Email Marketing History Lesson:
The New and Improved Old Economy
To some, tradition is a bad word. It reeks of narrow thinking, a lack of foresight, a bygone time that fails to account for the advances we've made. For these people, tradition symbolizes that which is outdated, the things that should well be left behind as we forge ahead to establish broader boundaries and become ever increasingly familiar with uncharted territory. This is especially true in the digital age.

The new Economy, from its inception, has defined itself by being different. It was founded on the idea that there is a whole new way of doing business, a method with different rules and practices. But as the euphoria of the halcyon days that marked the dawn of the New Economy begins to fade and our New Economy turns cycles reminiscent of the Old Economy, we are reminded that tradition may have some important lessons for us. And those businesses most likely to succeed in the New Economy are likely to do so through the careful examination of the Old Economy, the retention of the timeless traditions from it and the marriage of those traditions to the visionary principles that fuel the New Economy.

One tradition that database marketers cannot fail to acknowledge is the Old Economy "80/20" rule. While the methods for researching, locating and purchasing goods may have changed for consumers, they still buy in similar patterns. On average, eighty percent of sales continue to come from twenty percent of a business' customers. This means that focusing on creating loyalty and increasing the long-term value of your best customers will still be the most cost-effective way to generate revenue. And with the convergence of New Economy technology and Old Economy experience, this can be easier than ever before.

The key to maximizing the relationships you have with your best customers is establishing communication with them and rewarding them for their loyalty to you. This can only be done if you maintain an up-to-date database and have the capability to mine it for the appropriate data at the appropriate time. This means that all of your customer touch points should be either integrated or accessible through an umbrella application that is capable of drawing out and sorting the necessary information. In today's world, you may have a customer who has purchased several small accessories through your catalog or bricks and mortar stores, but who has made his major purchases through your Web site. If you can't draw on these separate touch points when assessing the buying habits of your customers, you may miss the major purchases made on the Web. This customer, who is actually in your top twenty percent spending bracket, may be left to wallow in the other eighty percent when it comes time for you to implement a rewards campaign. The result is a lost opportunity to better your relationship and to ensure the collection of revenue from your best customers.

While you are mining the database for buying histories and spending habits, you would be foolish to ignore your opportunity for personalization in your correspondence as well. Personalization sells. It makes customers feel heard and appreciated. I recently received an offer for eleven CDs for the price of one, a standard offer I have received one thousand times since my name was first entered on a marketers list. The envelope would have been filed promptly in the circular file but for the fact that the company had gone to great lengths to personalize even the printed envelope with my name, and spelled it correctly. While I didn't end up making the purchase, I picked up an otherwise forgotten piece of trash and at least opened it before sending it to its grave. This tiny touch of personalization took that direct marketing piece that much closer to its end goal of prompting a sale. The only thing that prevented the sale was the selection of music within the offer. Now imagine how effective that promotion would have been had the company mined data about my music preferences, supplied when I previously ordered from them, and included appealing titles based on those preferences. The deal would have been closed then and there.

With the incredible amount of information that can be captured in your database today through Web surveys and registrations as well as purchases and requests for information, your personalization can move far beyond the placement of a first name on the outside of an envelope. You can personalize content so that someone who has a history of buying only shoes through your catalog gets an offer for thirty percent off her next pair of shoes when purchased with an article of clothing. Within the same campaign, someone who has purchased mainly household trimmings can receive an offer for thirty percent off anything in your home furnishings department when purchased with an article of clothing. Your promotion is standard across the board, a thirty percent discount to your best customers to reward them and increase their loyalty. But it is more effective than a flat thirty percent discount, both because it lets your customers know that you know and understand your relationship with them and because it prompts your customers to spend on a new category of items by incenting them with items on which they are already inclined to spend.

All of this personalization may sound expensive, though. The first thing that occurred to me when I saw my name printed on the outside of my CD offer envelope was how much it must have cost to print and properly stuff all of the personalized content into these personalized envelopes! So why print the offer at all? Why not leverage email technology to send your customers messages quickly and at far less cost than any direct mail effort?

Email marketing campaigns offer you a way to maintain frequent, strategic communications with your customers, and to reward or push them in response to their real-time interactions with the various touch points of your organization. It also allows you to maintain an unprecedented frequency of communication at unprecedented low costs. If you aren't talking to your customers, you can be sure your competition is. Email gives you the opportunity to speak to them often. With the knowledge collected in your database you can also speak to them at just the times when they are most receptive and on the devices they prefer.

And the greatest beauty of email marketing is that the proper technology solution can tie your database mining, content personalization and email delivery together in one automated system. By writing a simple segmenting rule, your shoe aficionado gets her version of your customer rewards campaign while your trinket collector gets his identical offer, but with his personal twist.

The Old Economy has taught us who our most valuable customers are and how to ensure that they remain our most valuable customers. The New Economy has given us the tools, through database mining, personalization and email technologies, to maintain relationships with them that are fulfilling to all involved. As it becomes clearer and clearer that our New Economy isn't so new but more an enhanced version of the old, it also becomes clearer and clearer that the winners in the New Economy will be those who best merge tradition with innovation.

Copyright 2002 ClickAction