DRIVING THE ROI OF SOCIAL AND EMAIL MARKETING

DRIVING THE ROI OF SOCIAL AND EMAIL MARKETING Tactics to Deliver Relevance and Results Written by David Daniels, The Relevancy Group, LLC November, 2011

Driving The ROI of Email and Social Marketing Tactics To Improve Relevance and Results Written by David Daniels, The Relevancy Group, LLC StreamSend Overview: Email continues to be used each day by 93% of consumers. Mobile utilization of email and social is also on the rise, with as many as 66% of consumers interacting with email on their mobile phones. Consumers continue to demand relevance and state that non-relevant or too frequent email marketing messages will be deleted. Email continues to drive high Return on Investment (ROI), higher than other direct marketing channels. Email is bringing in $40.56 for every dollar spent on it this year, according to the DMA. The majority of email marketers are not embracing segmentation strategies to improve relevance and marketing results. Marketers that use email in combination with social segmentation drive six times the amount of revenue than those marketers that do not connect social and email segmentation. Moreover, marketers that are able to leverage social and email data deliver monthly marketing campaign profits that are seven times higher than their unsophisticated peers. List of Report Figures Figure 1 Marketers Must Embrace the Consumer Desire for Relevance Figure 2 Email Usage Remains a Persistent Daily Activity for US Consumers Figure 3 - Majority of Marketers Still Missing Many Major Segmentation Opportunities Figure 4 - Subscriber Churn, Frequency Management and Delivery Drive Email Marketer Challenges Figure 5 - Mobile Email Usage Soars Particularly Among Younger Consumers Figure 6 Today s Rudimentary Email+Social Tactics Will Increase in Sophistication Figure 7 Email Benefits from Social Connection Model comparing Non-Email+Social Marketers to Email+Social Marketers For more information on The Relevancy Group s services, visit www.therelevancygroup.com, call (877) 972-6886, email info@therelevancygroup.com or on twitter @emaildaniels or @relevancygroup Reproduction by any method or unauthorized circulation is strictly prohibited. The Relevancy Group s reports are intended for the sole use of clients. For press citations, please adhere to The Relevancy Group citation policy at http://relevancygroup.com/press.htm. All opinions and projects are based on The Relevancy Group s judgment at the time of the publication and are subject to change. Page 1

The Here and Now: The Reality of Consumer Expectations Demand a Sophisticated Approach from Marketers Hundreds of brands and their advertising impressions vie for the consumer s attention each day. Consumers are increasingly time starved to digest this ever-increasing amount of marketing that collectively makes up our consumer driven Short Burst Society i. The Short Burst Society is made up of the hundreds of millions of consumers using Facebook and Twitter to communicate quickly with one another in short-hand, where words such as okay are now simply written as the letter K. This frenzy of persistent information and communication disrupts the consumer s focus, manifesting in a heightened attention deficit towards marketing messages. The difficultly to wade through this tremendous volume of communication and marketing noise is further exacerbated by consumers own multi-tasking behavior and their ability to connect with, comment on and time-shift marketing messages at will. These are the very real challenges that marketers are presented with. Marketers must begin to adapt their tactics in order to drive message relevance across channels, as well as increase marketing effectiveness. To meet such radical change, marketers must embrace the following facts about today s consumers and meet their demands for a connected relevant brand experience. Consumers Demand Relevance In a survey conducted by The Relevancy Group, 1,001 consumers ages 13 and older were asked about their online behaviors in the last six months. The top response from 72% of the consumers was I deleted an email marketing offer that was not relevant to me. ii This attention deficit answer was highest among 27-32 year olds where 79% indicated this as a common behavior (see figure 1). While unsubscribe rate is a worthy metric to monitor, given the efficacy of the mobile email device and the soaring gigabytes of email storage available to consumers, clearly deleting and not taking the time to opt-out is the primary behavior. Similarly 59% stated in the same survey that they delete marketing offers because the brand hits their inbox at a high and undesirable frequency. Clearly, consumers demand messages to be timely and relevant and will penalize those marketers that do not meet this criteria. Relevance is the intersection of content and context that is metered by frequency. Consumers View and Interact with Brands Holistically Across Channels, But Email Drives Interaction While silos persist in almost every marketing organization, consumers view and interact with brands across multiple channels, (email, social, mobile, offline) holistically. When they interact with a brand online or offline, they expect to be recognized and viewed as the same consumer and, accordingly in their view, the brand as one across channels. While more consumers spend an increasing amount of time using social networks such as Facebook, it is important to recognize that consumers continue to utilize email as a primary communication tool. This is particularly true as it relates to inbound marketing messages that drive and push the consumer across channels or to drive social interaction. The death of email has been greatly exaggerated, as 93% of consumers report to use email every day (see figure 2). However the appetite for consumers to share relevant marketing email to their social networks is documented by the 10% of consumers that do this on a regular basis, a number that is as high as 22% of consumers in younger demographics (see figure 1). Page 2

