How Much Is Your Email List Worth?

Every good direct marketer knows the top company asset is the customer database. Almost anyone with marketing experience can turn that data into revenue. I say “almost” because there is still a social media movement trying to prove that direct mail and email marketing is dying. It’s doubtful that anyone in that group could create and execute an effective plan that delivers sales and profitability. But, for the rest of us, the people who understand that customer relationships are about the quality of service, a solid list is money in the bank

Every good direct marketer knows the top company asset is the customer database. Almost anyone with marketing experience can turn that data into revenue. I say “almost” because there is still a social media movement trying to prove that direct mail and email marketing is dying. It’s doubtful that anyone in that group could create and execute an effective plan that delivers sales and profitability. But, for the rest of us, the people who understand that customer relationships are about the quality of service, a solid list is money in the bank.

Direct mailers are very good at creating detailed plans that project sales and profitability down to the penny. When shifts in external factors like weather and politics affect sales, adjustments are made to keep the company operating in the black. Executing a direct marketing campaign requires a significant investment, making careful management necessary to corporate success. Customers and prospects are segmented, monitored and measured every possible way in an effort to increase lifespan and lifetime value.

Email Marketing Is Different
The investment required for email marketing is minimal when compared to direct mail. Returning a profit is so easy that marketers are lulled into complacency. When the revenue to cost ratio is that good, why invest additional resources in making it better? After all, there are always other areas that need more attention.

Email marketing can do so much more than generate revenue and profits. In the right hands, it increases customer loyalty and reduces operating costs. Emails offer the opportunity to create a personal connection that is unavailable in any other marketing channel. They can be used to economically provide high quality service on an individual level. Capitalizing on this requires in-depth analysis that begins with the value of email subscribers.

How Valuable Are Your Email Subscribers?
There is a direct relationship between the quality of your email marketing program and the value of your subscribers. Programs that build relationships using personalized promotions, education and service create substantially higher value subscribers than pure-play promotional campaigns. This really shouldn’t come as a surprise to anyone because better investments always yield stronger returns.

The first step in creating high value subscribers is analysis. How do the customers and prospects that participate in your email program differ from the ones who don’t?

Compare purchase history, time from first entry to purchase, times between purchases, average order, lifetime value, lifespan, number of orders in specific time frames and any other valuation information available. Segment customers and prospects as needed so you will be able to consistently evaluate the results. Seasonal, discount, and hit-and-run shoppers significantly skew the results. The information accumulated here is the benchmark that will be used to gauge the effectiveness of new campaigns.

Next, catalog all of the emails sent to each segment over the last two years. Include all available results so new emails can be compared to historical data. If you haven’t been segmenting subscribers, or segmented them a different way, capture the information that is available and move on. Don’t waste resources trying to analyze something that doesn’t have enough data to provide clear results. When finished, you’ll have a good idea of the current value of your email subscribers.

Creating a New Email Marketing Program
The analysis you’ve done tells you what has happened in the past. If you are happy with the results, keep on doing the same things. But, if you want more:

  • Look for gaps in your email marketing campaigns. Do they include personalized emails? Are the transactional emails optimized? Are you sending educational emails that teach subscribers how to use products and services?
  • Are you emailing often enough? Test sending emails more often to a sample of your subscriber list. If response increases without a significant jump in opt outs and spam reports, roll it out. Well targeted emails that provide value to recipients are rarely rejected.
  • Use your email marketing to improve customer relationships. Invest time in understanding your customers’ problems and creating solutions. The more problems you solve, the less likely they will leave. Email is an excellent tool for creating unbreakable bonds because it is effective, efficient and economical.
  • Measure everything on a regular basis. The better your data, the easier it is to improve results. Consistently digging through the data provides insight into how your subscribers behave. The more you know about their tendencies, the easier it becomes to create campaigns that motivate them.

New Developments in B-to-B Loyalty Marketing

Business marketers have much to gain from retention marketing. Business customers tend to be fewer and more valuable—meaning you can’t afford to lose even one. But how do you keep your customers active and buying from you, versus the competition?  How do you prevent defection? Let’s look at the traditional approaches to retention marketing in B-to-B, plus some new developments in loyalty marketing being adopted by B-to-B marketers today, including social media and gamification.

