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.

How Performance Marketing Accelerates B-to-B Prospecting

Every time you turn around, a new “performance marketing” opportunity turns up for B-to-B marketers. What a treasure trove! And on the face of it, a real boon, because you only pay when your prospect takes the action you’re looking for—the click, the download, the purchase, whatever. But there are some potholes to consider. Let’s look at how marketers get value out of this approach to finding new customers.

Every time you turn around, a new “performance marketing” opportunity turns up for B-to-B marketers. What a treasure trove! And on the face of it, a real boon, because you only pay when your prospect takes the action you’re looking for—the click, the download, the purchase, whatever. But there are some potholes to consider. Let’s look at how marketers get value out of this approach to finding new customers.

To back up, what is this performance marketing thing, anyway? It generally means that the media channel owner conducts a campaign and charges the marketer an agreed price for every respondent, according to predetermined criteria. There are scads of ways performance marketing is being applied across the B-to-B go-to-market spectrum. So far, this is what I know:

  • Pay per click. The grand-daddy of performance marketing, the system that sent Google’s fortunes into the stratosphere. You only pay when a prospect clicks on your selected keyword(s). The secret to success here is choosing the right keywords and sending the clicker to a brilliantly written landing page, where you have a prayer of converting them from a mere clicker to something else, like a prospect with whom you can continue a conversation. Some banner advertising and email rental lists are sold this way, as well.
  • Pay per lead. This highly popular technique was pioneered by trade publishers looking for ways to extend the value of their customer access. Ziff Davis and TechTarget are leaders in the tech industry world, using “content syndication,” distributing marketers’ white papers and research reports, and charging by response. MadisonLogic offers pay per lead programs via banner ads to a network of 300 publishers, with particular strength in the HR and technology sectors. Another player is True Influence, which uses email to its own compiled database of business buyers.
  • Pay per appointment. Hiring a telemarketing shop to conduct appointment-setting programs for sales reps is a long-time staple of the B-to-B marketing toolkit, and often priced by the appointment. Myriad call centers offer this kind of pricing.
  • Pay per PR placement. Several PR agencies have taken the big step of pricing their services on a pay-for-placement basis. Amid much hand-wringing among PR professionals, the model’s strong appeal to marketers is likely to mean continued experimentation.

Is the next logical step some kind of pay-for-performance results guarantee from creative agencies? I doubt it. I posed that question recently to Warren Hunter, Chairman of DMW Direct, who said firmly, “No way.” Since they are a direct marketing agency and thus used to delivering highly measurable results, I thought there might be a shot. But here’s how Warren explained his position. “If you give me control of the creative and the media, sure. Without that, there are too many variables that impact the results.”

The newest entrant in performance marketing is the daily deal business, pioneered by Groupon and Living Social. You might call this “pay per new customer.” In the B-to-B space, some experiments are underway like BizyDeal and RapidBuyr, but they don’t appear to have really taken off yet. Except for very small business, this is not how businesses buy.

My net takeaway on this subject is the old adage that you get what you pay for. When you think about it, the performance model has an inherent bias against quality, so marketers need to do the math. Avoid this model unless you have good data on conversion rates—conversion to qualified lead, and then conversion to a sale. With that data in hand, you can determine a profitable price and buy leads and appointments till the cows come home.

Based on my experience using PI (Per Inquiry) deals with cable TV operators years ago, I know that the “pay per” model works best if both sides have a track record with that offer in that medium. The media owner knows what kind of response it’s going to get, and the marketer knows the lifetime value of the new customer. So one way to increase the likelihood of success is to run a campaign using traditional pricing and then convert to performance-based pricing after generating some experience.

Where is performance marketing in B-to-B headed? Erik Matlick, founder of MadisonLogic, shared a few observations with me recently:

  • Marketers will get savvier about recognizing the importance of nurturing these contacts and converting them to eventual revenue. The new trend is assigning separate budgets, one devoted to generating “net new” leads and another to nurturing them to the right level of qualification.
  • Suppliers of leads should begin to offer account-level services. Most marketers need to reach multiple contacts in a target account to influence the various buying roles.

