Because of its incredibly low cost, e-mail harbors a temptation that doesn't exist with other media: Forget caution and prudent testing; toss as many e-mails against the wall as possible to see what sticks. Patricia Berry helps you to determine what to emphasize in your e-mail advertising.
With the low cost of sending e-mails, people rationalize, saying, “What's the harm (besides wasted time and consumer complaints) in just trying everything and hoping that, eventually, some of it will work?”
The ease, speed, and low cost of testing offers and copy on the Internet means that many companies are basing their marketing decisions solely on opinion, rather than on customer behavior, data profiling, and controlled testing. In other words, they're approaching marketing as an art rather than a predictive science. The reality is that this haphazard process can cost lots of money.
Here's a quick example: You want to test three different price points for a product: $11.95, $14.95, and $19.95. To do so, you blast 1 million e-mails for each price point, resulting in 59, 32, and 20 sales, respectively (It's not surprising that the lowest price point generated the greatest number of sales). In dollars, that comes to $705.05, $478.40, and $399.00, respectively.
Here's the kicker: Let's say that your all-in cost of goods to manufacture the product is $6. This means that your gross margin at $19.95 is 70%, compared with 59% at $14.95, and 50% at $11.95. From this, you have to deduct the associated CPM and e-mailing cost to complete the analysis. Ultimately this will lead you to a volume versus margin decision and, in my example, the highest price point will probably win out. Unfortunately, you've burned 2 million e-mail addresses to come to this conclusion.
So how do you determine which offer to roll with or what copy points to emphasize in your e-mail advertising, in order to produce the highest and most margin-efficient conversion rates? Is it experience gained from other channels, such as direct mail? Do you conduct customer focus sessions? Do you count on creative suggestions from your marketing organization? Or do you simply rely on gut instinct and common sense?
The answer is predictive modeling.
Ironically, because of the ease of using e-mail and the speed with which offers can be distributed and evaluated, predictive modeling is significantly less expensive than with other media channels, such as direct mail.
One of the easiest, most powerful, and valid techniques to help predict responses and conversion rates with return on investment (ROI) metrics is the e-mail survey. Surveys can be constructed quickly and inexpensively to test pricing options, copy, and offers. You can send them to your existing customer base or to prospects to confirm or refute assumptions.
The size of the survey pool doesn't have to be massive to obtain statistically relevant information, either. Just 100 valid responses (not numbers sent, but actual valid responses) from a good list indicative of your customers will provide important data to help your marketing and creative team improve their strategic decision process and, ultimately, the success of your e-mail campaign. That's right, you need only 100 responses. Think about it this way: In a national election, only 700 people are surveyed to predict the outcome.
When constructing a survey, try to limit it to a few important questions. For example, we recently sent an e-mail survey to find out if more consumers were apt to buy a single product at the lower price of $19.95 versus paying $29.95 for two products. Much to our surprise, 70% of the survey respondents selected the $29.95 deal. This shaped our creative processes and was the offer that we ultimately rolled out.
Whenever you do a survey, tabulate the data and restate it in comparative percentages to provide an easy method to analyze the findings. Compare apples to apples.
To engage consumers to participate and respond to surveys, we sometimes incorporate involvement devices such as contests, sweepstakes, or inexpensive gifts. Where we've used these devices, we've kept our total costs under $3,000 while still producing tremendous participation. Clearly, surveys incorporating involvement devices are an extremely effective way to quickly engage tens of thousands of prospects in, literally, 24 hours.
Think of how inexpensive this is in comparison with the risks of rolling out an advertising campaign with untested creative. It also offers an opportunity to learn how people think and behave by the comments they make, because surveys can be used not only as a way of gaining critical insights and tactical knowledge, but also as a hybrid marketing tactic.
Survey respondents who identify their interests and behaviors are often quite willing to consider marketing opportunities matched to their needs and wants. Sometimes we determine this by ending a survey with an opt-in question asking whether they would like to see an opportunity that addresses their needs. We've seen cases in which more than 50% of prospects have responded affirmatively.
As a direct marketer who has worked extensively in every other media channel, I've learned that using e-mail surveys allows you to quickly and inexpensively reach tremendous numbers of prospects to gain instant feedback, test creative assumptions, reduce risks, and increase revenue.
Try it yourself before launching your next e-mail campaign, and don't be surprised if you see results improve by at least 10%.