Business marketers have much to gain from retention marketing. Business customers tend to be fewer and more valuable—meaning you can’t afford to lose even one. But how do you keep your customers active and buying from you, versus the competition? How do you prevent defection? Let’s look at the traditional approaches to retention marketing in B-to-B, plus some new developments in loyalty marketing being adopted by B-to-B marketers today, including social media and gamification.

Traditional Approaches in B-to-B Retention Marketing
Given the importance of customer retention in B-to-B, business marketers have a long history of investing in loyalty drivers. The most basic approach has been—simply—superb account management.

In a well-run company, the sales team in charge of any given customer will do its best to understand what’s going on in the account; sell to them the way they want to buy; deliver on time; develop new products to serve their evolving needs; solve any customer service problems; cultivate deep relationships with the specifiers, influencers and decision-makers throughout the account; and generally provide the best possible products and service levels. It is this basic approach that has stood the test of time in account development.

But as buying has become more complex, businesses have developed additional strategies to deepen customer relationships and engender loyalty. For example:

  • Data-driven segmentation and differentiated treatment. Not all customers are created equal, so segmenting customers by value and treating them differently is a strategy that works well in business markets. Some companies will identify their top accounts—based on margin or on top-line revenue—and provide them with special perks, pricing and service levels, such as:
    • Corporate-wide purchasing agreements, where all buying across a far-flung enterprise can benefit from pre-negotiated contract pricing.
    • Dedicated sales teams, some of them even housed on site at the customer’s operation.
    • Dedicated customer service phone lines, where the service personnel can develop an ongoing personal relationship with individuals in the account.
    • Special status, like Gold Customer or Preferred Customer, programs that may include access to discounts, free shipping, invitations to events and other perquisites.
  • Incentive programs. Taking a page from the consumer world, some business marketers have found success with frequency marketing programs that reward customers for certain behaviors, such as repeat purchase. These programs are not universally applicable in business, but they have their place, particularly when the purchase cycle is short and purchase behavior can be tracked.
    Rewards programs are typically applied in businesses that mimic consumer purchasing behavior, like office supplies. Staples, for example, runs a thriving business rewards program targeted to its small-medium business customers. Financial services and telecom have also done well with frequency marketing programs in SMB, examples being American Express OPEN, the MasterCard Business Bonus program and Verizon’s BusinessLink.

New Developments in Loyalty for Business Markets
In the last few years, B-to-B loyalty marketing has benefited from the arrival of new tools that support the goal of deepening relationships with business buyers. Social media, for example, has created an easy, low-cost way for companies to build communities and foster engagement. Social media is being applied across the B-to-B marketing spectrum, from prospecting via viral pass-along, to enhancing customer relationships, to surfacing and solving customer service problems.

In the area of enhancing customer relationships and fostering loyalty, the power of social media is being felt throughout the B-to-B marketing world:

  • Companies build the ranks of their followers on Twitter and LinkedIn, their “likes” on Facebook, and their RSS subscribers to blogs and YouTube channels. These connections then become another set of media channels for staying in touch, introducing new products, sharing ideas and case studies, and otherwise building an ongoing relationship.
  • Within social media environments, companies establish communities of customers and prospects around certain subjects, like technologies, products, events and other shared interests. In these forums, chat groups, blogs and other formats, like-minded people share ideas, expand their knowledge and make valuable connections.

One of the most exciting new developments in B-to-B loyalty marketing is the new concept known as gamification. The idea here is to build on people’s natural enthusiasm for games involving prizes, competition and recognition, and turn that motivation into a loyalty driver. The goal of gamification is to add gaming elements to otherwise boring processes and tasks, converting them into something fun, competitive and addictively engaging.

Marketers who want to introduce game design and mechanics to their loyalty programs can now take advantage of several new software platforms, like Badgeville, CallidusCloud and Bunchball. These tools are taking loyalty programs to a new level of interactivity, real-time feedback and social interaction, with some promising early results.

If you’ve experimented with loyalty programs in B-to-B, please share your experiences.

A version of this post appeared in Biznology, the digital marketing blog.