Email Marketing X-Factors

© 2010 ExactTarget2

INTRODUCTIONEmail marketing isn’t new. When it comes to making headlines in marketing newsletters and at industry events, email’s not typically at the top of the list. But even without the glitz and glamour, the facts remain: More than 93% of online consumers are SUBSCRIBERS, and have provided their email address to at least one company or brand. 88% of U.S. online consumers check email daily, and 94% use email at least once a week. And more than 50% of consumers make purchases as a direct result of email —it drives more conversions than any other channel. So while email isn’t new, it certainly isn’t dead.

But why does email work when it comes to your marketing communications? What makes this channel unique and effective? In this second report of our SUBSCRIBERS, FANS, & FOLLOWERS series, we’ll expose why email continues to be an effective form of communication with your customers by revealing its x-factors—characteristics that set email apart from any other interactive marketing channel.

EMAIL’S X-FACTORS INCLUDE:

1. FAMILIARITY

2. MANAGEABILITY

3. PRIVACY AND TRUST

4. RELEVANCY

5. EXCLUSIVITY

As SUBSCRIBERS, FANS, & FOLLOWERS continues to explore consumer motivations as they relate to Email, Facebook, and Twitter, we’ll begin with the oldest and most established channel—email marketing. By revealing email’s x-factors, we’ll help you remember why email can provide a critical foundation for your online marketing, so you can build an integrated strategy that will work across all interactive channels.

“I’m more comfortable with conveying personal information through email. I don’t trust the social networks—I hear too many things about peoples’ accounts getting hacked.”-Jennifer, 35, Detroit, MI

© 2010 ExactTarget 3

“For me, the best thing about email as a communication tool is its efficiency. It’s quick, simple, and can be done on your terms.” -Brian, 31, Philadelphia, PA


Because email isn’t new, consumers are familiar with the technology, are comfortable using it, and know exactly what to expect. They’ve also grown accustomed to using email as a way of engaging with brands, making it top-of-mind when it comes to interacting with a company.

In the course of our research, we investigated two of the most common ways consumers proactively engage with brands via email:

OBTAINING PROMOTIONS AND DEALS

The internet has simplified price and promotion shopping, and 82% of consumers will search a variety of online channels to obtain deals and promotions. For the majority of consumers, they begin their search by checking a particular brand’s corporate website. 76% of consumers will initially seek deals and promotions on a brand’s website, and from there, 62% will sign up to receive email, while 54% will use a search engine. 17% of consumers will also include Facebook as part of their quest for ongoing deals, and 3% will search for deals on Twitter.

Women are more likely than men to sign up for emails (67% compared to 57%), and older consumers are also more likely to sign up for emails to get ongoing deals. However, the difference based on age is far less than may be expected. In fact, Millennials (aged 15-24) are twice as likely to subscribe to email in their search for ongoing deals (56%) as they are to search for deals on Facebook (28%).

CUSTOMER SERVICE COMMUNICATIONS

The internet has also changed how organizations approach customer service. In the age of immediate gratification, the importance of customer service has been magnified. And although social media has given customers a way to publicly air their grievances against a brand, the majority of customers still prefer to deal with customer service issues in private—over the phone, through a company’s website, or through email. When faced with a customer service issue, 41% of customers will communicate via phone, 33% via company websites, and 20% via email. 37% of customers will send an email after an unsuccessful first attempt, making it the most common second step in the process of dealing with a customer service issue.

Consumers often turn to email for customer service requests because an immediate response is not always necessary. Email is seen as an efficient way of dealing with issues without having to wait on the phone for help, or turn to social media where privacy is lost.

FAMILIARITY1X-FACTOR

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“To get ongoing deals, I typically

go to the company’s website first.

Then I check out any emails they

send letting me know of upcoming

deals or products. After that, I’ll see

if they’re on Facebook.”

-Russ, 38, Sacramento, CA

ACCORDING TO YOUR CONSUMERS:

THE STRENGTHS AND WEAKNESSES OF EMAILSTRENGTHS:

• PRIVACY: Email is trusted as a safe and secure way for handling private matters. And even the heaviest social network users prefer to handle private matters through email.

• FLEXIBILITY: Many consumers wait until the evening or weekend to catch up on email. So while they like the immediacy of sending an email, they appreciate the ability to respond at their own leisure.