I would add my own prediction: The sky’s the limit for creative ways vendors can craft new performance-based marketing programs. Marketers have plenty to look forward to.

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

Create a Bucket List

Whether you’re new to database marketing or a seasoned pro looking for some new idea to get your creative juices flowing, one of the most useful, and impactful, activities you can embark upon is to create what is called a “Bucket List.”

Whether you’re new to database marketing or a seasoned pro looking for some new idea to get your creative juices flowing, one of the most useful, and impactful, activities you can embark upon is to create what is called a “Bucket List.”

No, I’m not talking about a building a list of activities that you and a middle-aged companion wish to complete before you shed this mortal coil. I’m talking about taking a long, hard, and close look at your customers or prospects and getting to know them—really getting to know them—well enough to create broad classifications about who they are, what they do, what they like, and what affinities they share.

Remember, at the end of the day, database marketing is about sending out the right message to the right people at the right time—and, hopefully, achieving the desired response from the customer or prospect as a result. And without proper customer segmentation, this task simply cannot be done cost effectively, if at all.

Now, of course, there are many great customer segmentation models out there you can use. In a great article titled “Selecting a Customer Segmentation Approach” by Andrew Banasiewicz, Director of Analytic Services at Epsilon, four groups are identified: Predictive, Descriptive, Behavioral and Attitudinal.

Out of these four, the Predictive and Attitudinal models are arguably the most popular and widely used. Predictive is a model that uses value segments driven by customer purchase behaviors, extrapolating past behavior into future actions. An Attitudinal model, on the other hand, identifies affinity segments based on respondents’ expressed attitudes toward a company’s brand or products.

Now of course this list isn’t exhaustive and there are other models you can use. One popular alternative is Psychographic Profiling, which is used widely in the B-to-C space. In this model, consumers are assigned into groups according to their lifestyle, personality, attitude, interests and values.

Many B-to-B marketers, on the other hand, may prefer to use a segmentation model based on Firmographic variables, such as industry, number of locations, annual sales, job function and so on. Many software companies, not surprisingly, trend toward usage-based profiling, which includes variables, such as type of device used (desktop, tablet, mobile device), Operating System and so on.

One important fact that’s routinely overlooked is that successful customer segmentation requires taking a holistic approach. This includes aligning a firm’s segmentation goals to its marketing objectives and data acquisition investments. In other words, the data you have will determine not only which model you use, but also what marketing campaigns you’re able to run.

Now of course both data inputs and needs are in flux throughout the firm’s lifecycle. As Banasiewicz points out, for a firm in high-growth customer acquisition mode an Attitudinal model might work effectively for demand generation initiatives among qualified and segmented pools of prospects. Marketing campaigns in this scenario, we can assume, would speak to customer desires and affinities, with purpose of lead generation/nurture.

On the other hand, once the firm has acquired a large pool of customers, it’s not unrealistic to think that transitioning to a Behavioral model using inputs from past purchases will be more effective for running what are now CRM campaigns, focusing on driving lifetime value and repeat purchases.

Different groups not only have different attributes and attitudes, but consume different types of media. As such, they will respond to different types of offers, communicated in different ways and in different places. Where should a firm spend its marketing budget? Online display, email, direct mail, social media, print? … The choices are dizzying in today’s multichannel environment. Having a robust customer segmentation model can definitely help in the decision-making process.

Another important feature of customer segmentation is the realization that different customer groups can not only have wildly different demographic and psychographic identities, but very often will have strikingly varying lifetime values. To the surprise of some, a customer segment with a with younger average age will very often have a higher lifetime value than a group far senior to them, despite having far less disposable income to spend today. This may be based solely on the fact that the younger customers have, simply by being younger, many more years of being a loyal customer ahead of them. Taking this into account, many brands’ obsession with successfully penetrating the youth market should come as no surprise.

Now of course it’s easy to miss the forest for the trees, as customer segmentation is simply a means to an end, not an end in itself. Once you have broken your customers or prospects down into segments, the trickier (and for those who are not data geeks) more fun part of the equation involves devising incentive and reward strategies for each segment, and creating compelling marketing messages and collateral that can be used to get the message out across the various marketing channels. Knowing your customers, this part is a lot easier, which brings me full circle back to my point from the top: Create a bucket list.

