Andy Wood, MD, GI Insight You Asked With the advent of huge spam levels, plus restrictions on email marketing from the EU, what is the effectiveness of permission email to customers and to prospects?

Since the advent of the EU Directive on Privacy and Electronic Communications, restricting email communications with non-customers only to those people who have actively ‘opted-in’ to receiving such communications, there has been confusion amongst marketers as to how this has affected the efficacy of email as a marketing medium. Vast levels of spam in the typical email inbox have certainly fuelled this confusion.

When quizzed, confusion in the marketing community over email initiatives tends to focus on three main questions:-

• How much effort should I put into asking customers for permission to email them?
• Will my customers and prospects respond to email initiatives at all?
• Does email work stand-alone, or does it need to be combined with other channels?

Answers to these questions are desperately needed by marketers. Unhelpful debates about whether one medium is better than another have been quickly recognised for the nonsense that they represent, and have been superceded by cries for evidence about which media combinations work best, and in what circumstances. Different business sectors have different slants. In retail, the use of email combinations in building transaction levels and values is paramount, as is the case with credit card and mobile phone. In banking, the key objective is increasing products-per-customer. In mortgage finance and general insurance, customer retention is the principal driver. And for life & pensions companies, increasing contributions is the main marketing task. If email communications can play an effective role in achieving these goals, then marketers want to know, especially since the medium is relatively inexpensive.

The myth of return-on-investment

However, marketers should not be fooled by the hyperbolic claims currently being made about email campaign return on investment. This measure is often meaningless precisely because of the low cost nature of email campaigns. ROI can be well in advance of that achieved by more expensive traditional media, but achieve only a tiny fraction of the sheer volume of business that marketing overall is tasked with creating. Too many marketing professionals have been seduced by very high ROI, and have taken their eye off the ball when it comes to generating critical business volumes.

GI Insight commissioned an independently study to look at what proportion of the population have given their permission to be contacted by email. The results were enlightening and surprising. Almost three quarters of UK adults (74.4%) confirmed that they had given their permission, in the last year, to at least one firm that they bought from regularly, to contact them by email with latest offers and products. This statistic provides a major validation of the efficacy of collecting permission emails from the customer base. There is evidently a great willingness amongst the UK population to allow firms with which they already do business to use email as a communication channel.

For email permission with firms from which a consumer had not yet bought, the figure stood at a rather impressive 39.9%. These permission-givers will mainly be people who have made an enquiry through a company’s website — typically to download an e-voucher, or get a quote on a financial services product, or enquire about a holiday, and so on. In other words, they have already indicated that they might be in the market for the company’s products or services, and so may be justifiably labelled and qualified ‘prospect’, rather than merely a ‘suspect’. As such, they have already moved themselves nearer to a possible purchase than other potential customers, and have made it probably worth the company’s while to keep in touch with them. To be able to do so over email, as well as by post, makes them doubly valuable as prospects.

In short, findings underline the importance and potential return on investment from systematic gathering of permission emails, whether from existing customers, or from enquirers who have not yet bought but who have declared some sort of interest. At the same time, marketers must not be seduced by the low cost of email, to place over-reliance on this medium to meet their revenue generation targets. Indeed, real life experience shows that it is when email and direct mail are used in combination, that critical revenue targets are reached in the most efficient and effective way possible.

GI Insight