• DOCUMENTATION: Email has largely replaced traditional mail as the channel for official communications. People like having a written record of what they say, especially in business or when dealing with companies online.

WEAKNESSES:

• SPAM AND VIRUSES: Consumers almost universally believe that spam continues to be a problem when dealing with email. Spreading or contracting viruses also remains a concern.

• MISCOMMUNICATION: Consumers continue to struggle with miscommunication when it comes to email messages, since it can be difficult to convey emotion, tone, or inflection.

• NON-RESPONSE: Consumers are continually frustrated when the contacts they’ve delivered messages to don’t respond.

56% of Millennials subscribe to email in their search for ongoing deals compared to 28% who search for deals on Facebook.


MANAGEABILITY2X-FACTOR93% of U.S. online consumers are SUBSCRIBERS, meaning they receive at least one permission-based commercial email message on a typical day. But with so many brands and companies communicating with consumers on a daily basis, many marketers worry about overflowing inboxes, which could lead to consumers abandoning email or declaring ‘email bankruptcy.’

Marketers (especially online marketers) receive two to three times as much email than the average consumer on a typical day. The average consumer receives 44 daily emails (including commercial and personal), and half of consumers receive fewer than 25 per day. While these numbers aren’t small, most consumers consider the size of their inboxes manageable. So while marketers may be overwhelmed by overflowing inboxes, most of their customers aren’t.

Of those 44 daily emails, about 25% are permission-based commercial messages, with the remaining 75% comprised of personal messages, transactional messages, and spam that’s quickly deleted.

The average teen (aged 15-17) receives less than half the email of the average consumer, and receives only four commercial emails per day. And while marketers often interpret these statistics to mean a

large generational shift away from email is occuring, this is a misinterpretation. The amount of email teens receive increases significantly when they graduate from high school, suggesting life stage—not age—is a more important factor when considering how much consumers rely on email. Email is the accepted channel for “important” or “official” communications, and as consumers advance through different life stages, their use of email increases as they interact in these capacities.

Another factor that makes email manageable? The flexibility consumers have to respond at their leisure. Many consumers wait until the evening or weekend to catch up on email. So while they like the immediacy of sending an email message, they appreciate the ability to respond at their own pace. This offers a welcome contrast to the intrusiveness of phone calls and texting or the real-time urgency of Facebook and Twitter.

“You don’t have to worry about whether someone is going to answer your phone call. You can just shoot them an email, and when they receive it, they usually respond right back to you.”-Daniel, 29, South Bend, IN


41% of

U.S. internet users

threatened to

stop buying from

companies that

sent irrelevant

messages,

according to

a recent CMO

Council study.

SOMETIMES, LESS IS MORE

Just because consumer inboxes may

be less crowded than commonly

thought doesn’t mean you should

send more. Studies repeatedly show

that consumers believe commercial

email comes too frequently. A

recent CMO Council study* found that

41% of U.S. internet users threatened

to stop buying from companies

that sent irrelevant messages. The

problem isn’t that consumers receive

too much email—it’s that they receive

too many messages that fail to

communicate with them as individual

SUBSCRIBERS. In short, relevancy

is the key to frequency.

*CMO council (2009), “Why Relevance Drives Response and Relationships”, www.precisionpromotion.org/pdf/relevance_drives_response.pdf

8 © 2010 ExactTarget

If consumers don’t trust you, they won’t subscribe to your communications. But by building a trusting relationship centered on respect for privacy, marketers have a great opportunity to increase loyalty—and ROI.

In order to build trust, it’s important to understand the two concerns that are top-of-mind for consumers when considering whether or not to supply their email address to a company:

“WILL MY EMAIL BE SHARED?”

Consumers know that spam is a risk when sharing their email address, since certain companies may choose to sell or share this information.

“HOW DIFFICULT WILL IT BE TO UNSUBSCRIBE?”

Companies are required by law to honor unsubscribe requests in a timely manner. But consumers have learned that not all companies are diligent about unsubscribes.

Established brands have a distinct advantage when it comes to earning the trust of their consumers. Consumers tend to give the benefit of the doubt to big brands, and assume their email addresses will be safe, secure, and unshared. If you’re a well-known brand, you must continue to honor this consumer trust to ensure your subscription list—and reputation—remain intact.

