This is a question that I hear all the time from business owners, and I understand why – email is cheap, and so are business owners! I know because I am a business owner. We are always trying to find the most cost-effective course of action. While this is a good thing, sometimes we incorrectly evaluate the costs.
Is email cheaper than direct mail? Absolutely, initial expense-wise.
But there is more to evaluate here. The 2010 DMA (Direct Marketing Association) Statistical Fact Book provides this insight:
73 percent of consumers prefer mail for receiving new product announcements or offers from companies they do business with, as compared to 18 percent for e-mail.
That is a HUGE difference! This means relying on email exclusively for your marketing could result in you annoying 82% of your lead base. I know that I personally HATE getting email from a business that I didn’t give my email address to, and I know I’m not alone in that.
So now we need to add to the cost of email the possibility of turning off prospective customers. How much revenue will you LOSE because people got “spammed” by you and will now NEVER do business with you? Pretty tough to calculate, I’d say!
Maybe the first 2 times the recipient simply deletes the unwanted email with no emotion whatsoever. But after the third time, you’ve now totally irritated them. We just don’t know. All I can say is, whenever I give a marketing seminar, I ask the audience this question: “How many of you like receiving emails from businesses you never gave your email address out to?” I never get a single hand raised in response.
I go on to ask “How many of you feel distrust when you get an unsolicited email?”
All the hands go up.
Now the price difference isn’t looking so large, is it? Unless, of course, you’re not interested in the long-term effects and you just want to make a quick buck and bail. In that case, perhaps it doesn’t matter if you upset most of the recipients as long as the instant ROI is good.
You will be able to find marketing professionals on either side of the debate, but it will be very heavily against. I’m hard pressed to find even one quote in favor of email as a lead gen tool. However, it was quite easy to get a quote against this practice. Here is one from the website of leading email-marketing provider iContact:
Having customers sign up directly on your website is a surefire way to build a quality list. Avoid the temptation to rent or buy a list through a third party. Doing this will only cause you problems in the long run. Issues can include poor list quality, increased chance of being flagged as spam and potential loss of reputation.
I invite you to do a Google search on “email as a lead generation tool” or something similar. You will get loads of companies eager to sell you a list of email addresses! Please look into this carefully. You will hear “we don’t support spamming,” “these are opt-in lists,” and “folks gave their email address and want the data.” OH PLEASE! That’s all I can say! I’m on those lists and you are, too. Do you really recall GIVING your email address to an opt-in list? Most likely, you forgot to uncheck a box on a fill-in form and BOOM – you opted in!
Yahoo, Google Mail, AOL and all the larger email service providers do their best to stop companies from abusing their clients’ addresses and will block abusers. However, now there are ways to beat the system. My contention is this: If you have to “beat the system,” how ethical is that? Okay, I’m ranting a bit now. I need not tell you what side of the argument I’m on. To me, the answer is clear: email is a follow-up marketing tool.
Yes, some companies in very specific circumstances will have great success generating leads through email marketing. My friend has a company that used to cold call people at home asking if they’d like to change their energy provider. Email is far less intrusive than a call from a stranger during dinner. He has turned to spam to get new clients for this and he doesn’t have a problem because truthfully, if he can save them money on their energy bill, they are happy to be informed of this!
However, in most cases, it simply isn’t the best way to get leads for your business. It is cheap, but the response rates are dismal (maybe .000005%), and, as we’ve discussed, there is a VERY good chance you are simply turning off large numbers of potential customers before they ever get a chance to interact with your company.
The optimal use of email marketing is to follow-up with leads you generate through outlets like direct mail or television, etc.
Once the prospect has agreed to receive communications from your company, they are less likely to dismiss your email or, worse, mark it as SPAM. Thus, your open rates go up. Once your open rates go up, your response rates will follow.
By using email and direct mail in the correct way, you maximize your return on investment from your marketing. And that’s what we’re all after, isn’t it?
I’ll discuss exactly how to use email as a follow-up tool in Chapter 18: Building an Integrated Marketing Plan.