1. © 2007 e-Dialog, Inc. All Rights Reserved. Arthur Middleton Hughes Senior Strategist Chicago Association of Direct Marketing Sheraton Chicago Hotel and Towers 8:30 – 9:30 AM Tuesday May 5, 2009 Surviving the Recession with E-mail Marketing

2. © 2008 e-Dialog, Inc. All Rights Reserved. The recession is here It will last for more than a year. What should marketers do? Slash prices? Cut back on the marketing budget? Look for another job? Answer: None of the above. Better solution: make more effective use of e-mail to build relationships with customers. E-mail – developed correctly, is the answer to keeping customers in a recession. 2

3. © 2008 e-Dialog, Inc. All Rights Reserved. E-mails Role Not Understood In many companies, e-mail is not recognized as the marketing powerhouse that it is It is somewhere off on the side, producing Web sales which are about 3% or less of total sales. Budgets are often based on online sales alone. That may be the perception, but companies that think that way are missing the boat Here is the reality… 3

4. © 2008 e-Dialog, Inc. All Rights Reserved. E-mail Influences all channels 4

5. © 2008 e-Dialog, Inc. All Rights Reserved. E-mail Offline Sales 3 Times Online 5

6. © 2008 e-Dialog, Inc. All Rights Reserved. Multi-Channel Buyers More Valuable 6 JC Penney US Data

7. © 2008 e-Dialog, Inc. All Rights Reserved. Lowest Cost Per Order 7

8. © 2008 e-Dialog, Inc. All Rights Reserved. The value of an e-mail subscriber 8 Tracking the value of 1,000,000 specific people over three years. Once a week e- mails; open rate 25% For every online sale there are 3 offline due to e-mails Value of each e-mail subscriber is $48.99

9. © 2008 e-Dialog, Inc. All Rights Reserved. If you want them to register, you must promote the idea on the website, in transactions, in print and direct mail and catalogs. Go all out. Give them a reason for registering. Compare these two approaches One is tiny and hard to find. The other gets results. Which do you use? 9 Gain subscribers by your website

10. © 2008 e-Dialog, Inc. All Rights Reserved. Upgrade your POS system Borders UK set up their POS system in May 2006 to collect e-mail addresses at the cash registers. The POS system sent data every night to the Borders ESP. This triggered welcome messages to everyone who signed up the day before. The messages included a discount voucher to prompt a second visit. Results: 38% higher transaction values for e-mail subscribers compared to other members. 13% voucher redemption rate E-mail subscriber base increased 630,000 in 17 months. 10

11. © 2008 e-Dialog, Inc. All Rights Reserved. Reward Staff and Subscribers Once you know the value of an e-mail you can afford to incentivize subscribers and employees. If each e-mail address is worth $49, you can give a subscriber $5.00 for her e-mail address. You can give employees $5.00 for getting each new e- mail When the new e-mail is entered, a welcome e-mail is sent out right away, asking the subscriber to click that she really wants to receive your e-mails. If the e-mail is new, and valid, and she clicks yes you give the reward to the employee and to the subscriber. 11

12. © 2008 e-Dialog, Inc. All Rights Reserved. Incentivize Your Staff When I took my car to one of those quick-lube places, I watched the attendant as he clicked through the screens for my transaction and just skipped the one asking for my e-mail address. Why didnt he ask me? Probably because some people, when asked in the past, grumbled about spam and peppered him with questions he didnt know the answer to. Also, he must have had no incentive to capture my address. These issues are very easily overcome with little cost; it just takes commitment and a clear plan supported at all levels. – John Rizzi, CEO, e-Dialog

13. © 2008 e-Dialog, Inc. All Rights Reserved. Switch from Hunting to Farming As the world population grows, hunting for wild animals has been replaced by domestic farming. Hunters study their weapons. Farmers study their animals and care for them. 13 Hunters Farmers

14. © 2008 e-Dialog, Inc. All Rights Reserved. Most e-mail marketing is hunting E-mails are so cheap to send -- $6.00 per thousand – that most marketers do not bother with a database Mail em all. Someone will buy. Instead of studying the subscribers, marketers work to sharpen their e-mails 14

15. © 2008 e-Dialog, Inc. All Rights Reserved. Hunting is failing today Subscribers are getting more e-mail than they want or can possibly read – batch and blast is in tatters. 15

16. © 2008 e-Dialog, Inc. All Rights Reserved. Direct mail is like farming Direct mail costs $0.60 per letter or more If you sent promotional mail to everyone in the US you would go broke Instead you build databases and study consumers. You select the right lists, and demographics. The right list is your key (80%) to success. It is very scientific and profitable. E-mail marketing can be done in this same way 16

17. © 2008 e-Dialog, Inc. All Rights Reserved. How to switch to farming Build a subscriber database Include demographics (age, income, children, home, length of residence, etc.) Plus web behavior (opens, clicks, purchases) And preferences Use this to create segments Develop a marketing program for each segment Make sure that each e-mail is relevant to the interests and lifestyle of each recipient 17

18. © 2008 e-Dialog, Inc. All Rights Reserved. Recognize status levels 18 Actual e-Dialog retail client data

19. © 2008 e-Dialog, Inc. All Rights Reserved. Create meaningful segments Actual large retailer segment system with 16,000,000 customers

