December 26, 2000, 9:55 AM

To rise above the spam, retailers are turning to a host of new email marketing technologies

(Page 2 of 3)

“We want to create promotions that are highly relevant to customers so they look forward to future mailings from us,” explains Rudman. “By building these types of promotions with artists, we can effectively communicate with fans of the artist and keep them coming back to our site to get ticket information about future events.”

Don’t let ‘em go

Due to the high cost of attracting new customers via email marketing campaigns, retention is fast becoming the focus of many email marketing strategies. It costs Internet retailers about $286 to generate a single sale from acquisition campaigns built around list rentals, compared with $2 for retention campaigns built around in-house lists, according to Forrester Research.

Such economic advantages are not lost on Internet retailers. “The cost of using email just to get people to visit the site is high, especially during high clutter periods when the toss rate goes up,” says Robert Levitan, CEO of New York-based Flooz.com, which markets an alternative online currency delivered via email and is accepted by select merchants. “Email is suited to building the lifetime value of existing customers.”

To boost customer retention, Flooz.com’s email marketing application identifies whether Flooz account holders have activated their account, inquired about a merchant partner and the remaining value in their account. That data is then used to segment customers and create personalized messages based on customer behavior and buying preferences.

“We can send mail to someone we know who likes books and that we know has money in their account with a message saying we just signed a new bookstore chain, and by the way here’s an incentive if you buy now,” adds Levitan. “We can also track click streams to measure which percentage convert to sales to determine the value of that campaign and that customer.”

Flooz uses Digital Impact’s Email Exchange Network, which tags each email with a URL that is recorded by the network when the message is opened and which tracks click streams and purchase data on a real-time basis. Digital Impact analyzes the data according to client specifications. Once the data is crunched, it is sent back to the client and entered into a customer database used to develop email campaigns. On average, clients pay a minimum of $10,000 per month to use the network, according to Forrester Research. While that may seem pricey, Digital Impact says users pay less than $1 per customer response through the network.

The growing emphasis on personalization has Internet retailers paying closer attention to mailing frequency. While many customers on in-house mailing lists have given the e-retailer permission to market to them via email, bombarding them with messages can seriously damage the customer relationship.

Turn down the volume

“Since the ability to track whether a customer has opened an HTML message exists, retailers need to listen closely to individual customer click-through rates to understand whether they are over marketing to a customer,” says Bigfoot’s Leahy. “When messages go unopened, you turn down the frequency. This lets the customer have a sense of control and shows that the marketer respects what they are saying through their response rate.”

Bigfoot’s Generation E Network reports the number of messages sent to and opened by each email address in a specific campaign. The data is supplied to clients who scour it for trends and then determine the next step. “The network can automatically adjust frequency based on behavior patterns, but since understanding frequency involves analytics, we prefer human intelligence,” says Leahy. “Unopened messages may not be a symptom of the frequency, as much as the focus of the messages previously sent. Automation does not necessarily reveal that.”

Egghead.com is putting the frequency theory to practice with its auction notification service. Although the Menlo Park, Calif., Internet-based software retailer holds daily auctions, it sends no more than two auction notices a week to customers. The notices are usually for items in which customers have expressed interest.

“Quality is a key factor,” says Barry Peters, vice president of marketing for Egghead.com. “We know these messages will get read, so we want to make them as relevant as possible.”

Despite taking care not to irritate customers with unwanted email, some customers do opt out of email marketing databases. That has prompted Egghead.com to search for ways to use the analytical capabilities of email marketing applications to figure out the value of customers that ask to be removed from a mailing list, based on their responses to prior campaigns.

“It takes a lot of digging to figure out the value of an unsubscriber, because we can’t characterize them,” says Peters, who will not say how the company intends to achieve that goal and what it might cost to implement such a program. “It could be they are disenchanted with email marketing or that they have gotten what they need from us through previous campaigns and no longer have a use for this service.”

One way to keep consumers from opting off email lists is to make responding to the message easy. The most obvious method is to include a reply key, rather than a link to a web site. “When people open their email they are not necessarily looking for a web site to visit,” argues John Rizzi, president of e-Dialog. Rizzi adds the inclusion of reply buttons can boost response rates as much as six fold. “When email is sent to a customer, show you know them, build the piece to their preferences,” he adds. “Don’t waste their time. It is easier to opt off an email list than in any other marketing medium.”

Performance pricing

Analyst Santous predicts opt-in email volume will reach 61.1 million messages by year’s end, up from 40.1 million in 1999. Email marketers will have to place a higher premium on the return on investment from their campaigns.

“As email clutter grows, performance pricing will become more prevalent,” says Santous. “It will no longer be enough to pay for getting the message delivered and opened. Users will pay based on whether the goals of the campaign are achieved.”

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