Why Email Marketing Is Not King

By | April 16, 2013

I just received a complimentary copy of Cross Media Marketing 101 (for 2013) by James Michelson, president of JFM Concepts and VDP Web. Right upfront, I had to give James props for his dismantling of a favored email stat that has been making its rounds in the blogs, Webinars, and PowerPoint presentations. It’s from “Why Email Marketing Is King” in the Harvard Business Review.  Most Digital Nirvana readers have probably seen it.

HBR cites response rates and average order values for direct mail + email, direct mail only, and email only that are on par. When you consider the extremely low cost to produce an email campaign, the report says, email turns out to be king — ROI that blows everything else away.

But listen to what James has to say about these numbers:

1. The stats are impossible without outside manipulation.

The respondents [to this study] were cherry picked from a much larger pool in order to get a 25% response rate. How do I know? Given one client’s data of 650,000 prospects with detailed sales and contact history, I can universally pick a slice and get a fantastic response with targeted offers and specific channels. With realistic constraints (such as not giving each respondent $100 gift card for simply visiting a link), the same cannot be said for 35,000 cold records. . . Not going to happen.

2. ROI has to be calculated using, not just the cost to implement the campaigns, but the costs to acquire the names.

How did the firm in question get that many opted-in email leads? . . . It is almost impossible to exponentially grow an email list from an email campaign, regardless how good the referral spiff is. For email to be king, something else, such as social media, direct mail, experiential events, paid search, point of sale, or a mix of many methods is required, and usually at substantial cost.

3. The report ignores other costs related to email, such as the cost of maintaining the database, accessing enterprise level email software (not cheap!), preparing collateral materials, and so on.

For the ROI calculations in the article to be of any use, the cost of gathering the email opt-ins must be calculated. . . Throw those figures into the mix and what happens to that massive ROI advantage claimed by email? Chance are the savings cited in the chart rapidly evaporate.

This analysis shows why it is so important to use the full costs of any marketing effort in calculating ROI for your clients’ campaigns (and your own) — and when evaluating the truth and accuracy of claims by reports such as these.

Kudos, James!

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6 thoughts on “Why Email Marketing Is Not King

  1. Cary Sherburne

    I saw this study and while it certainly does not reflect true results for all email marketing campaigns, it does demonstrate the value of email marketing to an existing customer base … assuming relevancy in timing and content.

  2. Sigi Alder

    My experience is, that E-Mail campaigns are 90% less effective than print + e-mail + landing pages.

  3. Patrick Whelan

    Ok, my company sends out 250k emails per month on behalf of a number of clients so I’ve got a little experience with this. That being said, James is spot on correct with all of his points. And Cary also raises a great point. Email, used to engage an existing customer base can be a very effective tool.

  4. Joe Manos

    All good points but I can only say what I have in the past – it depends on the situation. The Harvard Review was an existing customer program – from the start that changes the mix. What if it had been a new prospect program would the results have changed – of course they would have.

    The average consumer/business person is available on 7.2 media channels today so focusing solely on the email vs. direct mail discussion misses the point…IT DEPENDS on the marketing objective and target audience. But opening up the media mix to engage more prospects through their preferred response channel is going to deliver more active respondents.

    In today’s world it is more about sales ready leads from a variety of media touches and then ongoing engagement through the lead nurturing cycle to move prospects to sales ready.

    That can only be done through an effective mix of media using the right technology and leveraging all of the best practices for effective personal and relevant prospect/customer experiences.

    The marketing world is rapidly evolving and the discussion of email versus direct mail while still important – depends on many factors and yet is only a small piece of today’s puzzle.

  5. Heidi Tolliver-Walker Post author

    Yes, that was James Michelson’s point — the cross-media approach touching customers from multiple angles over time. He just tackled that case study at the beginning to make a point, and I believe, a very effective one.

  6. Patrick Surrena

    All the points cited in the comments are very good, which emphasizes there are always many sides to any discussion. A point not touched on too, while there may be 7.2 media channels people are in touch with on average, which channels do your customers/prospects favor? Do you ask them? Do you really know? How does their age factor in to which channels they may prefer?

    It really goes back to your own data analysis and what you TRULY do know about them to be able to focus on the most effective of the 7.2 channels, and the TRUE ROI. People have a tendency to favor the tactics they use because they are the tactics they use so they re=assure themselves they must be correct. Objectively, though, they may not be correct.

    We need to insure we understand who we are marketing to, how they receive their information and how they prefer to receive their information. Different strokes for different folks and it’s up to us to identify and use them to our best advantage.

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