E-mail campaigns are cheap, resulting in a cost per sale as low as $2, says Forrester analyst Shar Van Boskirk, compared with $18 per sale from paper-based direct mail to an in-house list (that is, customers already on a company's database). Not only that, they're trackable, allowing a company to discern which ads elicited which sales, and to calculate an ROI based on real data. Since customers can respond so quickly, many marketers test ads on a sample group before launching a full-scale campaign, thereby optimizing returns.
While some CRM products do help companies tap the marketing potential of E-mail, many firms begin with a rudimentary, homegrown approach. That was the strategy at San Rafael, California-based Autodesk Inc., which sells dozens of design software products to architects and other professionals. Frustrated by a direct-mail response rate that had dwindled from 5 percent to 2 percent, and unsure what to do with the 350,000 customer E-mail addresses he'd collected, marketing manager Bryan St. Amant decided to take a flier. Using the company's MarketFirst software, he sent an E-mail to all 350,000 addresses, offering to tell customers about a new product as soon as it launched, along with news on any other topics they might check off from a list he provided. "It was the softest marketing I'd ever done," he says. "So I was shocked to get a 9 percent response rate."
That effort also helped scrub the list, letting St. Amant know who was no longer interested and which E-mail addresses were defunct. Now, using the same software, Autodesk can send out tailored newsletters with little effort, and easily decide which customers to invite to which online trade shows or product demonstrations. As a result, he has been able to focus more effort on the costlier task of acquiring new customers without increasing his staff, and sales have increased enough to cut the cost per new trade-show lead from $200 to $80.
E-mail holds great promise, both as a cost-cutter and a revenue-generator, but it's just one part of an increasingly complex company-customer relationship. Companies that simply put an E-mail link on their Web site or an E-mail address on their literature and assume that customer-service staff can handle the results are probably in for an unpleasant surprise. "Companies need to manage the preferences of each customer," says Rogers. Augmenting basic E-mail functionality with the technologies that can help manage it is probably essential, and while companies may not welcome the added expense, the cost of not doing it may be considerably higher.
Alix Nyberg is a staff writer at CFO.
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