E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
How to live with the new rules of the e-mail marketing game.
“The sky is falling!” That’s the mantra of the latter-day Cassandras, reacting to all the hoopla, the yes-it-will-work, no-it-won’t-work reaction to the CAN-Spam legislation, speculation, and expert conjectures and guesses about the future of e-mail.
Then we have America Online selectively deciding that in some cases the phrase “Click here” indicates spam and in others, letting the message pass without having to get a stamp on its passport. Confusion becomes the unhappy parent of negative reactions.
One of the newly imposed rules of e-mail marketing is identification. Who sent this e-mail? Direct marketers have been loudly weeping and wailing, attacking this intrusion into e-senders’ privacy. Huh? An ancient rule of marketing, for any medium on any level-including head-to-head selling-is that reluctance to identify oneself equals assumed duplicity. Why not tell the recipient who is sending this e-mail?
A client for whom I write nothing but online messages flat-out quit the medium: “Too many possible legal hassles,” he told me. Okay, that’s an understandable and increasingly common negative reaction to the world’s negative reaction.
Then, because business volume is a better way to keep score than is withdrawal from the marketplace, that company re-ignited its online marketing, observing any and every identifiable rule, including some that absolutely are ridiculous, nonsensical, and useless.
Did adding identification to the e-mail messages damage response? No. We sent some without the identification, just to test. No difference. The lesson: complying with the law isn’t going to hurt you and will keep you out of legal trouble. We received no complaints about the unidentified ones either, but we’re still early in this CAN-spam game. As more recipients become more familiar with CAN-Spam provisions, e-mail marketers’ risks of not identifying themselves may go up as consumers learn they can easily forward violations to the Federal Trade Commission.
Candor is disarming
Clearly identifying yourself as the sender and clearly giving customers the option to stop receiving your e-mails is one form of candor with your customers and prospective customers. And we all know-or should know-that being candid with customers and prospects is one key to direct marketing success. Another way to be candid is to state your message upfront-especially important in e-mail marketing where tossing the message can take place in a fraction of a second and most recipients can’t act on second thoughts and retrieve it from the recycling pile the next day.
Every retailer knows the gigantic difference between a never-buy looker and a casual browser, as well as the difference between a casual browser and a serious potential customer.
Whether in person, in space or broadcast advertising, or in direct mail, we have no interest in reaching the never-buy looker. We have considerable interest in converting the casual browser. And we’d better aim our rhetorical arrows right at the heart of the wallet of the serious potential customer.
That’s why clearly identifying yourself-and your message-in an e-mail is not only not bad, it’s good: The serious potential buyer isn’t put off by a statement of message origin.
For a home goods chain, this first sentence disarmed any skepticism serious potential buyers may have assumed: Yes, this is a specific offer to [CUSTOMER NAME] from [COMPANY NAME].
Response to that message was higher than it was from a second group whose message omitted that line, as well as a test group to whom the first sentence had slightly different-but far less effective-wording: Yes, this is a promotional offer for [CUSTOMER NAME] from [COMPANY NAME].
Oh, sure, it’s possible that spam filters killed some e-mails that didn’t identify the sender. But that’s the game we’re in today, and until and unless the rules settle down, we play that game, optimizing within those rules as best we can.
E-mail marketing rules may be changing, but no one has yet rescinded the rule that “free” draws response. And no one has rescinded the rule that a marketer can’t measure results on response alone.
Time and again, the unpredictable outcome of e-mail has validated the power of the word “free.” And time and again, the effectiveness of the word depends on what it’s tied to. Here is a small example:
A company offered free shipping, under three test conditions:
- Free shipping with any order over $75.
- Free shipping with any order over $50.
- Free shipping, no minimum purchase.
No one planning this test could have predicted which would win:
“Free shipping, no minimum purchase” brought the highest percentage of response. “Free shipping with any order over $50” brought 89% of the response “no minimum purchase” prompted. “Free shipping with any order over $75” was in third place, with response 75% of “no minimum purchase.” But businesspeople know that total response is just a partial conclusion. How about two other components of the marketing mix, profit per thousand e-mails and profit per order?
The $50 minimum was the profit per thousand winner, but by just a tiny margin over the $75 minimum and no minimum purchase, which were in a virtual tie. In profit per order, the $75 minimum was a runaway winner, 11% better than the $50 minimum and 24% better than no minimum purchase.
So the marketer trying to decide which direction to follow has a decision to make. When the goal is to add buyer names, price becomes the primary incentive. After all, an established rule of Internet marketing is: The web is price-driven. Any promotion in which the lowest price doesn’t bring the greatest response has a hole in it. To implement name acquisition, a huge number of web marketers, especially those with continuity programs (such as a series of collectibles) are willing to sustain a loss on the original sale, anticipating recovery on subsequent appeals to the customers they have acquired. (That anticipation is sometimes faulty, because it ignores the psychology behind the original low-ball buy.)
If profit from this offer is the goal, parameters shift. A higher price obviously translates into a higher per-sale profit, and beyond that immediate profit lies a second benefit, fewer post-sale problems, if only because the number of buyers is fewer.