004
CASE STUDY: Skechers USA, Inc.
E-mail marketing actually matches with the
brand image we are creating in the m arketplace.
Geric Johnson, Vice President of Direct Market ing
Skechers, USA, Inc.
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E-mail M arketing as a Relationship Stra
WHITE PAPER2004
200 4 Carlson M arket ing Grou p. Pepp ers & Roger s Group is a Carlson M arket ing Grou p co mp any. All ri gh ts pr ot ecte d an d re served .
Comp anies comm it ted to prof i tably get t ing, keeping and
grow ing customer relationships are moving b eyond regulatory
comp liance and using e-mail more p roactively.E-mail market-
ing remains a very effective tool for cultivating profitable and
loyal relation ships, says Mart ha Rog ers, Ph.D., foun ding part ner,
Peppers & Rogers Group.It is imperative,however,that compa-
nies integrate e-mail marketing efforts within t he context of an
overall customer strategy that interacts with a customer how
and w hen t hat custom er prefers.The Four Steps to High -Impact
E-mail Marketingp rovides com panies with actionable insight
from strategy and execution, to m easurement and results to
raise e-mail cam paign s to t he relationship strategy level.
Step #1 : Think Customer Experience
When used to imp rove the custom er experience rather th an
strictly as a sales too l, e-mail becom es part o f a larger
relat ionship-bui lding plan. In tod ays regulatory c l imate,
e-mai l market ing ini t iat ives must be predicated upon
know ing the custom er base and com mu nicating w ith tho se
customers in a credible way that sustains their interest.
Sending out a large num ber of campaigns witho ut consider-
ing it s imp act on customer relationships,does not g uarantee
higher response rates. While i t m ay produce a short-term
lift, i t w il l more l ikely alienate recipients and weaken the
customer experience.
6
Key Steps to High Im pact E-m ail Marketing
1. GATHER CUSTOMER DATA(both internal and external)
Contact inform ation
Offer,interaction and privacy preferences
Purchasing behavio r
Custom er interaction history
2. DERIVE CUSTOM ER INSIGHT Custom er needs
Custom er value
Custom er feedback
Offers or products customer
will n eed next
3. SUGGEST PROACTIVE ACTION Ensure robust privacy prot ection policies
Develop customized e-mail m arketing campaign sbased on customer n eeds
Refine campaign s based on results and custom er insight
Train m arketing and sales staff o n the value of ap plyingcustomer insight
Report ing & Feedback
Decision-support
Analysis Action
High-impact e-mail marketing relies on leveraging customer insights throughout the e-mail marketingcampaign lifecycle. By applying customer-focused approaches to e-ma il marketing, companies can bett ergenerat e the positive customer experien ces driven by long-ter m, loyal relationships.
4. EVALUATE RESPON SE
Track click-throug h and open rates
Pilot campaign s to test
custom ized content versions
Test content-to-promotion ratio
Elicit direct customer feedback
Gauge level of custom er engagement
CUSTOM ER INSIGHT D RIVES E-MAIL M ARKETING ACTION
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E-mail M arketing as a Relationship Stra
WHITE PAPER2004
Effectively managin g a custom ers experience an ind ivid-
uals total interactions with a brandrequires integration and
relevance. Ideally, marketin g, sales and service shou ld operate
from a central customer profile and use integrated business
rules to m anage custom er interactions. From here, e-mail mar-
keting camp aigns would reflect an individuals most up-to-date
preferences and relevant offers.
While personalization techniques have improved e-mails
relevancy for recipients, mo st campaigns have not m oved
beyond identifying the recipient by name and making an
offer b ased o n a t ransaction analysis. Raising th e relevancy
bar m eans custom izing e-mail campaign cont ent b ased on
an ind ividuals expressed n eeds. Understanding custom er
needs drives insight int o w hy the custom er buys, not just
wh at she bu ys. E-mail can then become m ore relevant in
term s of tim eliness and target ed offers to t he recipient.
