Direct Mail and E-mail: A Pair for Profit
There's online shopping. Retail shopping. Catalog shopping. Outlet shopping. And now there's what you might call "e-mail shopping"purchasing in
response to an e-mail marketing effort.
And despite reputable marketers' names being dragged through the mud in many anti-spam circles, consumers are responding to legitimate e-mail marketing efforts: This market now accounts for at least $7.1 billion in sales annually, according to results of a study by the Direct Marketing Association (DMA).
As a point of reference, the popular video game industry topped $7 billion in sales (online and offline) just last year, so says the Entertainment Software Association. Another point of reference, however, is that e-mail marketing sales represent less than 4 percent of what the DMA reports as sales from all
direct marketing efforts in 2003 ($2.1 trillion).
A valid point may be that e-mail marketing is a baby compared to its direct mail and direct TV siblings. But it's a baby going through a major
developmental stage during a time when many consumers are hot with anti-marketing sentiment.
Despite these challenges, marketers obviously are using this medium to sell to the tune of billions of dollars. Many are using e-mail in retention efforts, to engage in more timely, frequent communications with current customers. "We found that e-mail works best when the customer has a prior relationship with the marketer," notes Neil Feinstein, director of creative strategy at direct
response and interactive agency True North Inc. "This is not news. But it's
important to remember this when testing e-mail and direct mail for acquisition."
In fact, some marketers have seen e-mail outpull direct mail in head-to-head tests sent to current customers. "In many cases, our permission e-mail lists significantly outperform our direct mail campaigns," says Peter De Legge, director of e-business for the world's second largest insurance broker, Aon Corp., and former marketing consultant.
Many experts suggest partnering e-mail with its older sibling, direct mail. In fact, this is one of the few modes of e-mail marketing that seems to have proven itself somewhat consistently. After testing, says Feinstein, "In all cases, we found a lift in response by sending both."
In De Legge's experience, he says, "Highly targeted permission e-mail and direct mail can be used together to generate a greater response than they would separately."
As in traditional direct mail, however, response isn't the sole factor in a joint effort's success. "When we dig into financials, we sometimes find the combination of direct mail and e-mail only makes sense in certain high-
performing segments. Lower-performing segments did not warrant the extra expense of a dual-media message," explains Feinstein.
De Legge says he usually reserves combination efforts for difficult-to-reach targets with higher-dollar sales, as well.
One challenge of executing an effective e-mail effort is the care needed in compiling a list. "Developing a solid, permission e-mail list is more complex than sending direct mail to a purchased list," notes De Legge. "I never buy
external lists. It's too dangerous. I've seen campaign results where outside lists were used that claimed to be permission-based, and the responses are horrible compared to what I've seen with house lists."
De Legge says he has seen open rates average 50 percent to 60 percent for in-house lists, while for outside lists or those where there is not clear consent (such as when an opt-in box may be pre-checked on an online form or when a company selling the list can't specify how the recipient opted in) the open rate usually is 20 percent to 30 percent. Click-through rates for
in-house lists, he says, usually average from 20 percent to 25 percent, but he has seen them reach 80 percent. For outside or questionable-consent lists, click-through rates generally don't reach above 10 percent.
According to the DMA 2003 Response Rate Study, though, the
response rates De Legge has seen for both in-house and outside lists are higher than industry average. The DMA study showed an average response rate for an e-mail effort to a house list of 1.83 percent, while average response to outside lists fell at 1.74 percent.
Using Direct Mail to Feed the Baby
Regardless of whether marketers are using outside lists, building a house list seems to be a priority. And, they are using direct mail to build it. "I use
direct mail to gain the target's permission," says De Legge.
More mailings are surfacing in the Who's Mailing What! Archive that request e-mail addresses from prospects. As profiled in the "Top 5" mailings in Inside Direct Mail's April issue, Entertainment Weekly sent out a mailing in January asking prospects to submit e-mail addresses to become eligible to receive free movie-screening passes. In retail, The Children's Place sent out a self-mailer in February asking prospects for their e-mail addresses to receive notices of future discounts. Even financial services companies like MBNA are requesting e-mail addresses on credit card application mailingsso recipients can stay "informed of special marketing offers."
