Cost Effective Email Marketing Solution

This is from an original post I made way back in April 2008 on my technology blog but its still as valid today.

The flippent answer would be one that generates a definative and repeatable return on investment! There is going to be a cost for any email marketing, whether it be the design of the layout of the email if you need to make it look enticing, or using a third party service which charges a subscription fee. Before you do anything though consider;

  • How targetted are the prospects on the list?
  • How well written is the copy? Are you starting with a compelling, benefit oriented headline?
  • How compelling is the actual offer?

Always remember to do small scale tests first. if you have a list of 10,000 prospects why not come up with two different emails (same offer, different copy in the email) and send email A to 100, and B to another 100 and compare the results.

If you are going to use a third party service then check they offer costs on a ‘per subscriber’ and not ‘per email’ basis. If you are being charged per subscriber it means you can email the list several times for no additional cost. One great service which does that and offers a whole lot more besides is Mailchimp.

Are You Measuring the Effectiveness of Your Campaigns

There has been a huge uptake in customer relationship management (CRM) systems over the last couple of years. All businesses from small to large have been clamouring to select, buy and implement CRM as it is seen as a ‘must-have’. But I wonder, how many businesses have actually measured their return on that investment? How is your CRM system delivering benefit not just in operational process but in additional sales and new customers? Sure your CRM will tell you how many leads have been won, the status of those leads, which salesperson brought in that lead. It will also tell you how many and the potential value of any opportunities arising from that lead. But of course the real crux of the matter is you need to measure/test/refine/repeat the effectiveness of your campaigns.

And there lies the problem, whilst most CRM systems on the market allow you to create a campaign against a list of customers it is the segmentation of your customers that falls down. Why? because even if you do have an integrated CRM and financials system the chances are you cannot create what I would term as dynamic campaigns. I had this very request a few weeks ago from a Sage CRM customer. “We want to be able to create a campaign based around customers who have bought product x”. Can the system do it? No! Can it be made do it? Absolutely. Here are 4 examples, from hundreds of possible, dynamic campaigns you could be using (but probably won’t be);

  • Customers who bought product x
  • Customers who have spent more than (or less than) x pounds, dollars, euros
  • Customers who have bought within the last 180 days but not within the last 90 days
  • Customers who have only bought once from you

So the key is getting at your financials data and using it to create customer segments that are meaningful (and hopefully responsive!) to an offer in the campaign.

When Writing Good Copy is Less Relevant

OK I thought there wouldn’t be an occasion to discard everything you have learned about good copywriting but I may have just found it. I have dipped my toe in the water of Facebook advertising before and like many others have found it extremely difficult to monetize offers.

What I had done in these instances is taken years of writing good google adwords advertisements and used that as the basis of generating Facebook ads. However when you think about it there is a fundamental difference from a Facebook user to a google searcher. One is (or you can determine) actively looking for information or to buy a product or solve a problem and the other is simply looking to hook up with friends and share their feelings/thoughts etc. The bottom line is this, you have no idea if they are looking to buy your product or service.

So you need to re-think your ads, you might not be able to sell them on your product or service but you might be able to get them to ‘Like’ your page which is setup specifically to promote your product or service. Once they are a fan you can then build that relationship and monetise later. The key here is, and my initial testing has found that you can significantly boost your click through rates, create a fan base and drive down your cost per clicks.

Facebook Fan Pages for Business

Should you use one?

In a previous post I mentioned how you need to look at what copy you are writing in your Facebook ads to improve click through. As we are typically dealing with browsers rather than buyers trying to get a sale directly from an ad might be a tall order. So the best step is to get clicks, and preferably ‘Likes’ to your page and then sell later.

So the question is should you have one? I would say its certainly easier for ‘sexy’ products where prospects can get enthused, even excited over your product/service as opposed to an offering which doesn’t invoke much enthusiasm to build fans but its another marketing channel your business cannot afford to overlook. You can put offers on your fan page to entice prospects and, most importantly, build a relationship.

Don’t Waste Space (or time)

I was watching some advertisements on television the other night and one popped up for Dyson vacuum cleaners. It started with the line ‘the new Dyson vacuum cleaner is designed to make cleaning easier’. Now that statement struck me as odd for several reasons. First the ‘statin’ the bleedin’ obvious’ comment springs to mind. Secondly, its a little patronising, does anyone seriously think its designed to make cleaning harder? Of course not and finally theres why even waste valuable airtime making this statement in the first place.

Which brings me onto my point, dont waste precious ad space, regardless of media pointing out things that

a) Your prospect already knows
b) Does little to add any real benefit to your prospect

Remember you have to capture attention in the blink of an eye, you do this with benefit oriented, relevant headlines, not with fluff!