When ut i l ized prop erly, e-mail strength ens the custom er
experience and acts as a catalyst for ongoing customer
interaction. In this way, e-mail marketing campaigns act not
only as sales tools, but as building blocks of more p rofi table
and lasting relationships.
Step #2 :
M ake Privacy Protection a Part of Your Brand PromiseThe most valuable representatives of a firms brand are the
prospects and custom ers wit h wh om a comp any interacts. A
recent b enchmark stud y conducted by th e Ponem on Institu te
found that o nly 36% of m ajor U.S.corpo rations view p rivacy as
an impor tant part of th e com panys brand image.When tied to
privacy protection ,b rand can become synonym ous with trust.
As trust increases,custom ers will share mo re inform ation w ith
a companyinformation that comp etitors do n ot h ave.
Most companies know that permission marketing is a neces-
sary and valuable first step, bu t add itional practices are required
to tie privacy protection to brand. Respon sible Inform ationStewardship (RIS) is a more comprehensive organizational
approach to m ove beyond com pliance and treat privacy, infor-
mation security and data protection as an op portu nity to b uild
the trusted relationships that increase revenue,red uce costs and
strength en brand . RIS guid elines ensure that a comp anys infor-
mation use and handling p ractices are aligned w ith b oth busi-
ness goals and w ith t he preferences of consum ers, emp loyees,
investors and business partners.The key practice elements of RIS
are process management, education and training, mo nitoring,
comm unications to emp loyees and custom ers,and enforcement.
Given consum ers sensitivity to spam and tod ays regulatory
environm ent,p rivacy protection and e-mail m arketing initiatives
mu st go hand in h and. Comp anies can use this advantage to
uncover the needs of prospects and customers to create more
prod uctive e-mail camp aigns. Specific marketing standards can
be aligned w ith RIS principles to provid e a framewo rk from w hich
to d esign e-mail marketing campaign s.These include:
Refusing to share custom ers inform ation w itho ut first
receiving exp ress consent.
Raising emp loyee awareness of regulation s aroun d
privacy prot ection as well as all com pany p olicies th at
go above and b eyond comp liance.
Collecting t he privacy preferences of ind ividu al
custom ers and m aking t ho se preferences available
across the marketing d epartment .
Providin g custom ers access to t he inform ation
the comp any has about th em.
200 4 Carlson M arket ing Grou p. Pepp ers & Roger s Group is a Carlson M arket ing Grou p co mp any. All ri gh ts pr ot ecte d an d re served .
7
Black & Decker b uilds wisely
To boost custom er acquisition and retention, hom e
improvement product manufacturer Black & Decker
saw an opportunity to communicate directly with
consum ers,rather than o nly throu gh it s retail product
distr ibution netw ork. With i ts targeting and cus-
tom ization ability,high response rates and lower cost,
Black & Decker chose e-mail to com m unicate it s core
brand values and build custom er loyalty.
The com pany designed a phased e-mail m arketing
program that began with a database acquisition
initiative, targeting relevant profile groups b ased on
seven key questions abou t th eir do-it -yourself habit s
and where they lived.The campaign resulted in click-through rates of 27%, with more than 90% of those
users that clicked t hrough completing the q uestion-
naire. Users that opted into the e-mail subscription
were then categorized according to their do -it-your-
self expertise and a schedule of com m unication s was
customized for each target group.5
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Posting a clear privacy protectio n po licy regardin g th e
use of inform ation across channels,includ ing e-m ail.
Regularly audit ing p rivacy policies against internal
bu siness pro cesses in add ition to m arket standards.
Opt-in a s a way o f life
With RIS prin ciples in hand ,t he first step in creatin g any e-mail
marketing strategy is building a responsive opt-in database.
Enterprises that have been successful in building opt-in data-
bases often rely on a com bination of tactics. Best p ractices
include:
Leveraging existing marketing programs to let
prospects and customers know about the valuable
information you r comp any wants to share.
