Christmas Blitz

In 2007 U.S. marketers will spend $500 million on e-mail marketing to generate $21.9 billion in sales. That’s a 20% increase in e-mail marketing expenditures over last year. The upward trend indicates that marketers’ increased reliance on e-mail marketing may stem from an impressive return on investment: for every dollar spent on it in 2007, marketers can expect an estimated $43.80 ROI—better than any other direct marketing vehicle.

To capitalize on this forecast, most retailers will increase their e-mail holiday promotional campaigns. But a sharp increase in outbound messages over normal activity can put a strain on a marketer’s e-mail system, resulting in slower delivery.

Moreover, ISPs frequently change their deliverability requirements, and a marketer’s inability to comply with them can result in undelivered messages and strained relationships.

Delivering the goods

Deliverability is essential to the overall success of an e-mail campaign and the bottom line is bounced messages equate to lost revenue. Consider, for example, a company that sends 500,000 e-mails as part of a targeted marketing campaign. Past campaign performance indicates that 10% of all e-mail messages delivered to customer inboxes are opened and that of these, three people purchase products at an average transaction value of $25.

Using these statistics, the retailer can expect the campaign to generate $375,000 in revenue if all 500,000 messages are received. However, if the deliverability rate slips to 80%, 100,000 messages are undelivered, costing the retailer $75,000 in lost revenue. Repeat this process on a wider scale over a year and the revenue loss is staggering. In this case, every 1% of increased deliverability produces $3,750 in additional revenue. Having an e-mail delivery system that consistently achieves high deliverability rates is vitally important to the bottom line.

It is for these reasons that marketers should evaluate the ability of their in-house e-mail delivery system or of an e-mail service provider to accommodate holiday marketing and sales activity. If the current e-mail delivery system and strategies come up short, marketers can take steps to prepare for increased campaign message volumes in the coming months.

As the volume and size of a sender’s messages increase as is often the case for holiday mailing, performance can be compromised. The traditional IT infrastructures, including open source solutions used by most in-house delivery systems and many e-mail service providers are not capable of scaling to handle the increased mailing requirements at desired performance levels.

Some of the newer e-mail delivery systems use an intelligent queuing system to solve the speed-of-delivery problem caused by increased mail volume and ISP filtering policies. Traditional delivery applications stack separate e-mail campaigns one behind the other; if a spam filter blocks the first campaign because of a suspicious word like “free” in the subject line, it will also block the other campaigns lined up behind the first one. But an intelligent queuing system treats each campaign separately, so if one is blocked, the others will still go through. Therefore each campaign is an order one priority, which means there is zero latency in processing messages from that queue, regardless of the status of any other campaigns that have been sent or are in the process of being sent.

If your current e-mail delivery system cannot handle increased volumes of mail without speed degradation, consider adopting an e-mail solution that will allow each server to send millions of messages per hour with the ability to maintain 100,000 concurrent connections for maximum performance. If you need to send multiple campaigns simultaneously, this technology provides the bandwidth to prevent delays which otherwise could cost you in lost revenue.

Getting to know the Internet service providers you use is a good first step. As ISPs struggle to protect their customers and keep a step ahead of spammers, they implement new strategies and requirements such as domain signing, throttling, blacklisting, tar-pitting (adding a delay between e-mail messages) and spam filtering to weed out the bad mail. If you don’t know what these requirements are, your mail could be blocked. Establishing an in-house ISP Relations department or contracting with a third-party reputation management service is the most effective way to keep up with ISP requirements. ISPs will be much more inclined to send your mail to their customers if you’re playing by their rules.

Reputation is key

Most ISPs have systems in place to individually scan incoming messages for viruses and spam, check them against blacklists, and evaluate them with any number of other attributes. Reputation is one of the criteria ISPs are now using to evaluate mail. ISPs do this by requesting the sender’s reputation score from a central third-party reputation database.

Using an e-mail delivery system that can be integrated with mailbox monitoring seed lists provided by third-party providers such as Habeas and ReturnPath will provide a higher level of delivery detail. By pulling from a network of special accounts from all ISPs used, seed list integration provides details on actual inbox delivery rates, including the final disposition of each message.

You can also apply to have your mail certified by a third-party certification company such as Goodmail. Goodmail CertifiedE-mail messages are a trusted class of e-mail that assures deliverability and automatically renders links and images for accredited senders through best sending practices. This technology is being deployed by several major ISPs.

