Email marketing

Did you know that over 22.43 billion emails are sent daily, and nearly 85 percent are spam? Email marketing is no stranger to the business world. In fact, 9 out of 10 marketers believe that it is the most important channel to access and build customer relationships. The trouble is it is hard to do email marketing right. One wrong message and your email will be deleted, unsubscribed, or sent to the spam folder. So, how can marketers escape the fate of "blackhole" email and maximize email marketing's impact on the business? That's a question we'll find the answer to today. 1, 2 

Email marketing Email marketing

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Table of contents

    Email Marketing Definition

    Ray Tomlinson sent the first email in 1971, but it was Gary Thuerk, a marketing manager at Digital Equipment Corp, who started the first email marketing campaign. The email was sent to just 397 email accounts but had heralded the age of email marketing.3, 4

    Nowadays, email marketing is everywhere. Look into your email inbox right now. It's likely that 9 out of 10 emails you receive are from a company or service to which you subscribe.

    So, what is email marketing, exactly, and why is it important?

    Email marketing is a form of direct marketing that uses emails to educate or persuade customers to take action.

    What separates email marketing from regular emails is that it is sent by a business with an intention. That intention could be to raise brand awareness, get a product sold, or have the reader sign up for an event.

    As for why email marketing is so popular, it is simply that it has a relatively high Return on Investment (ROI). According to a study by DMA in 2015, email marketing brings £38 ROI (return on investment) for £1 invested.2

    Email marketing objectives

    A company's email marketing objectives are closely linked to its strategic objectives. The National Email Benchmarking Report (2013) listed six critical objectives of email marketing (Fig. 1):

    Driving sales was the number one email marketing objective, whereas brand awareness was cited as the least important. Other important goals of email marketing include customer engagement, customer acquisition, and lead generation.

    The last three objectives are much easier to measure than sales and brand awareness, as most Email Service Providers (ESP) (services for sending email marketing campaigns to a list of users) allow marketers to observe engagement metrics such as open rate (percentage of which emails are opened), click-through rate (percentage of people clicking a link in an email), and conversion rate (percentage of people taking the desired action after reading an email).

    Email Marketing Types

    There are many email marketing types, but newsletters, welcome emails, and surveys are the top three that bring a business closer to its objectives.

    Email Marketing: Newsletters

    Newsletters are the top email marketing type. They are often sent by people with a blog, website, or eCommerce store to inform, educate, or engage customers. Most newsletters are periodical, meaning they are sent to readers at regular intervals, such as a week, every two weeks, or a month. Newsletters can come in various types and forms depending on the target audience and their purposes. For example, a lifestyle blog sends its subscribers a weekly roundup of its most popular articles.

    Email Marketing: Welcome emails

    Welcome emails are the second most important email type. These are messages sent to subscribers for the first time. The primary goals of welcome emails are to create a good impression and encourage people to learn more about the business.

    Welcome emails belong to a category known as behavior-triggered messages or automated emails. These are messages automatically sent from an ESP to a subscriber who has performed an action on the website or app. Some popular automated messages include purchase confirmation, first-time offers, thank-you messages, birthday emails, win-back campaigns, abandoned cart reminders, etc.

    Email Marketing: Surveys

    Email marketing provides a quick and cheap way to conduct surveys on a large scale. Despite serving no informational or promotional purposes, survey emails are an excellent tool for gathering customer data and feedback. To improve the conversion rate of survey emails, marketers can provide an incentive such as a discount voucher or gift card.

    Based on marketing purposes, emails can also be divided into promotional, informational, and announcement emails.

    Email Marketing: Promotional emails

    Promotional emails offer a specific deal to drive sales and revenue for a business. The primary goal of a promotional email is to entice customers to make a purchase. A promotional email should always contain a concise and clear call-to-action (CTA).

    A call-to-action (CTA) is the part of the email where marketers tell the audience to take an action. An example of CTA is "Buy now",

    Normally, it is not advisable to send promotional emails too frequently as they can appear spammy. However, during special events like Black Friday or Christmas, companies can send more promotional emails with unique deals and offers to drive more sales.

    Email Marketing: Informational emails

    Companies send informational emails to leave a positive impression in the minds of readers and build their trust. These emails are more about informing and providing added value for the customers than driving sales and revenues. A popular example of an informational email is a newsletter that is sent regularly to inform or update the audience about a topic.

