Data, Direct Mail, Email Marketing, Marketing

The Pitfalls of an Email-only Approach

Before the Internet, B2B direct marketing must have been a snap. Think about it. For customer acquisition, direct mail was the only game in town. All you needed to do was create compelling offers, buy or rent decent lists, send out the mail, and get results. Once the campaign was over, you would then crunch the numbers, pick the best offer, find better lists based on the responses… rinse and repeat. It all just came down to looking at how much it cost to acquire each customer, and how much each customer was worth.

Direct Mail

Used to be king...

Well, or course it was a lot more complicated than that.  But contrast that with what today’s direct marketer needs to face – a broad array of marketing choices, most of which didn’t exist 20 years ago – and it seems simplistic indeed. Direct Mail. Email. Display. Search Engine Marketing (paid and organic). Social CRM… Today’s list is staggering and grows constantly. And to add more complexity, let face it, we’re living in an age of shrinking marketing budgets – forcing marketers to do more with less, spread across more and more channels. No wonder why the average tenure of a CMO is so short. In fact, according to a recent AdAge column, Chief marketing officers have a shorter average tenure than NFL coaches, with barely two years before they are gone. Ouch.

Given the situation, it’s not surprising that many B2B marketers are turning lock stock and barrel to email, while scaling back or eliminating their traditional marketing channels, particularly direct mail. While email marketing can be highly effective, employing an email only strategy is both limiting and short-sighted. Contrary to popular belief, direct mail is not dead yet. In fact, direct mail remains a highly effective and powerful tool in every direct marketer’s arsenal – and is not going anywhere anytime soon.

Email Marketing

What's not to love?

Let’s get this straight: I love email marketing. In fact, I used to work as Interactive media buyer and I’ve brokered deals that have pushed out tens of millions of emails across both B2B and B2C channels. Over the years, I’ve used email marketing to generate bucket loads of high-quality leads and sold millions of dollars in goods and services for my customers. But, while email marketing can be relativaly inexpensive and highly effective tool, it’s not a silver bullet and should not replace other channels in your marketing mix. Think of email marketing as a tactic – one of many – that you should be using to reach out to your customers and prospects. There are several important reasons why.

To begin with, despite its reputation for being “inexpensive,” effective email marketing can be anything but. A statement I frequently hear during meetings with marketers is “email costs next to nothing.” Not true. Try making a few calls to quality email list brokers or data aggregators with true opt-in lists. Guess what, their data rates are expensive. Why? Because their lists are good. Compiling, cleansing, segmenting, updating and continually opting-in massive quantities of emails is a tough business with lots of moving parts. Nor surprisingly, list prices reflect this. But what about that list company that sent me a promotional email promising “great B2B lists for cheap.” Well, if they sent you an unsolicited message then you know they are spammers.

When it comes to working with email list owners or brokers, you need to ask the right questions. What are the best-practices they employ for their lists? Where did they get the data? How do you know it’s truly an opt-in list? Among the many questions that need to be asked, the most important one is: would you trust this list provider with your brand’s reputation? If you’re unsure, then the answer is no.

CAN-SPAM

No SPAM indeed.

The next reason why email is a tactic, not a strategy, boils down to the very nature of CAN-SPAM. In case you’re not familiar with it – and if you work in today’s integrated marketing world you most certainly should be – the CAN-SPAM Act of 2003 was a statute that established the rules for commercial email. It covers all commercial messages, which the law defines as “any electronic mail message the primary purpose of which is the commercial advertisement or promotion of a commercial product or service.” Contrary to what you may have heard, the law makes no exception for business-to-business email.

Among other things, CAN-SPAM prevents marketers from sending out unsolicited emails to those with whom they do not already enjoy an existing relationship. Moreover, the law also makes clear that you can’t contract away your legal responsibility to comply with the law by hiring another company to handle your email marketing. If your name and logo are in the message, it’s your responsibility legally speaking.

Businessman in jail

No, not THAT strict!