In contrast, consumers will do additional research on unknown brands before offering their email addresses. They’ll google company names, and review complaint history and comments on Facebook and Twitter. If you’re a small brand, it’s even more important you proactively manage email addresses, as well as your social media presence, since these comments can have a direct impact on subscriber registration.

TRUST AND PRIVACY3X-FACTOR

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62% of consumers mistakenly believe website privacy policies prevent their information from being shared without their permission, according to a recent University of Pennsylvania and U.C. Berkeley School of Law study.**Turow et al., “Americans Reject Tailored Advertising and Three Activities that Enable It” (September 29, 2009). Available at SSRN: http://ssrn.com/abstract=1478214

9© 2010 ExactTarget

“I only provide my email if it’s for a company whom I trust, which are companies I regularly do business with, or sites given to me by a trusted friend. When it comes to smaller, more unknown companies, I have gotten into the habit of googling the name to check it out.”– Angela, 28, Ann Arbor, MI

Consumers receive an average of 44 emails a day, 25% of which are permission-based commercial messages.


Consumers know it’s possible for companies to send targeted and personalized messages, meaning relevancy is no longer an option for marketers. And when it comes to email, consumers quickly decide which companies they like to receive messages from—versus those they don’t—based on whether the email message is relevent or not.

Our research found that half (49%) of consumers “always” open emails from their “favorite” companies, compared to only 16% who say they never open email.

So how can you get on your consumers’ “favorite” list? To get a sense of messages deemed worthy of “always opening,” we asked consumers to name specific companies they feel do the best job. Two themes emerged:

RELEVANCY4X-FACTORCONTENT IS CLEARLY PERSONALIZED.

Consumers can quickly identify bulk messages. How the content is targeted is less important than noticeable evidence that personalization is present.

THE ADVANTAGE OF BEING ON THE EMAIL LIST IS CLEAR.

SUBSCRIBERS want to see that they’re getting information that’s not widely promoted to the general public, which can be made evident through special deals, promotions, or for-their-eyes-only content.

According to MarketingSherpa’s 2010 Email Benchmark Survey, two-thirds of marketers say that delivering relevant content to customers is a highly-effective marketing tactic. And according to Econsultancy’s How We Shop in 2010 Study, the biggest difference between valuable and non-valuable email programs is whether or not the information provided relates to the interests of the customer. Marketers and consumers agree—relevancy is a must.

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“Stop sending everyone everything! I want to receive what’s interesting and relevant to me, not information for another group. I’m not interested in those non-relevant messages, and they make me much more likely to delete them as a contact.”-Jeff, 42, Sarasota, FL


If there’s one thing that makes email unique above all other communication channels, exclusivity is it. While only a third of consumers said they were motivated by the promise of exclusive content when choosing to become a SUBSCRIBER, email’s exclusivity factor extends way beyond content.

Becoming a SUBSCRIBER is like becoming a member of an exclusive club. As mentioned earlier, SUBSCRIBERS demonstrate their trust in a brand when they provide a company with their email address. And in return, they expect to be a part of an exclusive club that receives all of the members-only perks outlined below:

PROMOTIONS AND DEALS: 81% of SUBSCRIBERS have been motivated to provide a company with their

email address due to some form of promotion. And when consumers actively seek promotions from a particular brand, 62% end up opting-in to receive that brand’s emails, compared to only 17% of consumers who will check Facebook, and 3% who check Twitter. Because email is the only outbound marketing channel that allows marketers to proactively contact consumers with promotions, SUBSCRIBERS know they must be exclusive members of the email list in order to receive these great deals.

EARLY NOTIFICATION: By becoming SUBSCRIBERS, consumers expect to be the “first to know” about

upcoming promotions and sales. It’s important that marketers honor this expectation, since consumers want to make sure they can take advantage of special offers before they become widely known. They will eventually share this information with friends and family, but only after they’ve had a chance to capitalize on the offer themselves.

EDUCATION: Consumers rely on brands to keep them informed about topics that interest them, especially if

they’ve provided that company with their email address. This educational content can be distributed in the form of newsletters or alerts, to the exclusive group of email SUBSCRIBERS. And while consumers may be able to search for this content elsewhere, the exclusive e-newsletter keeps them informed on a regular basis.

