Building a targeted e-mail list

Oct 01, 2006 9:30 PM  By

Growing an e-mail database isn’t a simple task for multichannel merchants. In fact, in its annual e-mail list growth survey, Atlanta-based e-mail services provider Silverpop reports that 53% of marketers rank the task of developing a qualified e-mail list as their top challenge.

Thanks to a high annual churn rate — 21%, according to a JupiterResearch study — building and maintaining an e-mail file can be like inflating a leaky life raft: You have to keep pumping air in to stay afloat. Thanks to the success of the e-mail medium, however, there’s no shortage of tactics to grow an inhouse file — though of course some tactics work better than others Jay Schwedelson, corporate vice president of Boca Raton, FL-based list services firm Worldata, advises merchants to look at multiple methods of collecting names.

“Now that the e-mail channel is maturing slightly, there’s not one thing you can solely rely on to grow those lists,” Schwedelson says. “The combination of many tactics will result in healthy e-mail list growth. You cannot just focus on one type of effort and hope that it will be enough.”

Here are a variety of tactics to use — and to a few to avoid — in growing an e-mail file.

DO use online marketing and search

Many experts consider online marketing and search — either search engine marketing (SEM) or search engine optimization (SEO) — to be a cost-effective but underused e-mail acquisition tactic. More than half (53%) of the respondents to Silverpop’s survey, in fact, ranked the method as moderately or very successful.

The idea is to encourage opt-in requests within your Website. So the ability to leverage paid search to drive visitors to e-mail registration forms depends upon the easy accessibility and visibility of an opt-in request. For that reason, you should pair online marketing and search with registration forms on every page of your site.

DON’T depend heavily on e-mail appends

E-mail appending — adding e-mail addresses you’ve rented to the postal addresses on your house file — is a tricky proposition. Marketers walk a fine line between engaging their catalog and retail customers in an additional channel and being viewed as a spammer.

Proponents of appending insist that when used carefully and properly, it can quickly and effectively help you increase market penetration, grow revenue, and improve customer communications. But the tactic has fallen out of favor for many marketers in recent months.

“The process was popular about a year ago, but over the past 6-12 months it’s been seen in the industry as a method that has really died down,” says Schwedelson. “It’s being viewed as a second-tier tactic. The data quality is not there, and the lifetime value of appended e-mail addresses is worse than if you ask for their e-mail address first-hand. The best prospecting method is to ask for your customer’s e-mail address right away.”

DO try a co-registration campaign

Co-registration is one of the fastest-growing areas for list development in the e-mail marketing industry. With co-registration, when users register on a Website for e-mail, they see the offer of another company and, by merely checking an additional box, opt in to receive e-mail from both companies.

Reggie Brady, president of Norwalk, CT-based consultancy Reggie Brady Marketing Solutions, says that the success of a co-registration program depends on picking the right partner. She contends that creating sponsorships with similar merchants to grow your e-mail lists is a better bet than renting lists from a competitor.

As an example, Brady points to an e-mail she received from food gifts cataloger Hale Groves, extending an exclusive offer for free flower bulbs from Gardener’s Supply Co. if the Hale Groves customer signs up for Gardener’s Supply Co.’s free e-newsletter. Hale Groves transmits the e-mail, but the recipient still has to click through to the Gardener’s Supply Co. Website to subscribe.

Still, “co-registration is working for consumer marketers right now, but not very well for a lot of b-to-b marketers,” Brady says. “But that’s the nature of the beast. It’s something that I think could be more robust in a six month time frame, as more b-to-b marketers are testing the process.”

DON’T get caught up in viral marketing

If customers find your e-mails valuable, they’ll forward them on to friends. But making a formal viral marketing program work can take a great deal of effort, and matching the right product to the right audience may not generate the right return on investment.

“Viral marketing can be phenomenal, but it cannot work if the person receiving your offer doesn’t feel it’s valuable enough to share with his or her friends,” Worldata’s Schwedelson says. “The critical part is that the offer has to be compelling enough that the recipient would want to share it.”

Also, the Federal Trade Commission has put into place requirements around programs that offer consumers incentives to forward information to a friend. When an incentive is involved, messages must be sent not directly from one recipient to another but through the company’s servers to allow for the removal of names on suppression lists.