Calculating Customer Lifetime Value

So what is ‘customer lifetime value’ (CLV) and why should you measure it?

Customer Lifetime Value is an extremely important metric that any size of business should be using to allow them to grow the business effectively. Why? Because in a nutshell it allows you to determine what you can spend to acquire a new customer and still remain profitable.

Imagine if you knew that every new customer cost you £100 to acquire but they were actually worth £200 to your business. You would keep spending that £100 over and over to grow the business.

Sounds straightfoward but many businesses don’t measure this or perhaps are not sure how to.

Firstly you need to determine your cost of acquiring a new customer. Now sadly this is where alot of systems fail, staggeringly many CRM systems, the very things that should be measuring this metric don’t! You need to track each channel you are marketing in and how many leads each channel generates. If you know your spend on a campaign and the number of customers it has produced then you have your starting point.

Now you need to calculate the total spend a customer makes over their ‘lifetime’. Now again this isn’t that straight-forward as how do you determine a customer that is dead from one that is live? Well you can use another metric called ‘latency’. Latency is the amount of time between each customer purchase. If you get an average for all customers you can roughly predict those that will buy again and this that won’t. (I’ll cover latency and customer retention in another post)

Once you have your ‘average’ customer lifetime value and your current customer acquisition cost you can now determine if there are funds to enable you to increase your marketing spend. Many marketers use these metrics to actually lose money or break even on the initial sale to boost customer conversions as they know they can recover this cost on the ‘back-end’ by selling higher value items. This is also known as ‘moving the free line’.

Marketing Campaigns with Incentives and Targets

I get to work in alot of vertical markets because of what I do.

Today I was with two guys who work in and around the motor trade. We were looking at creating some software that can incentivise your existing base to increase their spend by setting ‘uplifted’ sales targets.

It was something I had never seen before. So here’s how it works. You create a campaign and lets say that campaign runs for three months starting tomorrow. You then select what customers you want to add to that campaign. Then using historical financial data you get the sales figures for each customer for the same period in the previous year (or go back 2,3,4 years).

You then apply a percentage uplift to each customers historic sales and this then becomes their target for the current campaign. Now where it gets really interesting is you also take your current gross profit figure and then apply that to the uplifted sales figure. What this will do is tell you how much in actual revenue you will receive from each customer if they hit target.

Lets look at an example. Customer X has sales for the same period of the previous year of £100K. We use an uplift of 20% which means that customer has to hit £120K of sales during the current campaign. If our average gross profit is 30% then we make £6K if they hit target. So of course we can incentivise the customers to hit this target with some really compelling (and quite expensive) prizes in the knowledge of how much money there is to play with. And of course if they dont hit the target they dont get the prize!

What is a cost-effective email marketing solution?

The flippent answer would be one that generates a definative and repeatable return on investment! There is going to be a cost for any email marketing, whether it be the design of the layout of the email if you need to make it look enticing, or using a third party service which charges a subscription fee. Before you do anything though consider;

  • How targetted are the prospects on the list?
  • How well written is the copy? Are you starting with a compelling, benefit oriented headline?
  • How compelling is the actual offer?

Always remember to do small scale tests first. if you have a list of 10,000 prospects why not come up with two different emails (same offer, different copy in the email) and send email A to 100, and B to another 100 and compare the results.

If you are going to use a third party service then check they offer costs on a ‘per subscriber’ and not ‘per email’ basis. If you are being charged per subscriber it means you can email the list several times for no additional cost. One great service which does that and offers a whole lot more besides is GetResponse

What is the most effective marketing for small businesses?

This is an often asked question and is a constant challenge for start-ups/small businesses on a tight budget. Having spoken to many SME business owners the same word keeps cropping up…..Referrals.

Why? well for a start the cost of acquisition is virtually nil, unless of course you have had to provide some form of incentive to get the referral. Secondly you have been recommended so your prospect hasn’t been given the hard sell but has received a more gentle approach. You can actively seek out referrals, the marketing guru Jay Abraham actually wrote a book that details 93(!) referral systems that you could, and should look to implement in your business.

The other area to look at is existing business. How often do you communicate with your customers? Do you communicate with your customers? What triggers do you have in place to monitor if a regular buyer stops buying? Running a business is a time-consuming thing and our best intention is to make regular contact but this normally slips. Many business owners ask “Won’t my customers get fed up with me keep sending them stuff?”. Potentially, yes, but you can minimise this. How? Make sure your communications are relevant, informative with a genuine and compelling offer.