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What It Takes to Make the Numbers

David Dickey is director of marketing and communications for direct and new initiatives for Sprint. Susan Goodman leads Goodman and Co. Roger Gray works as VP of plan sponsor communications for Scudder Investments. And Andy Sernovitz is CEO of Gaspedal.

David Dickey is director of marketing and communications for direct and new initiatives for Sprint. Susan Goodman leads Goodman and Co. Roger Gray works as VP of plan sponsor communications for Scudder Investments. And Andy Sernovitz is CEO of Gaspedal. Their panel discussion this morning at Ad:Tech 2003 addressed new email ideas to kickstart online marketing programs. Here is a rough transcript of their exchange:

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Susan Goodman: I come to this session with a background of being in interactive marketing since we started having these conferences. We’re almost back. The industry didn’t die. Everyone got a little depressed, and we spent too much time firing people and cutting budgets. One of the key areas of discussion about growth right now is email marketing. The big players in the industry, including AOL, are starting to help curb some of the abuses. David Dickey from Sprint will share some of Sprint’s approach. Andy Sernovitz will lend some industry perspective. And Roger Gray works for Scudder Investments.

To set the stage, we live in a really competitive time for marketers. I live at 86th Street and Broadway. Above the entrance to the subway there’s a video display playing interactive video and ads. You’re not even safe at the subway. Everyone’s email inbox is full of spam these days. As people who are in traditional direct marketing have been telling me, response rate is going down. If you get a response rate that’s below 1%, that’s a sad state of affairs. Another big issue is that there aren’t enough marketers who understand the new direct marketing.

One of the things we talk about is understanding the comsumer’s purchase process. What is the process people go through from the time they’re peripherally aware and actually make a purchase? Where do you target your direct mail and email? You also want to consider life events. Is somebody more susceptible to buy your product or service when they go to college? We also need to look at the email process. How many emails did you send out — and how many had effect?

We also need to think about the balance between short- and long-term impact. As direct marketers, we grew up understanding that we were looking for response now. If someone puts the envelope down, you’ve lost the person. With interactive media, it can be up to 10-30 impressions before a person actually acts. In some cases, people act 72 hours later. Those of us in direct mail would’ve stopped running those banners. Remember our conversations about fatique? What we find is that if you leave them up, you may still get a response. Think about that.

There’s also been a shift in consumer perceptions. Consumers are accustomed to control. They’re used to channel choice, and they’re used to being able to delete anything that annoys them. The tone is more of collaboration and inviting people in rather than, “Buy now!” because people don’t like being shouted at. As marketers, we need to take caution. If we are sending out email, we need to be aware of relevance. Gap’s campaigns are a good example of using email in an integrated fashion. They have store windows, print ads, and TV spots. They also had a lot of PR. And everything was supported by email.

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That’s my portion. Our first panelist is Roger Gray. Roger, how does Scudder Investments use email marketing?

Roger Gray: Why is a boring old, stodgy money manager here to talk to you about email marketing? I want to take a lot of ideas from your space and share how we use it in our world. Scudder’s part of the Deutsche Asset Management. We manage roughly now $750 billion in assets around the world. And we manage 95 retail mutual funds. I work in the retirement sector. That’s $12 billion in retirement plan assets. We have 400 folks dedicated to that space.

We have on our books roughly 14,000 clients. 1,000 we give a lot of hand-holding service to. We try strongly to retain our customer base through education. Most of our clients dont have a big HR and benefits department. We also aim for rapid response. That needs to be flexible and convenient, but we also needed activity tracking. And in addition, a big goal was cost reduction.

Let’s talk about them specifically. We talked to our clients about what kind of information they wanted to receive and designed our newsletter around that. People told us they wanted to get information in their hands before a colleague came down the hall to give them a hard time. We wanted to get the Scudder name out in front of them on a regular basis as brand reinforcement, and we wanted the newsletter to initiate a dialog with our relationship managers.

