Number 11: July 16, 2003

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This week in Katydid:

• When Good Lists Go Bad
• Opening up Your Throttle Points
• Don't Say I Didn't Warn You
• Subscription Information

When Good Lists Go Bad
I was heartened to read a recent ClickZ article, Don't Give Up! E-mail List Rental Isn't Dead. The article contains a number of tips for increasing the performance and return on investment for e-mail campaigns.

I have heard negative buzz on e-mail campaigns lately, which comes naturally upon the heels of great hype. A few years ago, as companies began tightening their belts (okay, throwing their belts over the sprinkler mains and trying them on as neckties), e-mail campaigns shone as the great hope. They were cheap, had measurable returns, and got strong results. Many thought, I've already got the pipes connected, all I need to do is turn on the spigot. As realism seeps back into our consciousness, it's natural for there to be a backlash.

Marketers are just as prone to self-fulfilling prophecy as anyone, and some tend to cherry-pick the data that will support their preconceptions, but I haven't seen a decline in the response rates of e-mail marketing despite increasing concerns about spam.

Over the last few years of running campaigns for clients, few e-mail campaigns have run less than 3% of open rate. Most had click-through between 5% and 10%. Campaigns that performed poorly could usually be traced to a poor list – either a poorly maintained In-house list or a poorly targeted rental list.

The variance for open rates has been larger – between 30% and 70%. Several factors affect open rates, including list quality, name recognition, and subject line. The best tactic is to test subject lines with smaller runs.

B2C lists are larger, which makes it easy to test a number of subject lines for performance. With B2B lists, the selects (criteria filters) often yield small lists that make it difficult to run effective tests. With some B2B campaigns, there are so few names available it can be a challenge to meet the standard 5K minimum list rental.

Another factor that contributes to the backlash against e-mail is the discomfort of cold, hard facts. Now that marketers have a way to track campaigns more accurately than ever before, it can cause anxiety when the numbers drop. With direct mail, one could take comfort in the uncertainty. Somewhere 'out there' bad things happened. With e-mail, there's a tendency to immediately drop a campaign if the rates drop a couple of percentage points. Often these normal fluctuations are interpreted as trends.

The ability to track e-mail campaigns (and to track direct mail response through integrated campaigns) brings the science back to marketing. Like any good scientists, it's best to change only one variable at a time. Avoid changing the subject line and the from line at the same time. Keep your offer when you change your call to action. Incremental changes allow you to evolve tactics that work for your unique audience.

A third factor leading to unrealistic expectations for e-mail campaigns is the use of e-mail for lead generation. E-mail can be a great lead-generation tool for B2C applications, and for products that have a very short sales cycle. They're not likely to work as well for big-ticket items (Want a new car? Click here to purchase.) One reason lead-gen campaigns tend to have diminishing returns is that the first run pulls in everyone ready to buy. Remember, marketing is your Air Force; they soften up the enemy with long-range bombing runs, so your sales troops can move in and claim territory. (You know this, but the metaphor is nice for unit meetings.) Hit them from every angle.

Finally, especially in the B2B world, remember your uniqueness. Few case studies out there apply directly to what you do. In fact, assume everybody else is waiting on you to publish. Track your campaigns carefully. There are too many marketers out there waiting for the definitive study. Use a balanced, integrated approach, and publish your success. And whatever you do, don't look surprised if you're the first to discover a trend.

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Opening up Your Throttle Points
The funnel is the classic picture of a campaign. You drop a lot of names at the top, and a few responses come out of the bottom. Like powerful microscopes, improved campaign tracking reveals hidden details. The funnel is still wide at the top and narrow at the bottom, but it turns out there's a number of bottlenecks that choke off the flow. I call them throttle points.

Here's what a typical lead campaign looks like.

You can see that if you were to widen any of these throttle points, you could increase the flow for the campaign. The following table shows the key factors that affect each throttle point.

So, improving the subject line would mean that there were more people reading the call to action. These incremental improvements lead to greater aggregate sales. However, one point often missed is that you want to eliminate the throttle points altogether. Every step you make your audience take carries the risk of losing them.

For example, if you avoid the step of clicking through to an offer page, and include the offer in one step, you greatly increase the number of responses you can qualify. This is why including a form in the e-mail greatly improves campaign performance. In our example, eliminating that step would increase sales to 150, which is more than double.

Consider, though, that you lose information when you combine steps. If you put everything in one e-mail, you don't know whether the offer, the call to action, or your subject line reduced effectiveness. It's best to break your steps up to test the elements first, and then combine steps when you find the most effective combinations.

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Don't Say I Didn't Warn You
It warms my heart when writers get away with sneaking in their own material. (I was able to slip a few interesting photo captions into my high school yearbook.) In this case, the writers managed to force a reputable company to publish their joke. Symantec, the publishers of a very popular virus protection program, keeps a list of virus warnings along with appropriate responses. Check out the recommended response to this hoax. Thanks to Dan Johnson for bringing this to my attention and don't forget to read everything submitted by your writers.

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Thanks for Reading
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Kind regards, 
Kevin Troy Darling

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