by Troy Janisch

Subscribing to an electronic newsletter is like giving out your phone number on a blind date. It’s a gamble. Sometimes you get what you want. Sometimes you never hear from them again.

And, sometimes they never stop bothering you.

They are the blind date from hell. You are deluged by a rapid array of one-sided email or telephone sales pitches highlighting how wonderful, fast, reliable, and inexpensive their products are. They talk, talk and talk hoping that their volume of words will convince you to buy.

It doesn’t.

The average conversion rate (percentage of emails sent resulting in sales) for an email marketing message is only.3% (3 in 1,000). This makes it about one-third as effective as a direct mail campaign.

However, the cost is much lower. A Gartner study found that email advertising, which costs less than 50 cents each, could be 75 to 90 percent less expensive than traditional direct mail, which ranges between $1 and $5 per piece. A Jupiter Communications study found similar savings, with the average cost of one piece of direct mail to be $1.50 and the average cost of email to be $0.13 per piece.

However, viewing email marketing solely as a low-cost alternative to direct mail is a common mistake. This artificial paradigm can lead to a scenario where, in order to maintain a reasonable conversion rate, a company has to constantly increase the volume of email addresses collected and messages sent. In doing so, their Email marketing efforts eventually fail when the company runs out of fresh email addresses or becomes ineffective by sending too many email messages to the same email addresses.

Successful email marketing isn’t based on volume. It’s based on knowing the person behind each email address; managing their expectations; and crafting relevant communications for each user.

KNOWLEDGE
It takes more than an email address to get the right message to the right person.

• ROLE – What roles does a subscriber have at work, home, or life that brings them to your company’s web site. How does that role shape their interests in your industry, your company and its products/services?

• INTEREST – Know the type of information individuals want to receive. Few people want to receive every communication from a company. However, they may be interested in receiving press releases, product updates or promotions without having to get all three. Are they interested in all your products/services, or only one of them?

• MOTIVATION – What are individuals hoping to learn from you? Do they want to learn about your company, your products, or your industry? How can the information you provide help them?

EXPECTATIONS
Let subscribers know, before they choose to participate, how your company will use email to communicate.

• FREQUENCY - Describe how often you are going to contact individuals who provide email addresses.

• CONTENT – Describe what information will be sent. If they are subscribing to a newsletter, provide examples for them to review prior to subscribing.

• PRIVACY – Let people know up front how the information they provide will be used. Subscriptions should require email confirmations from subscribers before initiating to protect privacy.

• CHOICE – Make it clear that individuals are receiving information they requested. Give them opportunities to change their subscription and suggest content. Make it easy for them to unsubscribe if their needs change.

COMMUNICATION
Many companies mistakenly view email marketing as a one-way channel. However, by using the knowledge subscribers provide up front and setting expectations, it’s possible to create email marketing content that is targeted, appropriate and relevant.

• TARGET – Send messages to segments of your email database, instead of the entire database, based on the relevance of the message to the recipient’s interests.

• FOCUS – Individual messages should be closely related to specific interests identified by recipients. Be aware of their interests prior to crafting messages and ensure that the content of messages address the demands of subscribers.

• EVALUATE – Use tracking tools to monitor email messages that are delivered, opened, and acted upon. As patterns develop, contact subscribers who are not reading your messages to determine whether the subscription is appropriate to their needs.

Include links in messages that make it easy for recipients to rate the relevance of each message and their interest level. Use the information collected to improve future communications.

By applying these principles, conversion rates can increase more than tenfold can surpass direct mail in many applications. Particularly, when it relates to customer retention.

Forrester Research reported that 92% of marketers felt that email was "very effective" for customer retention while only 54% saw it a very effective tool for customer acquisition. This makes perfect sense,

It’s all about relationships.

Note: Conversion rates are calculated from DoubleClick Software’s August 2003 QII Email Trend Report”. This report suggests a 3.9 percent conversion rate by basing it on the number of email messages where links were clicked. I created a more accurate conversion rate by basing it instead on the number of messages delivered.