Tips to Building Successful E-Mail Lists, Part 1 of 2

In a session at last month’s All About eMail Virtual Conference & Expo, presented by eM+C magazine (sister publication of Catalog Success), Arthur Middleton Hughes, senior strategist at the e-mail marketing firm e-Dialog, presented his best practices for acquiring e-mail addresses, most notably by incentivizing consumers and employees. Here’s a look at Hughes’ top tips and observations from the session.

“The e-mail isn’t anywhere near as important as the audience,” Hughes said. “The list is everything. If you have the right audience, you can make money. If you have the wrong audience, you can’t.”

Offer rewards to help find the right audience. Knowing that e-mail is a never-ending process — 20 percent or more of e-mail subscribers unsubscribe or become undeliverable every year — first determine how much each e-mail address is worth to your company, Hughes said.

* To determine the value of an e-mail subscriber name, set up a chart.
Take a segment of your subscribers and follow their lifetime cycle over a three-year period. Account for the following factors: unsubscribe rate, undelivered rate, average substitutions in a year, promotional e-mails delivered, open rate, clickthrough rate, conversion rate, online orders, offline orders, total orders and total revenue.

Then figure in your costs, including goods and costs per order, acquisition cost, marketing costs, transaction e-mails, and e-mail cost per 1,000. To determine your profit on an individual e-mail address, factor in the following variables: discount rate, net present value (NPV) profile, cumulative NPV profit, lifetime value, net revenue per e-mail and overall conversion rate.

This analysis provides a lifetime value per e-mail address. “If you know what a subscriber is worth, you can develop and organize your subscriber acquisition program,” Hughes said. This program should consist of a three-step process, Hughes advised:

1. determine the value of a subscriber e-mail address;

2. use that value to reward subscribers; and

3. use that value to reward employees.

* Use double opt-in. An essential process, this involves sending a confirmation e-mail to subscribers after their initial sign-ups to verify that they want to be subscribers. This is needed for two reasons:

1. to be sure the people who signed up are serious and will open and read the e-mails; and

2. as a way of proving the people you’re rewarding — either employees or subscribers — are providing you with new and valid e-mail addresses.

* Why reward your subscribers? People do what’s in their self-interest, Hughes said. Ask yourself why they’d want to subscribe to your e-mails. Think like a subscriber, not a provider. Subscribers enjoy information and news; recognition that the company remembers who they are (e.g., personalization of the e-mail); being treated with excellent customer service; an easy way to shop; perks and discounts because they’re loyal; and some sort of reward for signing up.

Hughes noted the case of drug store retailer CVS, which offered a $4 coupon at the store checkout for an updated e-mail address. This works for customers who have and haven’t previously given their e-mail addresses to CVS.

* Techniques to acquire e-mail addresses. Hughes cited two tactics:

1. Make it a contest: To be eligible for the contest, consumers have to provide their e-mail addresses (confirm the validity of these addresses with a double opt-in process).

2. Make it a club: Provide special discounts/promotions to club members, but require them to give you their e-mail addresses to become part of the club.

* Avoid unsubscribes. It’s required to have an unsubscribe button, but too many retailers simply allow subscribers to click this button without finding out why they’re leaving. Give them options to avoid unsubscribes. For example, many times you overmail subscribers. At your unsubscribe page, have a triggered message that allows subscribers to alter their contact frequencies (e.g., weekly, monthly). Or give them the option to only receive e-mails on certain topics.

After your initial reward, find a way to keep your most loyal customers, Hughes said. He cited the example of a phone company that gave its customers $1 off their phone bills every month their e-mail addresses were valid. Other techniques include advance notification of sales and exclusive members-only nights.

* Why reward employees? Incentivize employees to capture e-mail addresses. “Catalog people on the phone should always get e-mail addresses,” Hughes said, “but they don’t.” Reward employees for capturing e-mail addresses the same way you would for sales.

Hughes outlined a six-step process:

1. Determine who has customer contact — customer service, sales clerks, installation personnel, reservations, service staff.
2. Educate all employees on the importance and methods of acquiring e-mail addresses.
3. Everyone should be rewarded, for example, $5, $10 per e-mail address. Again, you need the double opt-in system to verify the validity of the e-mail addresses.
4. Employees enter the e-mail addresses in your system, along with their employee ID numbers.
5. If customers respond, “OK,” to the double opt-in, the employees get the rewards added to their paychecks.
6. Reward only if the e-mail is new, valid and confirmed.

“E-mail addresses are worth money,” Hughes said. “It’s like selling product.”

Register to view the presentation here.