How to Know What to Blog—Always and Forever

How do I decide what to write about in my blog? What’s the right balance of “providing value” and my product/service? These are great questions and everyone is asking them. So here I am answering them. In doing so I’m demonstrating how I, myself, generate leads for my business. Sure, I’m about to provide you with value, but if this story is going to serve a business purpose I need to write it as part of a larger plan, a content marketing system designed to produce leads and sales.

How do I decide what to write about in my blog? What’s the right balance of “providing value” and my product/service? These are great questions and everyone is asking them. So here I am answering them. In doing so I’m demonstrating how I, myself, generate leads for my business. Sure, I’m about to provide you with value, but if this story is going to serve a business purpose I need to write it as part of a larger plan, a content marketing system designed to produce leads and sales.

And by the way, I like writing this stuff. I do it with pleasure and so can you, providing you take pride in serving your market.

Gotcha With the Headline
As you can see, my headline got your interest enough to earn your click. it was pithy, useful, unique and very specific to a pain you’re experiencing. So make sure your headlines on Twitter, your blogs—anywhere and everywhere—are the same.

The hands-down source for just about everything blogging is Brian Clark’s Copyblogger. At the end of this article I’ll give you a link to his Magnetic Headlines resource that will give you the practical knowledge, inspiration and motivation to write nothing but magnetic headlines.

It’s About the Problem, Not ‘Value’
Ok, so you’re still reading. Why? Probably because you think I have the cure for your pain. I effectively secured your attention and now am beginning to scratch an itch you have (your urge to find a better way to blog). Of course, I’ve also set your expectation and had better deliver! I’d better provide value.

My point is focus this: Focus on customers’ problems. It’s not about providing value. Providing value is a meaningless industry buzz term, folks. Functionally it’s a cop-out. Your success at lead-focused blogging (and keeping your sanity if not finding a bit of joy in your work) depends on addressing your customers’ problems in a systematic way.

The System
The best way to describe the system is this: Be an answer center for your customers. Good news! This is a familiar concept to many direct marketers. But those who aren’t traditionally “direct savvy” are getting in on the game too.

The idea of being an answer center for prospective and current customers isn’t new to Amanda Kinsella of Logan Services. It’s what this residential heating and air conditioning product and services company has been doing for many years offline—at home improvement shows, for instance.

What works in blogging is rooted in an old idea: trading answers to serious problems with customers for insight on their “state of need” as a way to nurture leads (not just relationships) to fruition. “Then we can be there when prospects need our products and services,” says Kinsella.

Think about it in terms of your business. Might you already be helping customers solve problems in ways that capture information on the prospect’s “state of need” in return? When you answer questions for customers do you ask them in ways that lead customers to asking more? This is the key.

The Purpose of ‘Providing Value’
Ms. Kinsella says hammering away at calls-to-action and constantly asking for the sale won’t work. Because it never has. It’s not very sociable. What will? A more traditional, familiar tactic: answering questions that are important to the prospect in ways that entice them to ask more.

That’s providing value, yes, but Logan Services always provides this information in return for insight on their prospect’s need—where they are in the purchase consideration process, for instance. These details always-always-always connect to a lead-nurturing process. That’s the purpose of providing value. Right? The trick is to answer questions in ways that prompt more questions.

One Simple Idea That Works
Put this idea of answering your customers most frequently asked questions (or FAQ’s) to work today. Make the questions your headlines and the answers your bait. Make the answers complete (valuable) but always leading to more questions.

Dangle a hook nearby (in the form of a call to action) for a “complete guide to” resource that requires email registration, for instance. But resist rolling into the office and asking, “How often should we post stories on our blog, and on what day is best to get re-tweeted?”

Be like Amanda. Ask a different question. “What problems do my customers need solved? What itches can I scratch for them today?”

“How can I measure the value of a blog subscriber? How much engagement on her blog or re-tweets on Twitter is needed to have a positive effect?” People like Amanda don’t know—and don’t care. Because they know it’s the wrong question.

Here’s that link to Copyblogger that I promised!