Avoiding b uying l ists that claim to be opt -in. True
perm ission-b ased lists are difficult and expensive to
develop and maintain,t herefore they are mu ch too
valuable to sell.
Including a link to you r Web sites registration p age
with in e-mail marketing comm unications.
Using other channels trade shows, sales force, etc.
to d irect peop le to you r Web sites registration p age.
Providin g clear instruct ions to m ake it easy forindividuals to opt -in as well as opt -out.
When an individual opts-in, request a l imited num ber of
dem ograp hic qu estion s as well as a needs-based survey
to g auge individuals buying or usage m otivations.Ask
how frequently they w ant to receive e-mail marketing
communications.
Processing bo th h ard and soft b oun ces after each
camp aign to keep your op t-in l ist clean.
Step #3 : Ensure Your Recipien ts Know You
It used to b e that a m arketer could create an e-mail camp aign,personalize the message and press send,fairly confident that
mo st m essages wo uld reach th e intend ed recipients. Today,
these tactics are not enoug h t o d rive impact.Given consumers
frustration wit h m essaging and the rise of spam-filtering tech-
nolog y, increasing the odd s of recipients receiving, open ing
and acting on your e-mails has never been more imp ortant .
Accordin g to Forrester Research o n wh y U.S. online hou se-
hold s open m arketing e-m ails,52% of survey respo nden ts say
they open e-mails because they recognize the sender.6 Over
time,a trusted and profitable customer relationship can then
becom e a m arketers most effective ally in in creasing e-mail
campaign deliverability and respo nse.
Key basic deliverability practices include creating a uni-
form from l ine to guarantee
easy recipient recogni t ion
and identifying a process and
platform to deliver e-mails in
a consistent form at. Working
pro actively wit h ISPs to follow
white-listing policies and cre-
ating reverse name domain
system s goes above basic requirem ents to ensure th at w hat
get s sent reaches th e app rop riate inbox.
E-mail M arketing as a Relationship Stra
WHITE PAPER2004
According to a recentForrester Researchstudy, 52% of surveyrespondents saythey open e-mailsbecause theyrecognize the sender.6
FACTORS THAT D RIVE U.S. ON LINE HOU SEHO LDS
TO OPEN M ARKETING E-M AILS, 200 2 & 2 003
(AS A % OF RESPONDENTS)
2002 200
Recognit ion and Relevance
I recognize the sender: 50% 52%E-m ail fro m a co mp an y I ag reed t o g et e-m ail fro m : 52% 50%
E-m ail about a product Im interested in: 49% 40%
Som ething friends or fam ily m ight like: 23% 26%
Delivery
E-m ail received at hom e: 24% 18%
E-m ail received at work: 11% 18%
I get it first th ing in the m orning: 6% 6%
I get it during lunch or dow n t im e at work/ school: 5% 4%
Subject Line
The sub ject line includes a prom ot ion: 21% 11%
If the sub ject l ine i s personal ized to include my name : 12% 9%
If the subject line is clever or am using: 12% 8%
If the subject line contains the word free: 13% 7%
Sender recognition an d relevance,more than enticing subject linespromotions,m otivate customers to open e-mails from m arketers.
Source:Forrester Research, Ma rch 2004
8
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Step #4 : Measure Impact
Consider this:While a 10% click-through rate is strong,what
about t he 90% who did n ot respond? Performance metrics
such as open and click-through rates or direct revenue will
remain valuable to ols for measuring campaign effectiveness.
But as e-mail is t ied fu rther t o relationship strategy, mar-
keters m ust ask new q uestions to gaug e cam paign effective-
ness:Ho w relevant w as th e cam paigns cont ent t o recipients
needs? Was it targeted at prospects or customers offering
the highest value? Did i t enhance or di lute brand?
Strength en or weaken the custom er experience?
Fresh qualitative measurement practices will help mar-
keters answer these questions. Som e sug gested best prac-
tices include pi loting and testing. Over t ime, the company
can benchm ark perform ance to ensure e-mail camp aigns are
meeting custom er needs and providing a posit ive custom er
experience consistent with
other channels.