The newsletters that we produced can go out within an hour. It’s content rich. We’ll usually cover four topics in a certain month. There’s an opening paragraph, and you can dig further down to get more details. They allow us to manage perceptions. The way that news changes to rapidly, we need to get out and tell a story before it’s told for us. And finally, you’re only as good as your last communication.

We looked for a flexible, easy-to-use product. We publish seven different newsletters for seven different customer types. We distribute 3,000 newsletters a month. We wanted on-demand activity reports such as who opened the newsletter and what they read — as well as what bounced back. Does anyone else get bounce backs?

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Let’s talk about cost reduction. We work with IMakeNews to make our newsletters. That process side steps creative services, printing, postage, labor, and timing, and we’ve gotten a 60% savings. We had costs that we were able to eliminate. And we can get something out in a matter of hours rather than weeks.

One of the things we’re working on next is personalized eNews. In the interest of time, I’ll stop and turn it back over to Susan.

Goodman: Let me introduce our next speaker, David Dickey.

David Dickey: I want to talk about how we capture email addresses. We have 19 million customers at Sprint PCS and, ideally, I’d like to have all of their email addresses. Realistically, that’s not possible. At the end of the day, we might have 5-6 million email addresses.

We leverage email to do several things. Sending customers loyalty communications, you’re not asking them to do anything right now. You’re asking them to be happier by offering additional services. We also send cross-sell and up-sell communications, as well as acquisition. We have a prospect database of about 1 million people who’ve raised their hands to get more information from Sprint. Through frequent communications, we’ve increased sign-up rate by about 25%. Most of you didn’t buy your phone online. You wanted to touch it and feel it. It’s a high-consideration item. How can we use email to drive people to a retail setting?

Email extends direct marketing basics. Email enables you to get into a dialog with customers. Customers derive additional value. You can also build a relationship. Part of that is that dialog, but part of it is building permission. When capturing email addresses and using them, there’s a value exchange that’s crucial. Roger talked about cost savings, but there needs to be a real value or reason for people to give you their email address. It’s an interesting sell to go to senior management and say that you want to get fewer addresses — but that they’re better.

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None of what I’m saying today is particularly novel or new. The products that Starbucks and Krispy Kreme aren’t particularly new. But what they bring is executional effectiveness that’s second to new. Customers can provide email addresses through multiple channels. You might guess that it’s not a retail store employee’s primary goal to get your email address. They want to sell you a product. An activation call is a good time to get an email address. A customer care call might not be. I don’t want to ask you for your email address when you’re irate. Give people a reason why they want to give you their email address.

At Sprint, we’ve got three major divisions. We’ve had instances in which customers have given us different email addresses. You need cross-division integration. If a consumer opts out from one division, they may think they’re opting out of all your divisions. The attorney general of Utah doesn’t care about that.

The core of this is customer-centric. If you put cost first, the ultimate goals can become obscure. First goal? Opt the customer in. And if you’ve given people an opportunity to opt in, give them an opportunity to opt out. Then provide clarity and deliver clear value. We’ve even tested sending irrelevant emails with some frequency, and that’s better than not sending anything at all.

Goodman: Andy’s going to tell us how to survive and thrive on the email frontier.

Andy Sernovitz: There are more bills in Congress right now to regulate email than there are books you can buy to do email marketing the right way. The last time I went to Amazon, there were 11. The email business has gotten ugly. It is the Wild West out there. The bad is the spam, the sleazy opt-ins, and the iffy opt-outs. We can’t get away with the ugly any more. You used to do email marketing of average quality and do pretty well. But now, the spammers have generated a level of spam rage. You can’t get pissed off at a spammer because they don’t answer their emails. But they can attack you. When a user deletes nine out of 10 emails in their inbox, you want to be the one that’s left. And all you need to do is be interesting and relevant.

Here are some questions we ask clients. Is your list size proportionate to your Web site traffic? Are you losing permission as fast as you get it? When they unsubscribe, do you lose the relationship permanently? Do you burn more customers than you convert? Do you piss off 10 times the number of people you acquire? And does your email go into a black hole?