Maximize Holiday Sales

As the holiday season kicks into high gear, brands are scrambling to maximize sales and results. The growing use of social media and smartphones adds enormous complexity, along with many opportunities for today’s digital marketing gurus. But fear not! With a little preparation and integration, double-digit sales increases are possible. Here’s how to get the most out of your Q4 digital efforts to drive sales and grow lifetime value for many years to come.

As the holiday season kicks into high gear, brands are scrambling to maximize sales and results. The growing use of social media and smartphones adds enormous complexity, along with many opportunities for today’s digital marketing gurus. But fear not! With a little preparation and integration, double-digit sales increases are possible. Here’s how to get the most out of your Q4 digital efforts to drive sales and grow lifetime value for many years to come.

Community tagging. Tag existing offline marketing efforts with Facebook/Twitter tags. Integrate “Like” opportunities at key touchpoints, such as your homepage and product pages. A recent study from Syncapse and Hotspex found the lifetime value of a Facebook fan is about $136 to top brands. Consider offering an incentive to encourage consumers to become a fan of your brand, such as making a donation to a cause/charity for each sign-up. And remember to stress the value of being a fan or follower. Adding a “Like” button or “Join the Community” call to action only makes return on investment sense if you have a strategy and communication framework established to engage the community once you’ve converted them.

Belly up to barcodes. It’s estimated as much as 70 percent of all purchase decisions are made at the point of sale (POS). Therefore, it’s critical to stand out on store shelves and to offer some extra value. How about integrating new 2-D barcodes, which enables consumers to use their smartphones to “Like” your brand or product at the POS? Also, pay close attention to mobile applications like Foursquare, which now boasts more than 4 million users. Mobile will increasingly become a critical channel to not only acquire new customers, but grow the community and drive sales via the serving of location-based offers.

Segment and socialize. Implement sharing capabilities on banner ads and email marketing efforts. For existing email efforts, segment your audience based on engagement and social profiles. By targeting best customers and testing various incentives, you can encourage your best customers to get actively involved in the promotion of your brand, thus extending your marketing efforts’ reach and effectiveness. Remember to not only identify who shared the information, but flag them as an influencer for future campaigns.

Email, social and loyalty. Lots has been written about the integration of email and social media. But the importance of coordinating efforts across channels cannot be underestimated. Coordinate socialized email deployments with Facebook and Twitter posts. Furthermore, for those of you with established loyalty programs and sites, don’t forget to sweeten the deal for loyalty members.

The old rule still applies: With proper pampering, your best customers will become your best advocates. Studies and data also show that they buy more products and purchase more often, so remember to treat them extra special. Integrate offers into loyalty websites and statements, and highlight additional benefits for your best customers.

Remarketing/targeting. If you’re a direct response marketer, you likely have access to lots of data. Start with the basics this holiday season by implementing a remarketing strategy for key efforts. With average open rates hovering around 20 percent, look closely at open/click activity and resend offers based on observed behaviors and actions. Consider sweetening offers when and where appropriate. Implementation of a remarketing strategy can lift overall conversion rates anywhere from 50 percent to 200 percent.

However, be careful not to annoy your customers. Be conscious of the law of diminishing returns. Also, look closely at website data and leverage cookie/pixel technologies to target users both onsite and offsite via ad networks with relevant, targeted offers based on their profiles and behaviors. Don’t forget to review your privacy policy, always be transparent and offer users the opportunity to opt out.

Search and destroy. Search remains an effective and efficient vehicle to drive desired behaviors as consumers are actively in the market for your products/services. But search remains underleveraged. Think carefully about corresponding landing pages, and look to integrate data-capture opportunities that offer relevant value to encourage subscriptions. Doing so will allow you to continue the conversation. Also, pump up your search marketing efforts by adding social links to paid search terms to increase visibility and “Likes” for your social efforts.

Earlier this month, the National Retail Federation forecasted holiday sales to increase 2.3 percent, slightly lower than the 10-year average of 2.5 percent. While this year’s estimate represents a significant improvement over last year, marketers must continue to look for operational and marketing efficiencies. That means working smarter, not harder. While paying close attention to supply chain management, inventory control and minimizing markdowns is a must, marketing must overdeliver as well. Marketers must learn to better leverage data, their best customers and emerging/efficient channels like mobile, social media and email to drive sales in today’s difficult market.