Figure 1 Marketers Must Embrace the Consumer Desire for Relevance Question Asked: Which of the following have you done in the last six months? (select all) Source: The Relevancy Group Consumer Survey, n=1001 11/10, United States Online Consumers Ages 13+ Figure 2 Email Usage Remains a Persistent Daily Activity for US Consumers Question Asked: How often do you check your primary personal email account? (select one) Source: The Relevancy Group Consumer Survey, n=1001 11/10, United States Online Consumers Ages 13+ Page 3

Email ROI Remains Higher Than Other Direct Marketing Channels Email continues to drive high Return on Investment (ROI), higher than other direct marketing channels. Email is bringing in $40.56 for every dollar spent on it this year, according to the DMA. This is compared to catalogs ROI of $7.30, search s return of $22.24, Internet display advertising s return of $19.72 and mobile s return of $10.51 iii. Given the positive financial health of the channel and its persistent use by consumers, the inbox will continue to be cluttered. Ultimately such clogged inboxes require that marketers embrace relevant tactics in order to break through the clutter. Marketer Tactics Are Not Aligned To Consumer Expectations While consumers clearly demand and reward relevant messaging, the majority of email marketers have yet to embrace tactics such as segmentation, testing and targeting that manifest relevance in the inbox. An executive survey conducted by The Relevancy Group found that the majority of email marketers are missing valuable segmentation opportunities and instead, typically blast a one-size-fits-all message to every customer (see figure 3) iv. Marketers that fail to use important behavioral data such as email clickengagement will be unable to execute different messages to subscribers that are engaged versus those that indicate they are lapsing or simply deleting messages. This basis of audience engagement understanding is necessary particularly when attempting to drive engaged subscribers to become social advocates. Marketers must harness the data that they possess about their subscribers to drive relevance, engagement and ultimately, social advocacy. Without at least the use of changing message creative elements based on group segmentation, marketers that fail to segment will be at a severe competitive disadvantage to other email marketers that embrace such a tactic and stand a much better chance to appear relevant in the inbox. Figure 3 - Majority of Marketers Still Missing Many Major Segmentation Opportunities Question Asked: Which of the following customer data attributes has your company used to segment audiences for marketing campaigns within the last six months? (select all) Source: The Relevancy Group Executive Survey, n=368 5/11, United States Only Page 4

On The Horizon: Improving Social and Mobile Connection through Email Impressions Becomes Imperative While email relevance will remain a priority, driving the need for marketers to quickly amass the technical skills to realize and advance relevance, marketers must also immediately look to the near future that can be defined as the social and mobile imperative. The critical mass of mobile adoption is here and mobile smartphones shipments are expected to eclipse PC shipments in 2012. The use of mobile devices, particularly for email and social interaction, increases the time that consumers spend interacting with these channels, but simply in a different, small screen kind of away. Accordingly, marketers must begin preparing now for mobile to ensure that emails render appropriately in order to further increase email-inspired social interactions. Additionally, marketers must begin to make new inroads to ensure that they have a full social presence on destinations such as Facebook that include not only branded pages, but tabs as well. Marketers must begin investing in thinking about the following opportunities and challenges that the marketing horizon presents. Email Delivery Will Remain a Persistent Challenge Broadcasting a one-size-fits-all message to every subscriber, regardless of their click interaction, will impede email marketing delivery as well as increase marketer costs. ISP (Internet Service Provider) giants such as Yahoo! AOL and others are under the gun to increase profitably and the reality is that they have cut email postmaster resources and adopted a more systemic approach to metering marketer inbox placement in order to their reduce costs. This systemic approach entails blocking email marketers that hit too many dormant email accounts of their former users. Such a risk can be mitigated by monitoring and segmenting subscribers based on email click behavior. Moreover, without a persistent focus on getting the message delivered to the email inbox, any focus on ensuring that there is an email subject line impression, click or social interaction is a wasted effort. Marketers must focus on ensuring delivery, as it will continue to be a perennial challenge to the email marketing discipline as Relevancy Group surveys have documented (see figure 4) v. Email address-switching behavior will continue to drive this issue, as 30% of consumers in the aforementioned Relevancy Group Consumer Survey indicate that they have switched or created a new email address in the last year. Remaining relevant and maintaining engaged subscribers is imperative to driving the email and social connection. Email is Mobile and Rendering of Messages Will Increase in Importance across Devices and Platforms Overall, 39% of consumers state that they access one or more of their personal email accounts on a mobile device vi. This number of consumers, however, soars when focused on the profitable and key demographics, specifically those consumers under the age of 39 (see figure 5). This behavior will continue as the innovation of devices persists and the multi-tasking short burst society behavior further solidifies as the norm and not the exception. Simply, as the younger generation matures, this behavior will persist to become the mainstream of the population rather than a peaked exception of younger online email consumers. Accordingly, email marketers must ensure that their email marketing messages and landing pages render appropriately on mobile devices. Such fervent mobile behavior will drive marketers to ensure that their messages are not just readable, but can be consumed and read quickly on the small screen. Such a mobile focus is imperative to advance sharing and email plus social practices for the marketing organization. Page 5