20. © 2008 e-Dialog, Inc. All Rights Reserved. Understand your subscribers Most e-mail marketers think that everyone is looking for bargains. Some people definitely are. But others look for quality, helpfulness and service. To send daily e-mails saying SALE! SALE! SALE! may turn some subscribers off. Look at what Sears asks their web appliance buyers: 20

21. © 2008 e-Dialog, Inc. All Rights Reserved. Result: more opens and sales Jupiter research: segmentation can improve conversion rates by up to 355% and increase revenues by as much as 781% 21

22. © 2008 e-Dialog, Inc. All Rights Reserved. Making the most of your e-mails Now that you have lots of subscribers, make the most of them: Send out a welcome e-mail within minutes of receiving a yes Put subscribers into segments and design e-mails for each segment. Personalize your e-mails: goal is to have each subscriber feel that this e-mail is designed just for her. Include forward-to-a-friend. Lets begin by getting her to buy off line from you. Lets see what others have done… 22

23. © 2008 e-Dialog, Inc. All Rights Reserved. E-mail: Look in your mailbox! Miles Kimball tested 20,000 catalogs in three mailings with a simultaneous e-mail: Look in your mailbox Also sent identical catalogs to 20,000 others without the e-mail. Those with the e-mail produced 18% higher sales. E-Mails get people to do what you want them to do at very little cost. 23

24. © 2008 e-Dialog, Inc. All Rights Reserved. Borders store sales with e-mail Borders UK set up their POS system in May 2006 to collect e-mail addresses at the cash registers. The POS system sent data every night to the Borders ESP. This triggered welcome messages to everyone who signed up the day before. The messages included a discount voucher to prompt a second visit. Results: 38% higher transaction values for e-mail subscribers compared to other members. 13% voucher redemption rate E-mail subscriber base increased 630,000 in 17 months. 24

25. © 2008 e-Dialog, Inc. All Rights Reserved. Cold Stone Creamery E-Mails Cold Stone with 1,700 locations created a birthday club Receive FREE Ice Cream on Your Birthday!. In two years, 2,000,000 signed up for e-mails. Birthday e-mails have open rates 62.5% higher than other e-mails. Click throughs are 350% higher. Franchisee survey: Overwhelmingly positive response… drives people into the stores… people dont come in by themselves. 25

26. © 2008 e-Dialog, Inc. All Rights Reserved. E-Mail : Go to your retail store Blockbuster sent e-mails with news about movies to 170,000 members for six months. 14,000 members asked for the e-mails but were withheld as a control. At that time Blockbuster did not have any online sales Those who received the e-mails went to the stores and purchased 28% more over six months than those who did not get the e-mails. E-mails get people to get in their cars and drive to a retail store. 26

27. © 2008 e-Dialog, Inc. All Rights Reserved. E-Mails drive clothing store sales Goodys with 322 stores sends coupons every 2 weeks to their e-mail subscribers. Store clerks: Please fill out your e-mail on these paper forms Clerks type e-mails into Goodys web site in spare time. Barcode assigned to each coupon identified subscriber and source of the coupon: e-mail versus website. Coupon redeemers have 50% bigger basket: $74 versus average for non-coupon shoppers of $50 Some customers print and use coupons twice! That is great! Result: ROI of 150%. $0.68 revenue per e-mail sent per campaign. 27

28. © 2008 e-Dialog, Inc. All Rights Reserved. Triggered e-mail messages offer a three advantages. First, they have very high open rates. Second, they enable automated cost-effective communications. Third, by including promotions below the fold, they deliver high ROI results. In fact, it is not unusual for a triggered message to deliver upwards of five times higher revenue when compared to a standard broadcast e-mail. Use triggers to boost sales

29. © 2008 e-Dialog, Inc. All Rights Reserved. Birthday and Anniversary Trigger Recognize customer milestones such as birthdays or anniversary of program signup Results: 2x lift in revenue per net delivered e-mail

30. © 2008 e-Dialog, Inc. All Rights Reserved. Transactions: your most powerful e-mails Transaction e-mails (Your order was shipped today) have open rates of more than 60% Here is an ideal opportunity to promote additional sales – because customers are reading them. Many companies do not take advantage of this. Their transactions are in text, not HTML, and often say Do not reply to this e-mail! What a mistake! 30

31. © 2008 e-Dialog, Inc. All Rights Reserved. Netflix promotes via transactions The transaction The next product

32. © 2008 e-Dialog, Inc. All Rights Reserved. A Terrible Transactional E-mail

33. © 2008 e-Dialog, Inc. All Rights Reserved. Microsoft Blows an Opportunity 33 Why dont you make a note of this easy-to- remember number So you can enter it here! And read this easy number over the phone to them here!

34. © 2008 e-Dialog, Inc. All Rights Reserved. Summary: Prosper in the recession The downturn in the economy tells you: Now is the time to do a better job with your e-mails You need to add millions to your subscriber list Method: Calculate the value of your e-mail subscribers Use that value to reward your subscribers and your employees Switch from Hunting to Farming Use transactional and triggered e-mails to build relationships and sell more. Make your e-mails relevant, funny, interesting adventures Finally: Use e-mails to fill your stores with shoppers. 34

35. © 2008 e-Dialog, Inc. All Rights Reserved. Keep up on your reading 35 Order from www.dbmarketing.com or www.amazon.comwww.dbmarketing.comwww.amazon.com