The Return on Investment (ROI) on email marketing rose by 53% between 2013 and 2014 to an average of £38 for every £1 spent in 2014 (Direct Marketing Association, 2015). It now provides twice the ROI when compared to other relative forms of marketing, making it a very effective means of reaching customers and increasing sales.
A recent study by predictive analytics from Custora (2013) found that customer acquisition through email has quadrupled in the last four years and accounts for almost 7% of customer acquisitions. Compared to Facebook and other types of social media marketing this conversion rate of potential customers to customers is considerably greater as shown in the graph.
Email marketing has become a powerful tool for small businesses who want to send marketing messages to their customers. The advantages are pretty obvious; it is fast and cheap. They also give small businesses the opportunity to target their customers at the right time and can help them bring in new business.
Email marketing can help achieve many marketing objectives. Figures show that whilst sales were the main goal for 26% of campaigns, engagement (22%), followed by customer acquisition (16%), lead generation (12%), customer retention (11%) and brand awareness (7%) were all cited as being the primary reason behind an email marketing campaign (Direct Marketing Association 2015).
Customer retention is always key objective for any marketer and email is a great way to stay in touch as it can be used to inform customers about new products and new sales promotions and can highlight special offers. Schindler (1989) found that people who redeem coupons (special offers) feel good about themselves saving money. When a customer feels good about a service they have received they are likely to tell their family and friends about their positive experience. According to Hart, Heskett and Sasser (1990) those with memories of poor service tell approximately eleven people while those with pleasant recollections tell six.
Another important idea to bear in mind when issuing an email to customers is the time it is sent to them, as this can have an effect on their success rate. Although it varies across differing industry, nearly 22% of bulk email is opened between 8pm and midnight, which is also the highest conversion time (Experian, 2012).
However, despite the proven effectiveness of email marketing in maintain customer relations its critical that the sender obtains the permission to email from the customer otherwise the effect could be counterproductive. Research findings from Kent and Brandal (2003) concluded that seeking permission of customers to send emails is a worthwhile strategy for any company to adopt. It is vitally important for the email to have genuine relevance and value to the customer and personally directed otherwise it is likely to be ignored at best and resented at worse. A study conducted by Experian found that personalised promotional emails were shown to lift transaction rates and revenue per email six times higher than non-personalised emails (Gesenhues, 2013). Ansari and Mela (2003) also found that personalised emails marketing is very desirable, but not easily achievable.
Like personalisation, segmentation is another way in which selling companies can be more specific to their customer’s wants and needs which is done by separating their customers based on their past purchases. The segmented and target emails helped one Company called Totes Isotoner (an online retailer) to significantly boost their email conversion rate – producing an increase of more than 7000% in email driven revenue over a 14 month period, stated their director, Chris Reighley (Demery, 2012).
Having said all of the above and in concluding, whilst the conversion statistics are impressive the fact that it is such a cheap way to comminute with existing customers and acquire new ones means that many many companies do it. . It’s a very cluttered environment and for email marketers to effectively market their products and enjoy the benefits of the conversion rates quoted above its always important to adhere to basic rules and protocol. The link below summarises nicely the do’s and don’t’s of email marketing.
References
Ansari Asim, Mela Carl F. E-customization. J Mark Res 2003;40(2):131–46
Demery, P. (2012). Getting ‘lookers’ to come back and buy. [online] Internetretailer.com. Available at: https://www.internetretailer.com/2012/01/05/getting-lookers-come-back-and-buy [Accessed 1 Feb. 2016].
Dma.org.uk, (2015). DMA | Research | Email ROI increases 53% to £38 compared to 2013 thanks to new techniques and approaches. [online] Available at: http://www.dma.org.uk/research/email-roi-increases-53-to-ps38-compared-to-2013-thanks-to-new-techniques-and-approaches [Accessed 1 Feb. 2016].
Gesenhues, A. and Gesenhues, A. (2014). Study: Personalized Emails Deliver 6X Higher Transaction Rates, But 70% Of Brands Fail To Use Them. [online] Marketing Land. Available at: http://marketingland.com/study-70-brands-personalizing-emails-missing-higher-transaction-rates-revenue-73241 [Accessed 1 Feb. 2016].
Hart, CWL; Heskett, JL & Sasser WE (1990). The profitable art of service recovery. Harvard Business Review, 68, 148-156.
Kent, R. and Brandal, H. (2013). Improving email response in a permission marketing context. International Journal of Market Research, 45(4), pp.498-501.
Schindler, R.M. and Wiman, A.R. (1989), ‘‘Effects of odd pricing on price recall’’, Journal of Business Research, Vol 19, November, pp. 165-177