Email: Retention Strategies in an Acquisition World
As Head of Digital Compliance for Act-On David Fowler isresponsible for issues including email deliverability, privacy compliance, and industry stewardship in regard to our customers and our corporate objectives. Prior to joining Act-On, David held U.S. and European-based senior management positions with Marketfish, Lyris Technologies, Blue Hornet/Digital River, and Yesmail.
Recently David sat down with me to discuss a topic he said is under-addressed: Using acquisition email in a retention-based world. This blog post is an edited transcript of our conversation.
SHERRY: Let’s define our terms. First of all, what do you mean by retention email?
DAVID: There are three categories of email. There’s commercial email, in which you make an offer of some kind to someone you have a relationship with.
Acquisition email is mail that goes to someone I don’t have a relationship with yet. I might be making an offer, or I might simply be introducing myself.
And finally there’s transactional email, in which you are usually confirming some kind of transaction: Order confirmation, shipping notice, membership acknowledged, monthly bill, and so on.
SHERRY: That’s somebody sending me an email saying your membership’s about to expire, would you like to renew, that kind of thing?
DAVID: Or thanks for buying the dress or pair of shoes. Here’s your confirmation, etc.
A retention email is an email that goes to someone I have an existing relationship with, because they have opted in to get my content. It doesn’t have to be a transactional email.
SHERRY: It’s not called relationship email?
DAVID: Well you could argue that commercial email is relationship email based on the fact that you’ve opted in to get it. Let’s say you go to Nordstrom.com and you buy something for the first time. Ninety-nine percent of the time the retailer is going to ask you to opt in for their commercial messages. Which you’ll probably do. You’re engaged, you’ve made the purchase, you’ve given your details, you trust the company, etc. So from that purchase you will receive an auto confirmation: “Here’s your order, here’s your tracking number,” etc.
You should also have also received the option to go to a preference center, select your preferences in terms of how often you want to be mailed to, and the things you’re interested in. So that’s retention-based commercial mail. Transactional mail is: “Here’s your order confirmation,” and that’s pretty much it.
SHERRY: If somebody writes to customer service and they get an email back saying something, is that transactional?
DAVID: It is transactional. As long as there’s no commercial content in the body of the message, then it’s transactional in nature. If you inject any kind of offer or service in the message, then under CAN-SPAM, you have something what’s called a primary purpose rule that kicks in. In the U.S., it’s the recipient (i.e., you or me) who gets the message that has to determine what the primary purpose of the message is.
So for example, if you get message that confirms your order, and also offers you a 25 percent off coupon for your next purchase. If the coupon dominates more real estate than the order information, then theoretically you could say the primary purpose of that message is “commercial” as the intent is to get me to buy something else.
Typically in those situations, marketers make the offer below the fold of the email message, and it’s not dominant in terms of the real estate.
SHERRY: An example: Here’s your receipt for your magazine subscription. One line at the very bottom might read “By the way if you’d like to preorder the upcoming book, click here.” That kind of thing?
DAVID: Right. That would be a transactional message in nature. Typically you want to use the 80/20 rule. Eighty percent of the message is a confirmation of some kind, with the offer being 20 percent or less.
The Promise and Peril of Acquisition Email
DAVID: In the U.S., we have the ability to send acquisition email. You begin with no relationship, you have no order confirmation. Let’s say for example you are a marketer looking for a subset of people with certain interests in a certain ZIP code. There are providers out there who can give you that data. The list vendor will send a file with 5,000 names and say that they allow you to mail to this list. That’s acquisition mail. There’s no pre-existing relationship whatsoever. It’s not ideal, but there may be a reason why a marketer would do it. I can imagine, for example, that a brand new business with no list at all might choose to do an acquisition email marketing campaign.
I’m of the belief now that in 2015 the marketer has to apply some form of retention-based strategy in this acquisition channel. Meaning: it doesn’t make a lot of sense for me to mail you something that you have no interest in whatsoever. But I have a little bit of information about you, so I’m going to put that information to work.
I know that you are part of a certain subset of people. So how do I get you on the hook? It’s like going fishing. I’ve got to put a little bait on there and then the right fish will come back on the hook. And then the marketer nurtures that name in a program with the goal of facilitating a relationship, trying to go for the longevity of the relationship, not necessarily the quick hit of the sale or the conversion.
No one’s talking about this. For so long the lead generation channel has been this open secret. Everyone buys lists and rents data. It’s not illegal. What is illegal is the list provider offering data for you to mail to that’s been obtained illegally.
If you choose to rent data, then it’s buyer beware. Can you provide documentation of permission? And if you can’t, then you should find another way to grow your list.
SHERRY: When you say it’s not illegal, does that mean it’s not illegal in the U.S.?
DAVID: This type of rental is no different than going out and buying a bunch of names to do a postcard mailing, and no one raises an eyebrow at that. The buying and selling of data is not illegal in the U.S., nor is it in Europe, although the names on a list are supposed to have provided permission and consent.
Feeding the lead generation beast
DAVID: There is a lot of emphasis on lead generation. At some point, a lot of companies will have to feed the fire. And how do we feed the fire in 2015? We go out and buy lists and we go out and rent names. Let’s say you buy 100 names and it costs you $100. You send a blind message and 25 of them click on something, so your conversion rate is 25 percent. So the true cost of the list that you bought is $4 per name.