Turning Social Media Into Customer – And Shareholder – Value

Forrester Research reports advertisers will spend $716 million on social media marketing (including ads on social networks, corporate blogs, etc) in 2010, but that will grow by 34 percent to top $3.1 billion in 2014. The investment shift reflects changing consumer behavior and acknowledgement that customers increasingly learn about a brand through the company, its employees, other customers and even competitors.

Forrester Research reports advertisers will spend $716 million on social media marketing (including ads on social networks, corporate blogs, etc.) in 2010, and that number will grow 34 percent to top $3.1 billion by 2014. The investment shift reflects changing consumer behavior and acknowledgement that consumers increasingly learn about brands — e.g., their employees, customers and even competitors — via social networks.

While search growth shows signs of slowing, the conversations happening in social settings — which aren’t slowing down — drive search behavior. They reflect the sum of all strategic decisions that affect a brand’s ability to efficiently increase its value over time. In turn, proactive marketers and investor relations pros are making up for the slowing growth of search by leveraging social media for new growth. However, in order for social media to invite an emotional attachment and deliver tangible shareholder value, it needs to scale within an organization from the top down.

Networking solutions provider Novell is embracing social media as a strategic foundation on which it does business. According to John Dragoon, chief marketing officer for Novell, “The ‘social’ part of social media means that you have to get as many people involved as possible …” At a time when Novell profits slipped amid uncertainty, the company refocused on a clear sense of purpose and a mission to deliver unique customer value one step at a time. Social media helped the company communicate these accomplishments not just to customers, but to shareholders, its workforce and others.

For Novell and other companies that want to improve external communications, it only makes sense to embrace the efficiency and searchability of social media. Today, consumers create their own media schedules and can easily edit, copy, produce and distribute content. Furthermore, with internet television services like Google TV coming soon, it’s only a matter of time before C-level executives foster two-way dialogs with key stakeholders in searchable media.

Therefore, it’s best for companies to think about social media in the form of content and context.

Content:
Social media can complement formal press releases. It provides a forum for quality, two-way dialog with key stakeholders to evaluate where a company has been, where it’s going and other important topics of value to participants.


Context: Inbound links and topical content webs convey the strategic value of a product/service within the context of the business/marketplace. They answer critical, high-value questions like:

  • What do customers do with your product or service?
  • How does your solution solve a consumer pain point?
  • What’s unique and differentiating about your product or service relative to the competition?

A Facebook Fan is $136 in Lifetime Value, $3.60 in Media Impressions

The lifetime value of a Facebook fan is about $136 to top brands, according to this study on Facebook fan lifetime value from Syncapse and Hotspex. Another study, from Vitrue, comes up with a media impression value per Facebook fan of about $3.60. From either angle, having a framework to talk about the ROI of Facebook fan investment is priceless.

The lifetime value of a Facebook fan is about $136 to top brands, according to this study on Facebook fan lifetime value from Syncapse and Hotspex. Another study, from Vitrue, comes up with a media impression value per Facebook fan of about $3.60. From either angle, having a framework to talk about the ROI of Facebook fan investment is priceless.

Ad Age has a good comparison of the Facebook fan studies and their methodologies. The Syncapse/Hotspex study didn’t term the metric lifetime value, but that’s what the study tried to get at by surveying fans of the biggest brands on Facebook and analyzing their self-reported behavior and future plans in terms of product spending, loyalty, propensity to recommend, brand affinity, media value and acquisition cost. It’s a dollars and cents analysis.

Vitrue (whose social media blog is worth checking out, too) looked instead at the value of media impressions made through a site’s news feed and evaluated that on a CPM basis, basically calculating the PR benefit, and came up with a number around $3.60. Vitrue also provides an app that lets anyone calculate the value of a Facebook page.

Vitrue’s evaluation of your Facebook impressions is valuable information, but the Syncapse/Hotspex survey is a model for how e-marketers are starting to count Facebook fans, especially as Facebook e-commerce apps (f-commerce) are making the network a stand-alone selling channel. Facebook is becoming almost an internet within the internet, and such evaluation is the best way to justify investing in it.