The best way to determ ine
i f campaigns are meet ing
custom ersn eeds is to ask th e
custom ers d i rect l y. From
there, ref inement o f fu turecampaigns can take place.
A f irst step i s p i lo t ing the
cam p aig n s t o g au g e h ow
well the customized content with in th e e-mails is matching
up with recipients needs and preferences. Testing the con-
tent -to-promot ion rat io i s another example.D id the e-mai l
contain too m uch of a hard sell? Did the cont ent provide t an-
gible value to the recipient in addit ion to t he offer? Anoth er
valuable practice is creating feedback loops. Some firms
regularly convene a test grou p of customers to act as an
advisory board for th eir e-mail marketin g strategy. By elicit-ing d irect feedback, marketers can mo re confid ently assess
the im pact of ind ividual camp aigns on valuable custom ers
and refine futu re efforts.
In an increasingly pragmatic world, comp anies mu st
understand how to assess the return on investment from
managing t he custom er experience through e-mail market-
ing. These metrics wil l depend on a companys business
mo del, organizational characteristics, the channel in w hich
the customer is having t he experience,etc. In some com pa-
nies,these areas are already calculated. Collectively,how ever,
they contribu te to g auging t he effectiveness of how a com -
pany is delivering against the customer experience in the
context of prod uct, people and process.The impo rtant th ing
is to set m etrics and m easure over tim e.
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TheStreet.com:M ore th an p ressing send
With 16 subscription-based e-mail produ cts and
one million e-mail subscribers,financial-services
content provider TheStreet.com depends on
content relevance and deliverability as a core
comp onent o f its business m odel.
Its new sletter,RealMon ey, allow s subscribers
to view content according to a subscribers
investment style:Investor,Trader or Standard.
Addit ionally, the organization established a
comprehensive set of approaches to ensure
deliverability:
Main tains relation ships wit h key ISPs and
follow s white-listing policies.
Insists t hat subscribers add TheStreet.coms
from address to their add ress books.
Sets up a reverse name d om ain system
so ISPs can recognize the sender.
Creates feedb ack loops w ith AOL,so
if an A OL sub scriber clicks on AOLs spam
butt on, that subscriber is imm ediately
removed from the list.
Honors opt -out requests in th ree days.
Has written CAN-SPAM requirements
distributed to advertisers.7
By eliciting direct
feedback,marketers
can more confident ly
assess the imp act
of individual campaigns
on valuable custom ers
and refine futureefforts accordingly.
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ConclusionThe prom ise of e-mail m arketing remains stron g.To capitalize
on t his opport uni ty, marketers must adapt to a shi f t ing
e-mail landscape. New e-marketing technologies, consum er
frustration over spam and regulation are forcing decision
m akers to re-evaluate how th eir e-mail camp aigns are creat-
ed,d eployed and m easured.
The solution is to ful ly incorporate e-mail into a custom er
relationship strategy. Similar to a cal l center, Web site, or
direct mail camp aign, e-mail is a tool for managing the cus-
tomer experience and cult ivating profi table relationships
w ith in divid ual custom ers.By craftin g clear,strategic decision
criteria aroun d custom er needs, marketers can ensure that
e-mail campaigns are not o nly effective on a camp aign-by-
camp aign b asis,b ut also building a custom er relationship.
Peppers & Rogers Groups Four Steps to High Impact
E-mail Marketing detai led in t his report provide the g uide-
l ines for making t his a reali ty. To bring tog ether e-mail
marketing and relationship strategy, comp anies mu st: Think
custom er experience;Make privacy protection a part of their
brand promise; Ensure thei r recipients know them ; and
m easure imp act.As marketers apply th ese guidelines to their
com pany s e-mail practices and camp aigns,th e results will b e
h igher camp aign p er formance, st ronger brand and an
imp roved customer experience.