Figure 4 - Subscriber Churn, Frequency Management and Delivery Drive Email Marketer Challenges Question: What are your greatest challenges when conducting email marketing? (select all) Source: The Relevancy Group n=674 4/10 (US 486 Responses) Selected responses Figure 5 - Mobile Email Usage Soars Particularly Among Younger Consumers Question: Do you currently access one or more of your personal email accounts on a mobile device, such as a cell or smart phone? (select one) Source: The Relevancy Group Consumer Survey, n=1001 11/10, United States Online Consumers Ages 13+ Page 6

Leveraging Social Sharing, Social Control and Measurement Will Increase In Importance for Marketers While 55% of marketers indicate that they have created branded fan pages on Facebook, far fewer have begun the more advanced tactics such as implementing social listening platforms (38%) to discern customer sentiment (see figure 6) vii. Understanding and identifying customer advocates on social networks is important today and will become essential in the coming year as consumers will increasingly reward brands not just by their ability to be relevant, but also to provide a satisfying and enriching experience. It will become imperative for marketers to use mechanized tools to market efficiently and effectively on social networks, but also understand consumer sentiment and measure it accordingly. Today, Facebook has marketers captured to play by their rules and continues to change their rules, such as their change from Fans to the Like button and the continual tinkering to their API. Marketers will continue to be at mercy of Facebook as to what is possible and what data is available to them. Unlike internally owned email data, this suggests that marketers must commit to Facebook s will and embrace the notion of Social Leakage. Social Leakage is a construct where the marketer relies on an outside platform such as Facebook in order to understand the social engagement of their audience. However, Social Leakage is further exacerbated when that consumer on that network then shares that information off to an email or to a different social network, and with every click the social data that is important to the marketer will leak out of the database. For the marketer, it will become harder to recognize and understand the consumers cross channel social behavior across networks. Accordingly, marketers will begin investing in social tools that are tied to their email marketing platforms where such social and deployment are easier to manage and more effective. In this approach they will have more control to manage the frequency of posts as well as the measurement of the consumer s overall social interaction. Figure 6 Today s Rudimentary Email+Social Tactics Will Increase In Sophistication Question Asked: Which social marketing initiatives have you currently deployed, plan to deploy or do not plan to deploy? (select one for each tactic) Top Responses Source: The Relevancy Group Executive Survey, n=368 5/11, United States Only Page 7

