The maker of software for online retailers processed more than $1.6 billion in orders in the quarter.
Once unchallenged as an effective way to communicate with customers and prospects and increase sales, e-mail marketing is under siege as overuse and misuse alienate consumers.
Like the dot-com era itself, e-mail marketing emerged on the business scene several years ago as a fast ticket to fast fortunes. With the Internet offering a free and unprecedented reach to just about any marketing target in homes as well as businesses, e-mail quickly took hold in the minds of marketers as a direct-to-customer tool with a cost-efficiency ratio too good to pass up.
Almost everyone agrees today that too many marketers got the message. By simply playing the numbers game, purveyors of everything from polo shirts to pornography
realized that enough e-mail messages at relatively little cost were bound to produce sales. Now Jupiter Research Inc. reports that the average U.S. e-mail subscriber received more than 2,200 unsolicited e-mail messages last year and will receive more than 3,600 in 2007 if current trends continue.
The result: Plummeting response rates, growing consumer ire and the tarnishing of an entire industry. “It’s been too easy, due to low cost of e-mail, to not apply the same kind of marketing discipline that’s usually a matter of survival,” says Dave Lewis, vice president of deliverability management and ISP relations for e-mail service provider Digital Impact Inc.
For many retailers, running an effective e-mail marketing campaign has become a highly complex affair. They struggle to make their messages stand out above the fray, to find ways to pass through the bulk mail trap of increasingly effective spam filters, and, most important, to avoid annoying customers and prospects with unwanted mail.
Smart and shifty
And marketers aren’t the only ones concerned about protecting e-mail recipients from barrages of unwanted mail. Major Internet service providers like AOL and Yahoo report blocking huge amounts of spam from subscribers’ inboxes, diverting some into bulk mail folders. Yahoo reports it filtered out five times more spam in February than during the same month a year ago and AOL reports blocking as many as 1 billion messages in a single day. In addition, AOL is suing some mailers it believes to be spammers.
The spam crisis has also led to an ambitious new crop of anti-spam legislation. More than 25 states have introduced more than 70 anti-spam bills so far this year in a broad effort to take legislation beyond anti-spam laws already enacted in 27 states. In a sign of how crucial anti-spam legislative efforts have become to marketers, the Direct Marketing Association, a group usually against government regulation of marketing, has called for a federal anti-spam law to provide for a consistent-and tougher-nationwide effort against marketers who e-mail spam.
“The fact is it will take a long time to eradicate spam,” says Kevin Noonan, executive director of the Association of Interactive Marketing, a unit of the DMA. “Spammers are pretty smart and shifty, and they know how to get around the rules.”
The overabundance of spam and the growing efforts to block e-mail are pushing some merchants away from using e-mail as a marketing tool and toward other forms of advertising and promotions. “We’re cutting back on e-mail marketing in favor of Internet search, which has been more effective,” says Peter Cobb, vice president of business development of eBags Inc., which operates eBags.com.
EBags is not alone. A recent survey of 200 retailers by Chicago-based consultants the E-Tailing Group Inc. found that only 27% are e-mailing as frequently as weekly, while 34% are mailing twice monthly. “More retailers are going to twice a month, where we might have seen them on a weekly schedule a year ago,” says E-Tailing president Lauren Freedman.
Concerns about spam are forcing retailers to become better marketers. They’ve learned the hard reality that e-mail is no longer a free ride, that they have to constantly try harder to make it an effective means of reaching customers and prospects. As a result, successful e-mail marketers, experts say, are following a dual strategy of sending only permission-based e-mail and developing message content that recipients are likely to find attractive. A central point of this strategy is to build permission-based lists, then continuously engage customers with pertinent messages, reminding them why they signed up to receive e-mail marketing messages in the first place-and making it more likely that customers will respond to e-mail over the long term.
But that’s not an easy task to pull off. It requires constantly figuring out better ways to capture and record permissions, as well as checking the accuracy of e-mail addresses and thinking up new ways to engage customers through e-mail messages that they truly want to open. “You have to remember this is still retailing and you have to sell something,” Freedman says. “You have to engage the customer.”
The key to successful e-mail marketing that keeps customers engaged and clicking, experts say, is to find the right methods that produce better click rates and sales conversion rates for the particular retail audience being targeted. In an ironic twist, the very characteristic of e-mail marketing that led to abuses to begin with is what makes it possible to refine an e-mail marketing campaign-its low cost. “You can’t lose by doing a lot of testing,” says Freedman. “By establishing control groups, you can test different e-mail marketing formats. It’s a pretty cost-effective way to test what works.”
For example, she says, Amazon.com Inc. and Toys R Us Inc. have recently sent e-mail messages with a combination of full-price and discounted offers. This lets them test how customers respond to different offers without hitting them with too many messages. “We see more retailers focusing more on multi-purpose e-mail-more content on fewer messages,” she says.