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The overwhelming mathematics of email marketing

The overwhelming mathematics of email marketing

Email marketing is spectacularly efficient.  It is sensationally powerful.  For many businesses it represents the killer app in your internet marketing mix, driving loyal customers back to buy from you again and again and again.  The catch?  If you are lazy with your processes or arrogant about customer loyalty you may never recover.

So let’s kick off with the science bit.  The science bit simply exposes the maths of conventional marketing versus the maths of email marketing.

Conventional press advertising typically has a rate card value of £50 for every thousand people you wish to reach.  The very best recall rates of such adverts are 7% of people who remember, a further small proportion of whom will go on to buy.  By multiplying up, that infers that to get a thousand people to remember your brand and proposition will cost you £715, or 71.5p per person.

Email marketing production and delivery costs are notionally £25 per thousand, with recall rates well in excess of 30%.  Whilst purchase rates are difficult to measure, using the metrics from above, communicating to a thousand people costs circa £83 per thousand, or 8.3p per person.

However the 850% price hike from email to press marketing isn’t the big news.  The real story is the economy of scale around assets, in the form of customer information and permission.  For your second press advertising campaign you are starting from scratch again, hoping to interrupt people with a message compelling enough to get them interested once more.  However for your second email marketing campaign, your email recipients have already given you their permission to talk to them and thus expect communication.

So over time there is a snowball effect as customers receive greater value through email, recommend their friends, who receive greater value, who receive more emails, who buy more things, who recommend more friends, etc.

So why isn’t everyone doing this?

Because not everyone is prepared to accept the catch.  Simply put, to paraphrase the famous quote, for the first time ever we can know (if we wish to) which 50% of our marketing works and which 50% of our marketing doesn’t work.  And for some marketing managers who have been used to big budgets, big campaigns, and long lunches with advertising executives this is the worst news they could ever have feared.  Brash shouting to the masses has been replaced by subtle relevance to individuals.

The consequences of this for your business and ours are massive.  It means that the email recipient list needs to be built bespoke, specifically for your organisation, one email address at a time.  It means asking your customers for email addresses at each point of contact.  And yes, it means that you can’t rent and blast bomb a big list of email addresses, throwing manure at the wall and hoping some will stick.

It dictates also that your marketing needs to actually add proper value to your customers, or your contribution will get lost in the middle of a busy Inbox somewhere, or worse still a less busy Junk folder somewhere.  Your title needs to compel your customer to open your email.  Your copywriting needs to be honed and developed.  Your calls to action need to get your customer to the next stage.

But perhaps most of all it means that marketing managers have to start to seriously consider that interruption marketing is on its last dying breaths and permission marketing, dominated online by email and social media marketing, is the future.  The recession has only served to focus all of our minds on the overwhelming mathematics of email marketing.


By Gareth Dunlop

Gareth formed Fathom in 2011 and has been in the business of design performance for over two decades.

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