How Email Marketing Works

November 7, 2017
Peter McEllhenney

There are only two marketing platforms I really think every business needs. The first is a website. The second is an email marketing campaign.

Email campaigns are the most cost-effective way of marketing to your customers and your best prospects. Email campaigns are opt-in marketing. You have people’s email addresses because they gave you their addresses, which means they are interested in what you have to say.

Email management platforms are cheap. I often recommend MailChimp to smaller businesses because it is free if your list is 2,000 addresses or less. The interface is user friendly and the reporting is pretty robust.

I do have three qualifications to the statement “every business should do email marketing.” The first qualification depends on the size of your list and the amount of your average ticket sale. Having a customer list of 10 names is not big enough when your average ticket sale is $10. You need a list of at least several hundred names before you should begin email marketing. If you have a list of 10 names and your average ticket sale is $100,000 however, that’s a whole different matter.

The second qualification depends on whether your business deals in sensitive personal information or professional advice. Health professionals, lawyers, and financial advisors (for example) often need to be careful with their email marketing messages, and some industries have strict rules about customer communications that need to be followed.

The third qualification is that you’ve tried email marketing and it hasn’t worked. Now sometimes knowing if email marketing works is really tricky. That’s what we’ll discuss next.

What Can You Sell with Email Marketing?

As always with advertising, simple easy-to-understand low-risk products and services with short decision making cycles and easy-to-understand prices are best to market via email because it is easy to measure whether you made money or not.

For example, it you sell beautiful custom-designed shoes – as the store “Bus Stop” does in my neighborhood – and you send out an email containing an in-store coupon, you can directly measure the return-on-investment (ROI) of your email. You can also generate sales right away. And you can gather data on the kinds of products, services, and special offers that generate the most response from your customers.

For businesses with complex products and services that have a long decision making cycle and the costs of choosing wrong make that decision high risk, email gets more complicated.

Part of this problem can be mitigated by making the conversion something other than a sale such as a request for information, a free sample, a free estimate, or a call to a representative. The purpose is to have the person take a step necessary to ultimately doing business with you.

Beyond this, all email campaigns can also build top of mind awareness (or TOMA). Top of mind awareness is incredibly valuable to businesses. And it’s hard to measure. Let’s talk about it.

The Value of Top of Mind Awareness (TOMA)

One of the major challenges of marketing is that businesses can rarely know WHEN a customer is going to be interested in their products or services. (Search engine advertising is the one platform that solves this problem.)

As a result, businesses need to proactively and consistently and continuously market themselves to their customers and potential customers to create top of mind awareness – that is, to make sure people think of their business first WHEN those people are ready to buy what the business sells.

Since we can’t predict when any person will be ready to buy from us, we simply have to continue promoting ourselves to our entire customer base as intelligently and efficiently as possible, with messages they want to see and at a frequency they find acceptable.

Further, the value of top of mind awareness in email marketing extends beyond existing customers and prospects to that most valuable and desired source of new customers for any business: referrals and word of mouth.

Let’s use the example of the shoe store Bus Stop again. When a friend of one of their customers says “You know, I really need some new shoes” you want the customer to instantly reply “You should go to Bus Stop!” That comes from being top of mind and it does not happen on its own.

It’s Hard to Measure the Impact of Top of Mind Awareness

So top of mind awareness is extraordinarily valuable to businesses. Unfortunately it is also pretty hard to measure the impact of TOMA on conversions and sales.

Large businesses can always do market research and consumer surveys to help measure their top of mind awareness. This often isn’t feasible or affordable for smaller businesses, like the ones I typically work with.

And all businesses have the problem that email marketing targets their existing customers and best prospects. This means that while it might have been the email campaign keeping you top of mind with a customer that led to her buying from you again – when she buys, the sale will be attributed to the existing relationship. And the same is true for referrals.

This means that businesses tend to undervalue email marketing and give themselves the credit for the rise in repeat business and new referrals it generates. So they stop the campaign. After a period of time, their repeat business and referrals decline. At which point they attribute the decline to “bad luck.”

How Long Will TOMA Email Marketing Take to Work? 6 to 9 Months

Keep in mind once again that emails promoting simple easy-to-understand low-risk products and services with short decision making cycles and easy-to-understand prices – especially when there is a time-limited sale or special offer – can generate results right away.

For other businesses, top of mind awareness typically takes six to nine months to begin to work in my experience. This is because of two very good reasons.

The first reason is that you need to send a series of emails before you actually begin to be top of mind. Sending one email once ain’t gonna to do the trick.

The second reason is that you then have to wait for a need for your product or service to arise. It almost never happens that a person notices a hole in the sole of their shoe thirty seconds before they receive an email from your shoe store. There’s usually a lag time. Depending on your business, it could be a long lag time.

The Challenges of TOMA Aren’t Limited to Email

This lag time issue is not limited to email. Lots of traditional adverting – print ads, radio, television, billboards, free t-shirts, and so on – are about top of mind. And because these are more expensive forms of advertising, they are harder for smaller businesses to embrace.

Top of Mind Awareness is also one of the prime benefits of the newest, hottest, most effective, and definitely most tricky of all advertising mediums: social media. It is social media I will discuss in my next post!

No comments

Leave a Reply

Your email address will not be published. Required fields are marked *