The Imperative Tactics: Marketers Must Connect Social and Email Marketing to Advance the Customer Relationship Given the volume of marketing messages that consumers must wade through to discover meaningful offers which are further impeded by rather rudimentary email and social marketing tactics, marketers must quickly focus on easy to use solutions. Such a focus on efficient solutions is necessary to advance inbox delivery, mobile rendering and social presence in order to advance the brand s customer retention, engagement and advocacy. Marketers must focus on solutions that can deliver meaningful ROI that are derived from the ability to segment subscribers based on engagement and tactics that can quickly build Facebook functionality to drive advocacy and fan the flames of retention in an efficient fashion. Marketers Must Ensure Inbox Placement through Subscriber Reactivation and Engagement Focus Given the ISP penchant to penalize email marketers for mailing to dormant addresses, marketers must quickly begin to measure engagement and mail differently to subscribers based on these engagement levels. Marketers should investigate the following tactics: Craft a Win-Back Campaign: Understand click behavior of email messages and begin putting subscribers into segments that show some level of engagement such as at the bottom, two clicks over a three month period to the top, subscribers that click on a link in every mailing they get. Then find those subscribers that don t match any bucket or are just below the lowest level of that three month engagement and craft campaigns directed at them to win them back. Surveys often can have higher participation, and given the near universal desire for consumers to share their experiences, a survey mailing should be used to determine if the subscriber has a pulse. Depending on the brand s statement and ability to be edgy, test different provocative subject lines that might drive behavior. One cosmetic brand found success with such a subject line Are You Breaking Up With Us? That was enough for a nearly a third of their inactives to at least open the email with about 15% of that third clicking through. Coupons and sweepstakes, if brand appropriate, also are usable tactics to drive such win-back behavior. Remove Dormant Addresses: Cut the dead weight as needed. After the win-back campaigns are crafted, cut the dead weight off of the list. Why market to consumers that simply are no longer living at that email address? Doing so is an ineffective spend of the marketing dollar and akin to renting an airplane dragging a marketing banner to fly it over a ghost town or graveyard. What is worse, marketers that do not understand their dormant subscriber file will have greater delivery issues, including all-out blocking. Marketers must focus on improving delivery, realizing that a 5% of inbox delivery improvement is equal to improving revenue by at least half of a percent. Make the math simple - the more messages delivered to active subscribers, the more likely that they will transact. In this exercise, it is imperative to remain relevant and marketers must use every bit of data they have about that consumer to make the remaining surviving subscriber messages relevant and effective. Page 8

Become Relevant Through Segmentation, Social Sharing and Message Rendering Notwithstanding delivery improvements that click-based engagement segmentation can provide, it is imperative to focus on understanding customer behaviors and all available subscriber preference data to produce relevance-driven results. Accordingly, marketers must embrace the following tactics; Leverage Social Interaction to Drive Email Acquisition: Given the persistent challenge of subscriber churn, marketers must be equally focused on acquisition and retention. Marketers should leverage email to social sharing and Facebook pages to drive social visitors to email opt-in pages. Particularly when a customer expresses social advocacy, the marketer must present the customer with an easy way to optinto the mailing list. Additionally marketers should ensure that email opt-in registration pages set the expectations for how frequently email will be sent, as well as include a thumbnail image of what the email message looks like. Improve Results Through Understanding Engagement: Determine what engagement means to the organization. Engagement can be measured by spending, clicks, shares or other general behavioral events that drive worth to the brand. Utilizing a simple approach to score subscribers and utilize KPI s (Key Performance Indicators) has proven to be a useful mechanism to segment subscribers. Overall, this engagement exercise will demonstrate how much of the list is active in different ways. For example, for segments that are more engaged as measured in higher opens and clicks, testing higher mailing frequencies could be a remedy. Engaged segments should also see promotions for social and Facebook sharing more regularly than those consumers that are not as engaged. Improve Audience Reach Through Social Sharing: Marketers must make it easy for consumers to share content. While marketers typically only offer the ability to share the entire email message, consumers typically like to share the elements in that content that is interesting to them. Accordingly, marketers should include share buttons throughout the email copy so that nuggets of content can be shared. Marketers must also make the content compelling, such as using humor or a coupon to drive social sharing interaction. However, it is leveraging this social sharing behavior as a segmentation attribute and listening on the social web to what the customer is saying about the brand that are tactics that will further accelerate marketing results. Ensure that Messages can be Read Properly on the Small Screen: Given the increasing number of subscribers viewing their email on mobile devices, the marketer must also ensure that all emails render properly on these smaller screens. Using iphone emulators and message rendering tools that are built into most ESP applications will assist in ensuring that messages are readable. The same approach should be applied to landing pages and micro sites in order to ensure their rendering ability. Marketers should also experiment with shorter content, or mobile-specific content to ensure that buttons, such as social sharing, are larger and can be more easily tapped. Page 9