You should note, however, that there are no restrictions against a company emailing its existing customer base or anyone who has inquired about its products or services, as these messages are classified as “relationship” messages. If you decide to email customers or qualified prospects, though, be prepared to provide proof of the relationship in the event of a complaint. Penalties for non-compliance with CAN-SPAM are quite steep, as each separate email in violation of the CAN-SPAM Act is subject to penalties of up to $16,000. Each one! Anyone who has worked in the email marketing business almost certainly has first-hand knowledge of lawsuits, both real and frivolous, against both marketers and list owners.

This brings us to email appending. Over the past four or five years, a plethora or companies has emerged offering or claiming to offer this service. Email appending essentially refers to the act of merging a database of email addresses with an existing marketer’s customer or qualified prospect list to add email as an additional point of contact. In other words, email appending takes advantage of a huge loophole in CAN-SPAM that enables marketers to send commercial emails to existing customers or prospects the marketer has a pre-existing “relationship” with – even though these recipients have never opted in to receive email communications from the marketer. As such, email appending is a gray area and, not surprisingly, is fraught with risk. In other words, caveat mittens, or sender beware.

Another issue with email appending is accuracy. Not surprisingly, append rates tend to be quite low. According to Melissa Data, the typical append rate is 5% to 15%, which according to them is the industry standard. And keep in mind that after you append the emails to your customer list when you send out an email broadcast, most (at least 80%) recipients won’t even open your message – and among those who do so many will opt out from receiving more in the future. So in other words, don’t count on email appending as a sure-fire way to beef up your email database in a big way. It’s a great tool for adding incremental email addresses to your house file. Period. It should not replace or supplant other tools in your arsenal.

Now how can you reach out to those many prospects and customers for whom you don’t have an email address or permission to send emails to? This is where direct mail comes in. Indeed, for the vast majority of your customers and prospects, direct mail is the only viable channel you can use to communicate with them.

Think of Direct Mail as the Rolls Royce or direct marketing

Oh, but direct mail is so expensive, many marketers groan. Not if used correctly. And there are many ways you can contain costs. On the data side, make sure that your list is properly scrubbed using standard mailing services techniques, such as CASS Certification, NCOA, presorting, etc., so you can avail of the most competitive rates offered by USPS. Additionally, just because you have 100,000 records to send to doesn’t mean you need to mail each and every one.  Have you done any real analysis on your database? How many of those companies have filed for bankruptcy? How many don’t pay their bills on time and you don’t want as customers. How many don’t fit the profile of your ideal customer? Do you know what your ideal customer even looks like? Maybe you need a Customer Marketing Profile created for you? These are all important questions you need to be asking before you send out the mail.

Above and beyond the data, another important thing to keep in mind is how direct mail has evolved in the age of the Internet. Today’s direct mail is not the same as your grandfather’s or father’s – it’s grown up. Over the past 10 years or so, several fantastic new technologies have emerged that improve mail tracking (Intelligent Mail Barcodes), improve response rates (1:1 communications with Variable Data Printing), and connect direct mail seamlessly to the Internet (Personalized URLs, or PURLs) and the mobile channel (QR Codes). All of these cool new technologies have breathed new life into the channel, giving it staying power in a multi-channel world.

Direct Mail piece with QR Code

It's not your father's direct mail.

Getting back to the issue of cost, direct mail may be more cost effective than you think. In fact, I used to work for a B2B technology company that sold hybrid marketing automation and campaign management software. We tried to rely on email as much as possible, but it the end of the day we discovered that the cost per lead was far closer than you would ever imagine when comparing direct mail and email. In fact, when factoring in lead quality we sometimes found out that direct mail campaigns had better ROI in the long run.

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About rio_longacre

Rio Longacre is a veteran of the direct marketing space. He works at Capgemini Consulting USA as a Managing Consultant, Customer Experience Consulting, in the Life Sciences Market Unit. He is based in the firm's New York City office. Rio can be contacted at: rio.longacre@gmail.com. Or, you can follow him on Twitter at @RioLongacre. Any opinions expressed in the piece are his own.

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