Does Database Marketing Work With Email?

Arthur Sweetser and I wrote a book two years ago called "Successsful E-Mail Marketing Strategies — from Hunting to Farming." The basic theme of that book was that relevant, personalized, dynamic content is more profitable than batch-and-blast, identical content sent to everyone on your list.

In the two years since that book was published, I've worked directly with 51 different email marketers in a variety of disciplines. I trained account teams in strategy and the tactics of subscriber acquisition. What I discovered was quite interesting:

1. Few email marketers were doing any significant segmentation of their subscribers with dynamic content. In general, everyone got the same message. A study of 132 major email marketers conducted in 2010 revealed that 61 percent did little or no segmentation of their subscribers.

2. Even less were doing any testing. The testing that was taking place was primarily of subject lines. There didn't seem to be any permanent learning resulting from the testing that was taking place.

3. Most of the emails sent were from email lists rather than databases. The lists seldom included demographics or previous web behavior (i.e., opens and clicks).

Studies have shown that segmentation improves open and clickthrough rates. The Marketing Sherpa E-mail Marketing Benchmark Guide 2008 reported that open rates for segmented campaigns versus nonsegmented campaigns are as much as 20 percent higher on average for the first 30 days. This rate drops 14 percent in days 60 to 90.

But many marketers don't use segmentation in their email marketing programs. Why not? The problem seems to be available resources. Despite the fact that every database marketer agrees that segmentation is a good idea to improve customer response, many marketers don't have the staff to take advantage of dynamic segmentation.

Why does it cost more? It's hard to develop different messages for each segment. Many marketers today are sending two or more emails per week to their subscribers. For example, if you create four different segments and mail each segment twice a week, you'll have to create content for eight different emails. Most email deployment units — even a major corporation — have only a handful of creative people on staff. At minimum, developing one really good email takes one person a full day. Few companies have more than two creative staffers available in addition to the other personnel involved in their email programs.

In the direct mail days, companies typically sent one maybe two letters a month to each customer. If you had four segments, for example, there was plenty of time for your staff to create and write copy for each of those segments. You had two weeks or more to do it.

With email, marketers quickly learned that frequent emails are very profitable. Going from contacting customers once a month to once a week saw revenues shoot up. From once a week to twice a week, revenue still rises. From twice a week to once a day, still more revenue. Of course, by doing this you're risking losing your most valuable customers. Opt-outs subsequently rise with increased frequency of emails as consumers feel bombarded, but management seldom looks beyond that quarter’s sales. “Send more” is the mantra, so almost every email marketer obliges.

It's almost impossible to write different copy for every segment of your database if you're sending emails on a weekly or daily basis. Creative segment managers are hard to find — and expensive. Even more expensive is appending demographic data and building a database (rather than a mailing list) that's needed to support dynamic segmentation.

Arthur Middleton Hughes is vice president of the Database Marketing Institute. His new book from McGraw Hill, "Strategic Database Marketing, 4th edition" is due out this summer. Reach Arthur at Arthur.Hughes@dbmarketing.com.