August 30, 2007, 12:00 AM

SPONSORED SUPPLEMENT: E-mail marketers raise the performance bar

Retailers must continually evolve their e-mail marketing strategies or risk losing ground to competitors

Internet Retailer

Consumers may be more receptive to e-mail marketing, but that hasn’t made it any easier for e-retailers to get their message to the customer’s inbox and opened. More stringent spam filtering rules, sender authentication policies imposed by ISPs to reduce unwanted clutter in consumer mailboxes, the threat of phishing attacks, new technologies such as embedded video (see sidebar), and mailings to mobile devices have e-retailers scrambling to stay ahead of the curve.

“Retailers that stay on top of the evolution of e-mail marketing are solving problems and gaining ground,” says Barry Abel, vice president of field operations for Message Systems, a provider of e-mail marketing applications. “E-mail marketing is more than just throwing together a campaign and hitting the Send button, it is about maximizing the potential of new messaging techniques and strategies.”

Quality first

The starting point for any successful e-mail campaign is the quality of the mailing list. Too often retailers focus on gathering as many e-mail addresses as possible rather than gathering quality addresses through an opt-in process. Failure to maintain quality of the mailing list by purging bad addresses adds to delivery problems. Poorly maintained lists also result in a substantial portion of messages never being opened because they go straight into the customer’s spam folder or are immediately deleted.

“Most retailers have a deliverability rate of between 70% and 80% and their goal ought to be 95%,” says Abel. “A lot of retailers think they have reached the maximum delivery capacity when they haven’t.”

Too often inactive addresses are the result of recipients having little affinity to the retailer’s brand. These are usually one-time customers who have a specific need or comparison shoppers who bought because of a low price. Nevertheless, their e-mail addresses remain in the mailing list.

“Size of the mailing list no longer equates reach, so it is not enough to just collect addresses during the transaction confirmation process and send messages whether the recipient has a strong relationship with the brand or not,” says Stefan Pollard, director of consulting services for e-mail marketing application provider EmailLabs. “Smaller lists with more active recipients are far more productive.”

Cleansing a mailing list of inactive addresses ought not to be done in haste, as non-responsiveness can be due to sending the wrong type of information. “Before purging a list, retailers need to look at activity rates and refine the messages being sent to inactive addresses by running A/B tests to see if they will respond,” says Pollard. “Retailers want to confirm the inactive addresses first.”

Clean up those lists

Cleaner mailing lists also help the retailer’s reputation with the ISP because campaigns built around these lists result in fewer complaints by recipients to their ISPs about unwanted mail and lower bounce-back rates. When consumer complaints and bounce-backs rates pile up, ISPs typically impose restrictions on e-mail marketers that limit their access to consumers, such as blocking messages sent in bulk from the retailer’s URL.

One way to reduce consumer complaints to their ISP and bounce-backs is to build permission-based mailing lists. While not a difficult practice, many retailers overlook including an opt-in feature when gathering e-mail addresses.

“Retailers need to be more cognizant of how to gather permission to market to an e-mail address rather than apply direct mail concepts,” says Chip House, vice president of marketing services for ExactTarget Email Marketing, which specializes in permission-based e-mail campaigns. “E-mail is not a cheaper form of direct mail, it is a one-to-one marketing technique that allows retailers to understand who is opening their e-mail and how customers respond to it, which translates into a higher level of customer engagement.”

The first benefit of opt-in mailing lists is that customers on the list have expressed interest in receiving further information, which means they have an affinity for the retailer’s brand. That gives each message a better chance of not just getting past a spam filter, but also of being opened and generating a sale.

“Opt-in mailings are part of best practices for meeting customer expectations of the retailer’s brand,” says House. “The opt-in process also provides an opportunity for retailers to ask at the time of enrollment about the type of content the customer wants to be mailed and the frequency of those mailings.”

Combining information

Understanding the desired content and frequency of mailings for each customer helps retailers create a targeted communications stream with the customer. For example, e-mail addresses captured during a sale are typically passed to the shipping, marketing and customer service departments, each of which follows up with its own message after a sale, resulting in an unnecessary flood of e-mail to the customer.

Instead, combining customer information across all departments in a central database allows retailers to streamline communications according to the customer’s wishes. “If a customer that just bought a digital camera did not buy additional memory cards, the marketing pitch for that cross-sell can be included in the transaction confirmation message, rather than sending two separate mailings,” says Ryan Deutsche, director of strategic services for StrongMail Systems Inc., provider of e-mail delivery applications and services.

While this is a more efficient and less intrusive practice that meets customer expectations of brand quality, it is still not a widely accepted practice among retailers. “A lot of retailers still place control over certain types of mailings with individual departments. Marketing typically doesn’t interact with operations on transactional messages,” says Deutsche. “The key is to leverage customer information across all departments in a more meaningful way for the customer.”

Coordinating e-mail strategies with marketing partners, such as manufacturers, also needs to be taken into account. While marketing partners have good intentions, their mailing practices can trigger an ISP’s spam filter, resulting in high bounce-back rates or having the mailings blocked by an ISP for violation of e-mail guidelines. The latter can spell trouble for retailers that consent to having a link to their site included in the partner’s mailing, since ISPs will also block mailings that come from the URL for the enclosed link.

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