If your ISPs haven’t adopted an authentication technology—Sender ID, DomainKeys or DKIM—they soon will. These authentication standards are designed to verify that a message from a particular sender is indeed from that sender to reduce phishing attacks, spoofing and spam. These technologies enable ISPs to take actions on incoming e-mail, from throttling to marking e-mail with an “open with caution” notation, to an outright block to protect customers from unwanted or dangerous e-mail from unknown or illegal senders. Although all three standards are reliable, DKIM, or DomainKeys Identified Mail, has a slight edge over the others. It has been ratified by the Internet Engineering Task Force and is considered the published standard for e-mail authentication. DKIM also provides protection from mail forwarding where Sender ID does not, but the ease of implementing Sender ID makes it a natural augmentation to any authentication strategy. The emergence of DKIM as a standard and its added protections make it a natural for wide adoption for both the ISPs and corporate enterprises.

To ensure messages get through an ISP’s authentication checks to reach recipients, retailers must authenticate their outbound mail with one or more of these authentication technologies. While corporate IT will be integral to the decision, ultimately it may hinge on what authentication technology each of your ISPs uses.

Avoiding spam blockers

Retailers are aware of the benefits of segmenting mailing lists to increase response, reduce mailing expenses and increase customer loyalty. Marketing-driven segmentation creates smaller mailing lists based on common interests or buying habits. It often makes sense to send targeted campaigns to subsets of your customer base, rather than blasting a general campaign to everyone. But there’s another type of segmentation marketers should embrace.

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IP segmentation increases deliverability and helps keep you off the “spammer” list. Spammers generally send large volumes of mail from one IP address quickly. If all of your e-mail goes out over the same IP address, it can cause overuse, indicating to an ISP that you may be a spammer. This, in turn, will most likely result in blocked mail.

Segmenting by IP address allows you to assign a different IP address to different campaigns or types of mailing. For example, you might have one IP address for transactions, another for promotional campaigns and a third for your monthly newsletter. Going a bit further, you might assign an IP address to campaigns targeted at your business customers and use another address for campaigns sent to consumers.

By segmenting your outgoing mail by IP address, you reduce the volume of mail going out on each address, which reduces the chance that ISPs will misinterpret your intentions. Moreover, if an ISP mistakenly tags one of your IP addresses as a possible spammer, your other mail will keep moving toward the inboxes.

IP segmentation also aids in diagnosing delivery problems. A combination of real-time reporting and IP segmentation makes it relatively easy to identify which campaign is having deliverability problems, so that corrective action can be taken before the next mailing.

If you’re using an e-mail service provider, ask for your own IP address. If you share an address with another company and they do something the ISPs don’t like, your next campaign also may be blocked. Ask for a set of unique IP addresses if you want to segment your mailings by category.

Keep the list clean

Spammers obtain vast mailing lists and then mass mail to the entire list hoping a few messages get delivered—and expect a lot of bounces. They continue to send to the same list with the same results. These high bounce rates signal ISPs that these messages may be coming from a spammer. The ISP then blocks mail from that domain in an effort to stop the spam.

Legitimate retailers can get caught in this trap if they, too, have repeatedly high bounce rates. Moreover, rejected messages also represent lost opportunities and wasted resources. While most senders can cite statistics on how many of their messages are undelivered, few know why. Furthermore, many e-mail delivery systems only handle bounces that occur during delivery, ignoring the out-of-bound rejection messages that arrive hours or days after the delivery has occurred.

Knowing about every bounced message as well as why and by whom a message was rejected is critical information that enables retailers to take immediate corrective action to boost future deliverability. An e-mail delivery solution that can automatically capture and organize all bounces provides the information necessary to effortlessly manage mailing lists to increase deliverability rates and keep your company off the “spammer” list.

Some e-mail systems also provide real-time analytics that provide immediate insights into the deliverability of each mailing. On-demand reporting allows e-mail marketers to make adjustments to improve deliverability before subsequent campaigns are sent. Similarly, an e-mail solution that has workflow and policy management capability will alert administrators of mail processing problems when they happen, so that corrections can be made immediately.

Upgrading your e-mail delivery system to send high volumes of mail without slowing down—or finding an e-mail service provider that has this capability—is the first step to handling high-volume holiday marketing blitzes. Once the mail goes out, it has to be delivered in order to make a sale. Making sure your mail gets delivered in today’s e-mail environment requires new deliverability strategies. Establishing good ISP relations, maintaining a good reputation with ISPs, authenticating your mail, employing marketing and IP address segmentation strategies, adopting good list hygiene and having a way to evaluate and correct sending problems in real time will help increase your revenue this holiday season.

Barry Abel is vice president of field operations for Message Systems, an e-mail software solutions provider. He can be reached at barry.abel@messagesystems.com.

Staying on the whitelist

ISPs look at e-mail senders’ IP addresses to help them spot spam. Retailers can stay off the spammer list by using separate IP addresses for:

— Business customers vs. retail customers

— Order confirmation messages

— Newsletters

— Marketing messages