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Peppers & Rog ers GroupPepp ers & Rog ers Group is a m anagem ent con sulting firm ,rec-ogn ized as the w orlds leading authority on custom er-basedbusiness strategy. Found ed in 1993 by Do n Pepp ers andMartha Rogers Ph.D.,th e firm is dedicated to helping comp a-nies grow th e value of their business by growing the value oftheir custom er base. With expertise th at cuts across verticalindust r ies, our par tners, consul tants and subject mat terexperts have a deep understanding of the most powerfulvalue levers that drive business results.Our goal is to developand execute strategies that create im med iate return on invest-ment and long-term custom er value.
Led by 1to1Magazine,Peppers & Rogers Groups ind epend entmedia division reaches 250,000 readers weekly with the latesttrends,insights and b est practices driving custom er strategy.
Peppers & Rogers Group is a Carlson Marketing GroupCom pany,headquartered in Norw alk,Conn.The firm has a totalof 14 offices on six cont inent s.
For m ore informatio n visit: www.1to1.com
Right Now Techn olog iesRightNow Technologies is the leading on demand CRM com-pany focused on customer service and e-mail marketing.RightNow improves operational effectiveness with easy-to-implem ent t echnology, replicable best practices drawn fromthe industry's broadest base of successful implementations,and engagement terms that create accountability for deliver-ing q uantifiable results.
RightNow has delivered these benefits to more than 1,000custom ers wo rldw ide such as: Air New Zealand, Ben & Jerry's,Briggs and Stratto n, British Airw ays, Cisco, Dolby Laboratories,Inc ., Pioneer, Raymar ine, Reming ton , Sanyo, Special izedBicycles and m ore than 150 pub lic sector clients including t heSocial Security Adm inistration and the State of Florida.
Foun ded in 1997,Right Now has offices in Bozeman, Dallas,San M ateo,New Jersey,Lond on, Sydney an d Tokyo.RightNo w'sprod ucts are available in 13 langu ages wo rldw ide.
For m ore inform ation visit: www.rightnow.com
1John Hagel and Marc Singer,Private Lives,M cKinsey Quarterly 2000.2Jup iter Research,March 18,2004.3Pew Internet & Am erican Life Project,Spam:How it is hur ting e-mail anddegrading life on the Internet, October 22,2003.4Nucleu s Research,Spam :The Serial ROI Killer,June 8, 2003.Based o n a survey of em ployees at Fort une 500 com panies.
5Marketing Week,February 26,20046Forrester Research,Factors that Drive U.S.Online Households to OpenMarketing E-mails,2002 & 2003 (as a % of respon dent s),M arch 2004.7Direct,February 1,2004.
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WEB SITES
Pepp ers & Rog ers Grou pwww.1to1.com
eMarketerwww.emarketer.com
Forrester Researchwww.forrester.com
Federal Trade Comm issionwww.ftc.gov
MarketingVoxwww.marketingvox.com
ClickZ Netw ork: Solut ions for Marketerswww.clickz.com
Direct Marketin g Association
www.the-dma.org
Association for Interactive Marketin gwww.interactivehq.com
Marketing Sherpawww.marketingsherpa.com
Iconocastwww.iconocast.com
Wiredwww.wired.com
DM Newswww.dmnews.com
Virtual Insti tut e of Informationwww.vii.org
ORGANIZATIONS
Association for Interactive M edia (AIM)1430 Broadw ay, 8 th f loorNew York,NY 10018888-337-0008www.interactivehq.org
Federal Trade Comm ission600 Pennsylvania Avenue,N.W.,Washington,D.C.20580202-326-2222www.ftc.gov
Instit ute fo r Spam and Intern et Public Policywww.isipp.com
The Direct M arketing Association (DMA)1120 Avenu e of the Am ericasNew York,NY 10036(212) 768-7277
www.the-dma.org
REFERENCED REPORTS
Spam : How it is Hurting Email and DegradingLife on t he Internet.Octob er 2003,Pew Int ernet and Am erican Life Project
The Consumer Advertising Backlash.May 20 04, Forrester Research
The Stat e of E-m ail M arketing 2004.March 2004,Forrester Research
E-mail Marketing:Challenges and Opportunities.June 2004,emarketer
Spam : The Serial ROI Killer.Jun e 2003, Nucleu s Research
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Tools and ResourcesThe fol lowing l ist o f Web sites,o rganizations and reports wil l help p rovides a wealth of information on trendsand innovation on e-mail marketing,spam and related t opics:
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GlossaryConfirmed Opt-in A user has elected to receive e-mail
new sletters or stand alone comm ercial messages.A confirm a-
tion e-mail is sent, but the user is not required to take furth er
action in order to be included o n th e l ist.The confirmation e-
mail includes the opp ortun ity to remo ve their subscription.