TAILORED CONTENT: Consumers expect brands to tailor content to their individual preferences. They view the

messages they receive through social media as being appropriate for general audiences, but they expect email content to be specific to their interests and needs. Once again, they realize they can only receive this relevant messaging if they choose to become an exclusive member of a brand’s subscriber list.

EXCLUSIVITY5X-FACTOR

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“I sign up for email when they promise something exclusive: coupons, shopping codes, etc.”

-Daniel, 22, San Antonio, TX


MOTIVATING YOUR CONSUMERS TO SUBSCRIBEOverall, promotions are a primary motivator when people are choosing whether or not to subscribe to your communications. 81% of SUBSCRIBERS have been motivated to provide a company with their email address due to some form of promotion—from giveaways to deals to upcoming sales. And women are more likely than men to be motivated by promotions. 88% of women indicate that promotions have motivated them to become a SUBSCRIBER, compared to 70% of men. This difference is most pronounced for “freebies” offered in exchange for an email address, where 65% of women are motivated by this type of giveaway compared to 44% of men.

And contrary to conventional thought, older consumers aren’t the only people who are motivated by promotions. Promotions are the primary motivator for teens who sign up for a company’s email list. However, teens are more likely to be motivated by “social” factors than older consumers. For example, they’re more likely to subscribe to email newsletters for fun and entertainment (43% vs. 28%), or because someone recommended it to them (27% vs. 16%).


An ExactTarget customer since 2009, Groupon (www.groupon.com) is a deal-of-the-day website that’s localized to major cities around the world, currently serving more than 60 markets. The company offers one “Groupon” per day—specific to its different

markets—delivered early in the morning by email. If a certain number of people sign up for the featured offer or promotion, the deal becomes available to all, but if the predetermined minimum is not met, no one gets the deal that day.

Groupon has seen tremendous growth in its short history as a company. Andrew Kordek, Groupon’s manager of email optimization, has seen his subscriber list grow from 1.2 million in October 2009 to 5.5 million to date, totaling more than 1 billion emails sent per year. In short, Groupon has found email’s x-factor, mainly due to:

EXCLUSIVITY: Each day, Groupon features local deals and promotions at unbeatable prices. But you can only take advantage

of the savings if you’re a Groupon email subscriber. This exclusive club of 5.5 million subscribers continues to grow.

GIVING CONSUMERS WHAT THEY WANT: Groupon isn’t delivering a traditional marketing message. They provide a service

that’s solely dedicated to saving their customers money, while driving traffic to local businesses.

RELEVANCY: Groupon’s daily deals are specific to geographic locations, so customers receive relevant offers based on their city’s businesses. Each market is in effect its own list, with emails featuring the day’s deals for

that particular locale.

Groupon has discovered the power of email marketing by capitalizing on its x-factors, and Kordek sums up their success by explaining, “Email marketing is not a one-way communication. You need to take yourself out of the company and put yourself in the subscriber’s shoes. As a marketer, you’re not in charge of the email—your subscriber is. Let the customer and subscriber dictate how you should run your email program.”

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GROUPON’S X-FACTORSCUSTOMER SUCCESS


WAIT— THERE’S MORE!In Report 3 of SUBSCRIBERS, FANS, & FOLLOWERS, we’ll tackle our most ambitious research report to date. Although many marketers believe age, gender, and income are the primary factors driving how consumers interact online, our research suggests otherwise. Personality is actually the main factor that impacts how consumers interact online, and we’ve identified 13 distinct online personas that will help you truly get to know your audience—beyond age, gender, and income level—so you know how to successfully communicate with your target audiences. To automatically sign up to receive each report as it’s released, visit www.exacttarget.com/sff/download and select the opt-in button on the download form.

Ready to find your organization’s email x-factors? Visit www.exacttarget.com today.

Email remains the critical foundation for your interactive marketing strategy. But you need a provider with state-of-the-art capabilities.

ExactTarget powers billions of emails a month and stores more than 60 terabytes of data, so even at peak sending times, your mission-critical messages will always reach your customers.

Not only is our software sophisticated—it’s easy to use. Our team of User Experience professionals have created the most intuitive interface in the industry, so you’ll be able to spend less time executing your programs and more time focused on overall strategy.

Visit www.exacttarget.com to learn how we can meet your unique email marketing needs.

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