Here’s a compelling argument: If I could double that response rate, I’d make that 50 conversions and halve my lead cost. How do I do that in a way that so subtly gets you on the hook? I don’t think marketers are looking at it that way. They generally say, “I buy X, I mail Y, my clickthrough rate or my conversion rate is Z.”
So I’d like to shift that conversation. Consider going beyond a one-time mailing to maybe a welcome program. When I say welcome I mean a “Hello, I’m here” kind of program. Say you mail once a week for a month, and if the recipient hasn’t done anything with it, then maybe it’s time take them off the list. What’s different is that it’s not just a one-time mailing.
SHERRY: Not an email blast.
DAVID: I am outlawing that word, “blast.” No, it’s more of a nurturing program or some level of outreach that has a numeric value attached to it.
SHERRY: And it would have a quick exit? Because if you can’t create some kind of smoke, as an indication of some eventual fire, then you need to get out quickly before you make an enemy?
DAVID: Yes. It all tails back to reputation; you do not want that recipient to hit the complaint button or spam button.
SHERRY: So when I buy a list, should I not, number one, find the most trustworthy list vendor I can? And number two, look for someone who has already segmented by people who have demonstrated something that makes it logical that they will be interested in what I have to sell?
DAVID: Right. You can do that. You could say I want to find men, between the ages of 16 and 25, in South Florida, in a certain ZIP code, who own white iPods with a 16 GB drive on them.
Now, the point is to use a retention strategy here. Don’t try to sell something right off the bat. You reach out to them. You could do a survey. “I see you’ve got a 16 gig iPod, how’s it working out for you? What don’t you like about it?”
SHERRY: Is it like, in the social sense, like somebody reaching out and saying, “Hey I see via LinkedIn that you’re a friend of David Fowler. I am too. Maybe we have more in common. Do you want to have a conversation?”
DAVID: No. If I don’t know who you are and your simple request is “Hey let’s connect,” then I’ll never connect with you. A generic message doesn’t work. But it takes you two minutes to personalize. And if you personalize something as simple as a LinkedIn request, then yes, I’m more likely to say “Yes, I’ll do that.”
SHERRY: So it’s not that hard to personalize.
DAVID: No, it’s not. Not at all. To begin with, if you buy a list, then you can show the person’s name. And if there are any other factors, you should be able to address them as well.
Personalization is key. And it’s not just about email. It’s also about everything else.
SHERRY: Let me see if I understand you. Here’s a scenario: I’ve bought a list, and it has data beyond first/last/email. My task is to segment it, then think of three different ways that I could personalize a particular message to one particular segment. And I’m going to test these. And then I’m going to see which one is going to give me my greatest return. And then I’ll go out with it, for another product, for another segment, for another day. I’m going to come up with three different messages. Because what fits today on Monday is not necessarily going to fit on Tuesday.
DAVID: Right. And it will be wrong for Friday.
SHERRY: So the practice of mailing to a list needs to be extremely dynamic and you need to remain very sensitive to all those small changes.
DAVID: It’s something people should think about. But the technology is there. You can do that. The question is, will you do it the way that you should? I think we (as an email service provider) should have that conversation with our customers about the land mines of acquisition email.
Here’s one way to look at it: Would you rather have four sales a year at $25, or one sale one time for $25? As a marketer, you want to have the four sales every year. But people aren’t thinking that way. They’re thinking I’ve bought this list, I’m going to mail to it, I want to get that quick number.
I’m saying to stop that thought process – and start thinking long term. It’s a marathon, not a sprint. Those names aren’t cheap; it can cost a lot of money to go out and buy the right names or lists, especially if you get extremely tailored data. You can buy lists from pennies on the dollar to $25 apiece. So if you’re buying a list at $25 a name, and you’re not doing smart marketing around that, then you’re missing the boat. You target, you segment your mailing based on what you know about the recipient.
Find a vendor that can give you plenty of collection data, some level of engagement data, good references, and third-party verification. That’s where you begin.
SHERRY: And then, when the marketer rents that list, the goal is to use a retention strategy. Don’t make a one-time hard sell offer, but do something so well, so compellingly, that they opt in. Did I get that right?
DAVID: It’s like going fishing. You know where the fish are. You’ve got a pond full of names. The question is the hook you’re going to use to get the right fish. People think they need to use a net to do that. I’m going to put my net in, I’m going to get 500 fish out. But really if you hook them, the ones you get will be the ones you want to keep.
The idea is that the tenets of permission-based marketing, such as segmentation, if viewed or adopted in some mainstream shape or form, could be applied into the challenges of acquisition mail.
I’ll close with an example. I got an email from an airline. They probably had my name on a list of frequent travelers. They reached out to me and said, “Here’s the value proposition. We’re going to make you a 100,000 mile flier. You haven’t flown one mile with us, but we’re going to bring you in at that rate.” And for the next two years I flew 250,000 miles with them. I accepted the offer because there was something in it for me.
SHERRY: So they knew something about you, and they made an offer in line with that. They made it worth your while.
DAVID: That’s the deal. That’s how you turn someone who has no relationship with you into someone who has a certain level of interest or a certain level of relationship with you as you move forward. You provide a value proposition that is somehow tailored for them. It’s a retention tactic in an acquisition channel.
Email marketing 101 is all about organically growing your lists and engaging your subscribers with content and information that’s tailored towards them. If you choose to bypass the organic route and rent or purchase data, you should be thinking about your long-term strategy – not your short term gain.
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