Customer Experience The totality of a customers interac-
tions w ith a brands product, people and processes over t im e.
A companys most important non-replicable asset is its cus-
tom ers, so cult ivating t hat asset for results requires careful
management , just as a f irm w ould manage its capital invest-
men ts.Effective Custom er Experience M anagem ent (CEM) is
based o n fo ur p i l lars: Facil i tate consistent interact ions;
Integrate across channels; Create a relevant experience;
Cultivate custom er trust.
DNS (Domain Name System (or Service or Server)): an
Internet service that t ranslates domain names into IP
addresses. Because domain names are alphabetic, they're
easier to remember.The Internet however,is really based on
IP addresses. Every tim e you use a dom ain name, th erefore,a
DNS service must translate the name into th e correspo nd ing
IP address.
Double Opt-in A user has elected t o receive e-mail new slet-
ters or stand alone comm ercial messages. A confirmat ion e-
mail is sent t o th e user to w hich she mu st reply before th e list
own er may add t hem t o the l ist.
HTML (HyperText Markup Language): the authoring lan-
guage used to create documents on the World Wide Web.
HTML defines the structure and layout of a Web do cument by
using a variety of tags and attribu tes
Opt-in A user has actively elected to receive e-m ail newslet-
ters or stand alone com mercial messages by checking an opt -
in box. No confirmation e-mail is sent and the user is notrequired to take further action to b e included on th e l ist.
Opt-out A user must request no t to be included on an e-mail list
at the p oint o f collection or w ith subsequent comm unications.
Phishing Pronoun ced f ishing, the act o f sending an e-mail
to a user claiming falsely to be an established legitimate
enterprise in an attem pt to scam the u ser into surrendering
private information that w il l be used for identity t heft.
Responsible Inform ation Stewardship (RIS) The pro cess of
engendering t rust and confidence in how an organizations
leaders,em ployees and agent s m anage private,sensitive and
confidential information. It involves the alignm ent of stake-
holder informat ion preferencessuch as consumers,
employees, shareholders and th e general publicw ith b usi-ness,data and technology management practices across the
organization.
RSS (Rich Site Summ ary or Really Simple Syndication): an
XML format for syndicating Web content . A Web site that
wants to al low oth er sites to pub lish some o f i ts content cre-
ates an RSS document and registers the document with an
RSS publisher. A u ser t hat can read RSS-distribut ed cont ent
can u se the cont ent o n a d ifferent site. Syndicated content
includ es such data as new s feeds, events listing s, new s sto -
ries, headlines, project upd ates, excerpts from discussion
forums or even corporate information.
Spam Unsolicited commercial electronic mail or junk news-
grou p p osting s. Real spam is generally e-mail advert ising fo r
som e produ ct sent t o a mail ing l ist or n ewsgroup.
Spim Also spelled as spIM,spam over instant messaging (IM).
Spim is perp etuated by b ots that h arvest IM screen names off
of th e Internet and simulate a human u ser by sending spam
to the screen names via an instant message.The spim typi-
cally contains a link to a Web site that the spimmer is trying
to market.
Unsolicited Commercial E-Mail (UCE) See spam .
Source:Webopedia, Association for Interactive Mar keting
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