DO start a niche e-newsletter

Lee Vann, principal of San Diego-based Hispanic marketing services firm Captura Group, says you can build a more targeted audience with a niche e-newsletter. What’s more, a specialty e-newsletter can boost conversion rates from 1%-2% to 3%-6%, he says.

One of Captura Group’s clients, TodoFut, a merchant of soccer apparel, equipment, and novelties targeting Latinos, has had success with a weekly e-newsletter that contains soccer scores as well as sales promotions.

“The audience sees the newsletter as something that is relevant to them, and it gives them a notion of providing an extra value,” says Vann. “It’s something marketers are always talking about. The more segmented your lists, the higher the response.”

DON’T be swayed by sweepstakes

Some marketers see an online sweepstakes as a way to generate thousands of leads, but such programs usually generate quantity at the expense of quality. In a June survey of 1,900 business technology marketers by marketing research firm MarketingSherpa, just 1% of technology service providers said that sweepstakes produced high-quality leads for them. Software/ASP firms and technology hardware firms fared only slightly better, with 2% of the former and 6% of the latter saying that sweepstakes works. That’s because online surfers often register simply for the chance to win a prize, regardless of how interested they are in the company sponsoring it.

But a contest can yield high-quality names if the prize is one that’s closely aligned with your company’s products or services. If you sell medical supplies, offering the chance to win a year’s supply of latex gloves will probably garner you more-qualified addresses than giving away an iPod.

Developing a lead-generation site with a free offer, a coupon, or another incentive targeted to determine the prospect’s interests, such as continuing education, health care, or credit, can work as well, says Amy Benicewicz, vice president of brokerage, inserts, and licensing for New Fairfield, CT-based database solutions provider Media Source Solutions.

One example is a multifaceted promotion run late last summer by ABC-TV and ConAgra Foods that partnering Orville Reddenbacher microwave popcorn and the hit TV series Lost. Consumers could register for freebies such as Lost desktop images and photos along with coupons for DVDs of the show’s first season and e-mails from Orville Reddenbacher. ConAgra did not release the response rate, other than to say that it was three times what it had expected and that the specially marked boxes with codes needed to access the exclusive content sold out.

DO start a loyalty program online

To be eligible to reap the benefits of an online-based loyalty program, the customer has to give you a valid e-mail address. And as Michael Greenberg, vice president of San Francisco-based loyalty marketing firm Loyalty Lab, points out, loyalty programs help companies break out of the “batch and blast mentality.” After all, in a loyalty program, there is usually a defined financial benefit to the customer for joining. So in return, it’s not unreasonable to require more detailed information — income, presence of children, age — from participants. You can then use these data to better tailor your e-mail lists and messages.

And loyalty program members are, by definition, customers. So the likelihood of a loyalty program member buying as the result of an e-mail, which Greenberg says is ultimately the most important metric an e-mail marketer can maximize, is far higher than that of e-mail recipients from other sources.

DON’T forget about renting e-mail lists

It’s no secret that good targeted e-mail lists have been more difficult to come by than effective, targeted postal lists. Benicewicz, for one, says that the quality of rented direct mail lists remains far superior to that of their e-mail counterparts.

There are two reasons that most e-mail files aren’t yet up to snuff, Benicewicz says. First of all, many more quality subscriber, buyer, and donor companies put their postal lists on the market than put their e-mail lists on the market. Second, e-mail marketing requires more volume than does direct mail to achieve similar results, due to deliverability problems and lower response rates, so a top-quality rental e-mail file needs to be larger than a top-quality postal list.

What’s more, pricing for e-mail lists is significantly higher: Benicewicz estimates that a consumer e-mail file averages $150/M to rent, compared to an average of $100/M to rent a consumer postal list. Consultant Brady says she’s seen b-to-b e-mail lists that cost as much as $500/M.

But Worldata’s Schwedelson says the cost of e-mail list rentals has dropped 15%-20% since the beginning of the year, and he expects further declines in price as availability grows.

“Right now I think it is to the marketer’s benefit to rent established [affinity] e-mail lists,” Schwedelson says. “The lists on the market have value to them.”