Seek Solutions That Provide Efficient Ways to Extend Content across Email and Social: Marketers must seek solutions that make it easy to create marketing content once and then turn it into a Facebook Tab, a blog entry or an email. Vendors that empower production efficiency allow the marketer to focus on the creative and analytical aspects of their job. Accordingly, marketers should work with providers that not only ease the production efforts across creating email and social content, but also offer integrated analytics across these channels. Ensure the solution can track statistics, particularly when these content elements go viral to enable discovery of which subscribers shared which content element in what channel. Marketers will be much better equipped to optimize their mailings with such deep social and email analytics. Marketers Implementing Relevant Tactics That Connect Email and Social Marketing Have a Higher ROI The Relevancy Group identified two segments of email marketers. One group of marketers was made up of those that do not implement segmentation or utilize social sharing. The second group of marketers included those utilizing social sharing and segmenting and targeting socially active advocate subscribers. In comparing their own reported, open, click-through and conversion rates the second group of marketers that are leveraging the connection of email and social had a higher ROI. In every instance, marketers combining email with social had higher open, click-through and conversion rates. For the purposes of comparison, The Relevancy Group assumed that each marketer was mailing 2.9 million messages a month and had an average order size of $98.00. This model illustrates that the marketers using email in combination with social segmentation drive six times the amount of revenue than those that don t (see figure 7). This will show that marketers leveraging the aforementioned tactics have higher response rates than those marketers that blast messages in a non-sophisticated/connected fashion. In this scenario, marketers utilizing email and social delivered approximately $2.1 million dollars in revenue in a one month period. Moreover, The Relevancy Group looked at the costs, including the marketer headcount that was necessary to do these more sophisticated mailings. While email+social annual headcount budget was 25% higher than those marketers that were broadcasting the same message to every consumer, monthly profits that they were able to attain because of higher results were nearly 7 times that of an unsophisticated marketer (see figure 7 on the following page). Page 10

Figure 7 Email Benefits From Social Connection Model comparing Non-Email+Social Marketers to Email+Social Marketers Source: The Relevancy Group Executive Survey, n=368 5/11, United States Only Assumes 2.9 million messages a month, $98 dollar AOV, performance metrics as reported from survey respondents. End Notes i Visit www.shortburstsociety.com for more information and discovery on this topic. ii The Relevancy Group Consumer Survey, 11/10 n=1,001 consumers ages 13+ US Only iii Direct Marketing Association s Power of Direct economic impact study 11/4/11 iv The Relevancy Group Executive Survey, 5/11, n=368, Email qualified marketing executives US Only v The Relevancy Group Executive Survey, 4/10 n=674 US n=486 Responses of Email qualified marketing executives indicate that email delivery continues to be a top 3 challenge for email marketers. vi Ibis endnote ii vii The Relevancy Group Executive Survey, 5/11, n=368, Email qualified marketing executives US Only, Question Asked: Which social marketing initiatives have you currently deployed, plan to deploy or do not plan to deploy? (select one for each tactic) Page 11

About StreamSend StreamSend offers an easy-to-use, affordable and dependable email marketing software solution designed to help businesses make the most of their time and money. We are focused on developing and delivering elegant technological solutions to meet the communications needs of our customers. We believe in the value and freedom that comes with email marketing, and stand behind several core principles of email marketing for our company, product and service. And we also believe in having a little fun. For more information, please visit: www.streamsend.com. About The Relevancy Group The Relevancy Group is dedicated to educating the market on the imperative tactics needed to foster trust with consumers and improve an organization s relevance within the broader online economy. Working with the leading vendors and associations serving the household names that comprise our economy, The Relevancy Group acts as an educator and trusted advisor in the aim of optimizing crosschannel marketing strategy and tactics. For more information, please visit: www.relevancygroup.com. David Daniels, CEO, The Relevancy Group Bio According to Direct Magazine, David Daniels is one of the most influential experts in email marketing, if not the most influential. Until January 2010 he served as Vice President and Principal Analyst with Forrester Research and JupiterResearch. David is co-author of the book Email Marketing An Hour A Day and has been a contributor to the Weekend Today Show on NBC. David has held senior level positions at Apple Computer, Urban Outfitters/Anthropologie, Micro/MacWarehouse, ProTeam and CDA Computer Sales. David writes a bi-weekly column for ClickZ on Email Marketing. Page 12