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There are six symptoms of a troubled email campaign and six effective cures. Capture rate: Nobody should leave your home page without subscribing to something. Most Web sites are visited, bookmarked, and never visited again. If you’ve got a page just to sign up for your newsletter, you should get a high conversion rate. You want email opt-in forms everywhere: on the home page, on the side bars, everywhere on your site. Your subscribe form should be no longer than one field. And you need a compelling call to action.

Why should anybody sign up for your email list? Are you giving them a weak offer? “Special offers” equals spam. We’re pretty sure we’re getting screwed. You can do better than “special offers.” Send advanced product announcements, news, tips and tricks. Give them a reason to sign up and give them genuine value. Also, reassure consumers. Link to your privacy policy. Tell people you don’t sell your list.

I alluded to the wipeout rate earlier. That’s doing the math on your email campaign from both sides. How many customers unsubscribe? How many did we piss off? What’s the life-time value of a customer we lost? And how does that compare to our conversion rate up front? We talked about the math of cost per acquisition. The worst thing you could have happen is that you’re not getting angry emails. What’s the cure? Do the math on the complete value of an email and a customer. Factor in losses when calculating ROI. And consider brand impact.

The block rate is an easy one. Is your email going into a black hole or a spam filter? When your email is blocked or filtered, it doesn’t bounce. It vanishes. Your numbers are off. Make sure employees are getting emails. All of you marketers should have Yahoo, Hotmail, and AOL accounts. When you do a campaign, if you don’t get it, you’re in trouble. Clean up your content. Use a content-checking tool to get a spam score. Then, fix it before you mail. Clean your list. A dirty list with a high bounce rate will get blocked. Stop sending your own email. Unless you have a deliverability department, you need someone to make sure you get through.

Do you only have one list? If they’re on the list, when they unsubscribe, you lose the relationship. It’s better to offer a whole bunch of newsletters that do different things. Offer multiple opt-in lists. Separate the unsubscribes. It’s almost impossible to get off Amazon’s list because they have so many options.

And finally, what is your yuck rate? There’s no purer measure of bad content than a first-issue drop out. Another measure is natural list growth. It should get slightly bigger by itself. If your list can’t hold its own, your content’s probably no good. And if people are complaining about spam, that’s another warning. The cure? Better content, a clearer opt in, and a better welcome message.

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Goodman: In terms of targeting and personalization, how targeted and personalized do you intend to get by the end of 2004?

Gray: In our case, it’s an existing customer base. We have all their data. We can customize — not just to them but who it’s from on the relationship management side.

Dickey: I want every email to be personal. An email to you should include a picture of your phone even if that email’s going to several million other customers.

Sernovitz: If you don’t know enough about your customers to be personal, do what we call poor man’s segmentation and offer people a lot of categories that they can sign up for.

Question: Is there general consensus about third-party ads that companies should not have competing messages?

Dickey: We’ve not done any of that, and we most likely would not. The more things you make the customer remember, the less effective it will be.

Goodman: It’s also a question of permission. Customers, particularly if they are paying customers, are very intolerant of third-party marketing messages. They’re already paying to be subscribers. If the offers are relevant, really relevant, then you have a little room. On the prospect side, if you’re still trying to acquire someone as a customer, I’d be really careful about ride-along ads.

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Question: In the financial services space, have you tested mail-only, mail-email, and email-only to make sure you’re not decreasing response because of the mix.

Gray: Yes. You’re dead on. Email is a replacement for some, but not for all. Email is primarily useful as a customer retention and education piece but less successful in the acquisition phase. Once you have them, they like the email. But before you acquire them, they like printed material first.

Question: I’m interested in frequency. If you change frequency, do you warn them first?

Sernovitz: We’re big fans of letting customers determine their own frequency. Use frequency as part of the sign up. Weekly newsletter. Monthly offers. If you have a lot of lists, people will reach their own natural balance. Unsubscribes usually happen because you’re getting too much email. If you give them options, they can stay on your list.

For more Ad:Tech reports, visit the conference blog.

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