Using a One-Two Combo
However you're going to use direct mail and e-mail in your marketing
mix, "You must plan for them to work together," says Feinstein. "For one client, we timed e-mails and direct mail to arrive in the home at the same time to reinforce the message. In [another] situation, we gave a better offer in the e-mail than in the direct mail [piece]. We timed the e-mail to arrive just
before the direct mail so customers could compare the two offers and
decide to respond electronically."
Molly Crawley, founder and principal of Outsource Marcomwhich provides Web, print and multimedia marketing services to clients, such
as Exxon, Hewlett Packard and Citibankhas had success creating
efforts to be mailed simultaneously. For example, one direct mail/e-mail
campaign she created for AccPac International's software conference
exceeded projected response by 30 percent. "My clients felt that was directly a result of the combination of direct mail and e-mail being sent," she says.
Direct marketing consultant Ivan Levison draws a comparison between e-mail efforts and self-mailers in describing e-mail's best function: "You would use a self-mailer in the way you would use e-mail ... if you can't afford to mail a second or versioned package," he notes. "And you use it to push urgency." He has found that, "E-mail is best used as a follow-up. Direct mail is really your big gun. It's more expensive, but the environment is better, there's a higher level of acceptance in seeing [an offer] in your mail."
Daniel G. Wiest, vice president of integrated communications for AMW Direct & Interactive, and an executive member of CMA's e-marketing council, believes that while e-mail can serve as a follow-up, it "has great potential to be harnessed as a door-warmer, as well as a tool for concurrent support of its direct mail counterpart. And, of course, it also has great merit as a solo vehicle." He cautions, "Don't make the costly mistake of limiting it to only one of these functions."
Part of Levison's theory at leastabout the environment for direct mail being betterseems to be supported by the results of tests run by Wiest's agency on consumer response to a combination of direct mail and e-mail efforts that support one offer. The tests, validated across groups of consumers and B-to-B prospects, and for a variety of products (including software and
financial services), featured e-mails sent as pre-alerts as well as follow-ups. In a report called "Pleasant Surprises Surrounding Consumer Behavior
in Response to Email Sent in Combination With Traditional Direct Mail," Wiest writes, "We monitored response curves, and the shapes of those curves were ... classic mail curve for the traditional [direct mail], accompanied by sharp spikes in response from accompanying e-mail deployment. No surprises here."
But some surprises were found upon more careful examination. "When we analyzed the promo[tion] codes, it was clear that, although the e-mails clearly produced spikes in the response curves, it was not the promo code associated with the e-mails that many respondents were referring to," notes Wiest. "Although they were responding online or through a telesales rep as a result of the e-mail, they were still using the promo code found in the traditional direct mail piece to take advantage of the offer."
No matter how prospects responded, they still had the direct mail piece in their hands.
In discussing the results of the survey, Wiest explains, "What my studies found was that many of the e-mails were being treated in precisely the same way as that Internet pre-purchase search and decision analogy. The
e-mails were great for creating interest with information on the product. They were fabulous for moving people to the Web site for more information and to help close the sale." But, he notes, "Yes, there are still many consumers more comfortable transacting via traditional channels."
Like Brother Like Sister
Because there are still not many proven rules for e-mail marketing, many marketers advise simply approaching it as you would any marketing effort. "Different media seem to work for different products, offers and audiences," notes Robert Bly, veteran direct marketing consultant and co-author of "Internet Direct Mail: The Complete Guide to Successful E-mail Marketing Campaigns."
Levison, who sees direct mail as the major response-generator of the two media, even notes, "It does depend on your offer structure. If the offer is Web-related, then e-mail is the way to go. If you want them to download anything, go to a landing page ... they can just 'click here' and be there in seconds. The whole pitch of e-mail is that you're just a mouse click away from valuable information."
Like immediacy, some marketers are taking advantage of the medium's interactive capabilities. Crawley included an animated component in her e-mail effort for AccPac, and believes that largely impacted response. The show's logo faded in and out with text in the body of the e-mail message, and recipients could click right on the embedded image to get to the Web page.
Bly and his co-authors note in their book that, "E-mail is more immediate. It appeals to our impulsive nature. ... By following up your direct mail campaign with e-mail, you can influence the person who is holding on to your brochure and is yet undecided, or has forgotten about using your product or service."
And De Legge adds, "It is certainly wise to never have a channel-centric view. ... Use the best vehicle or combination of vehicles for the task at hand and always explore the benefits of integrating channels ... . Testing, learning and improving is the key."