E-fficient, e-ffective marketing

May 5, 2002

Scott Anthony knew e-mail marketing might boost his sales, but he never thought he'd see an eleven-fold jump in sales from his first one.

In preparation for launching an e-promotion, the Fox's Pizza Den franchisee in Punxsutawney, Penn., collected the e-mail address of every customer searching for special "30th anniversary celebration" coupons at Fox's site. When he'd collected several hundred addresses, Anthony launched a new campaign.

That Wednesday, Anthony's store sold 900 pizzas -- compared to a typical Wednesday night of just 80.

Pie caramba!

"Now I have a database of about 600 addresses in a town of 7,000," said Anthony, "and I try to do an e-mail at least once a month."

Billy Lane, founder of Pizza Lane in Sumter, S.C., took a low-tech approach to gathering e-mail addresses; he posted a sign and sign-up sheet at the pick-up counter. The sign said customers who wanted to receive Pizza Lane's new e-mail newsletter would receive coupons for deals, plus be eligible for a $100 gift certificate given away monthly.

To Lane's surprise, he collected more than 400 e-mail addresses -- almost 1 percent of the town's residents -- in just a few weeks.

"People have been eating it up," said Lane, who will launch the newsletter in late January.

Lane also believes that telling customers they'd receive a "newsletter" rather than advertisements set a more friendly tone.

"If I'd have just said coupons or advertisements, they might not have signed up," said Lane. "But I think customers will like reading this -- and I'm sure they want those gift certificates, too."

Get Personal

Chris Baggot, vice president of product development for ExactTarget, a custom e-mail marketing company in Greenfield, Ind., said one key to effective e-mail marketing is differentiating the message's content, quality and look. When operators go beyond what's on special that day spelled out in text only, customers take notice, he said.

"Any mom-and-pop shop can look as sophisticated as any big chain with a product like this," said Baggot, whose company produces customized, graphical e-mail messages for more than 400 customers in several different industries. "Growing a business is about relationship building, and e-mail can help you do that more effectively than most other advertising because you can put your personal touch on it."

In addition to news about food deals or store-related events, some of ExactTarget's clients write personalized letters about their families or employees. Others note that their pizza company is sponsoring a particular sporting event, and invite message recipients to attend.

Lane said his newsletter will center on stories about Pizza Lane's "interesting" customers, as well as Sumter locals. Mixed within those messages will be his promotional messages.

"E-mail is the only marketing vehicle that doesn't charge you for frequency. You can send as many as you want as many times as you want."

Chris Baggot

"I'll write about Sumter's new restaurants and old ones, famous people from here, and those that aren't famous," he said. Lane got the idea of a using a newsletter from a retired Sumter justice who e-publishes a lighthearted weekly newsletter detailing the lives of locals. "He does it just for fun, and he has about 1,000 subscribers."

Baggot pointed out that e-mail messages offer interactivity that direct mail, TV, newspaper and radio ads don't. He said customers often won't complain to an operator when they're disappointed, but that they can and will send an e-mail because they can sound off somewhat anonymously.

"I always tell a story about a dry-cleaner who got an angry e-mail message from a customer," said Baggot. "The lady said she was never coming back to his place again."

The customer was angry because the employee assisting her was smoking while working, and she couldn't believe the operator allowed that.

When he got the message, the operator first fired the offending employee, and next sent the customer a sincere apology. In the end, the angry customer replied with an apology of her own, and used his service again.

"What other form of advertising allows that sort of interactivity?" Baggot asked. "The truth is that people speak with their feet and just don't come back when they're angry. But they'll tell you in an e-mail."

Easy E-marketing

Fox's Anthony is a do-it-yourself e-marketer, editing and changing pictures and text in the e-mail himself. Anyone with some Internet aptitude can do it, he insists.

"Anyone who's a little informed about JPEGs and HTML can whip up an e-mail in a few minutes," he said. "Just a click sends it to everyone. A good Web master is a very important key also, one who can meet your needs."

Lane relies solely on his Web master to handle formatting and distribution services, which costs him $30 a month.

"It's not expensive at all," he said. "Even when I have him do special projects for the site, I've never been charged more than $200 for it."

Since the vast majority of users are Internet illiterate when it comes to marketing, companies like ExactTarget specialize in doing it for them. As an application service provider (ASP), its clients only have to connect to its servers through the Internet, make updates to their core e-mail package created by ExactTarget, and send the message. Since there's no software to load, any computer that is Net ready will work.

"You could be really dumb about computers and still this would be simple," said Baggot, whose service costs about $100 per month. "We have church ladies using AOL and 28.8 modems sending out beautiful e-mails, because all they have to do is connect to us."

Training, Baggot said, typically takes 45 minutes, and is done over the phone. If problems occur, tech support is available.

Perhaps about as simple as ExactTarget's product is using POS system that manages a store's e-mail database and message distribution.

"Our customers can do mass e-mailing right from their POS systems," said John de Wolde, president of SpeedLine Solutions in Mesa, Ariz.

Tell Me How You're Feeling

Fox's Anthony said his response rate varies between 6 and 10 percent, (but more significantly, he credited e-mail marketing with a 15 percent boost in sales in 2001). Baggot claims ExactTarget's response rate is in the 11 to 16 percent range.

"Direct mail -- snail mail -- can't even come close to that," Baggot said. "Response rate for that usually is about 1 to 2 percent. And it's not cheap to advertise that way, either."

To wit, research done by The Gartner Group showed that most targeted e-mail promos garner response rates of 15 percent, and a survey by Jupiter Communications, found that when all costs are accounted for, e-mail marketing costs just 1 to 25 cents per message, compared to direct mail costs of $1 to $2 per piece.

Additionally, where increased frequency escalates direct mail costs, it has no impact on e-mail marketing costs.

"Frequency is the most important component in advertising, but the problem is the cost of that frequency," Baggot said. "If you run a television ad more often, it costs you a lot. But e-mail is the only marketing vehicle that doesn't charge you for frequency. You can send as many as you want as many times as you want."

Topics: POS

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