    Email Marketing: Announcements

    Announcements are sent to keep readers posted on something new, updated, or changed in a business. For example, a company can send an announcement email when launching a new product, expanding to a new market, or reaching an important milestone. Sometimes, announcement emails can be sent to inform customers about a shipping delay or technical issues on the website.

    Email Marketing Examples

    Now that you've understood what email marketing is let's look at a few examples.

    Farnam Street's weekly newsletter

    Our first example is Brain Food - a weekly newsletter founded by Farnam Street to provide people with timeless insights and ideas. Brain Food is a type of informational email. While there are parts for promotion, its main focus is on informing the readers and increasing their knowledge. High-quality content has brought Brain Food an impressive readership of more than 400,000 people. The newsletter has also been featured in top publications like Forbes, The New York Times, The Wall Street Journal, and The Economist.6

    email marketing screenshot of Farnam Street Brain Food Newsletter StudySmarterFig. 2. Screenshot of Farnam Street's Brain Food Newsletter

    Discover Magazine's newsletter

    Another example is the newsletter by Discover Magazine - a publication of science stories and news for non-professionals. What makes Discover Magazine's emails special is that they are segmented based on subscriber preferences. This allows the magazine to provide more focused content and improve readers' engagement.

    Email marketing screeshot of Discover Magazine Newsletter landing page StudySmarterFig. 3. Screenshot of Discover Magazine's landing page

    Email Marketing Strategy

    All email marketing strategies contain three key aspects: customer segmentation, list growth, and contact frequency.

    Email Marketing: Customer segmentation

    The great advertiser and Father of Direct Marketing Gary C. Halbert once said:

    The primary and most important thing in all of Direct Mail Land is to get the envelope delivered and opened.

    Halbert wrote this statement before digital email was born, but it still holds today. If you are an email marketer, your main task will be to get customers to open the email. The question is: "How?". As many marketers would tell you, the key is to provide relevant content. In practice, this means dividing your email list into different groups and sending them emails matching their preferences, a.k.a. email segmentation.

    Email segmentation means segmenting the email list based on people's needs, wants, and profiles.

    Email segmentation can significantly improve email open rates as people are more likely to read emails that are relevant to them. In fact, according to Mailchimp, segmented email lists have an open rate 14.31% higher than unsegmented lists, which leads to 100.95% higher click-through rates.13

    An email list can be segmented based on:

    • The buyer journey

    • Subscription preferences

    • Recent purchases

    • Purchase frequency

    • Purchase value, etc.

    Thankfully, this process can be automated by an ESP. 14

    Email Marketing: Contact frequency

    Contact frequency means how often a company wants to contact customers per week or month via email.

    In email marketing, neither too little nor too much contact is good. Too little contact means less exposure, which reduces your business's chance of driving sales and revenues. On the other hand, too much contact can appear spammy and annoy readers. There is no-size-fits-all frequency, though a good rule of thumb is to let readers know what to expect and stay true to it. For example, if you promise to send emails weekly, you should not email your list every day or skip a week because you don't feel like writing.

    Email Marketing: List growth

    Before emails enter customers' inboxes, customers have to agree to receive them, or in email marketing terms, opt in.

    List growth refers to strategies and channels to gain email opt-ins.

    The prerequisite for email marketing is that the brand must be trustworthy and offers a privacy policy. Without these two guarantees, customers are unlikely to submit their emails.

    Once these prerequisites are met, companies can initiate many marketing campaigns to grow the list. For example, they can ask people to sign up to receive:

    • Discounts,
    • Free samples,
    • Exclusive offers,
    • Free delivery, etc.

    Growing lists is an ongoing task. This means marketers have to constantly observe email marketing KPIs (Key Performance Indicators) to retain subscribers and gain new ones. Some important email marketing metrics are:

    • Open rates,
    • Click-through rates,
    • Conversion rates,
    • Unsubscribe rates, etc.

    Email Marketing Strengths and Weaknesses

    Let's now take a look at the strengths and weaknesses of email marketing.

    Email marketing strengths

    Despite the rise of social media, emails are still the most effective way to build customer loyalty. Here are some key email marketing strengths.

    Cost-effectiveness - Emails have a much lower cost than other platforms. Usually, companies only need to pay a monthly fee to gain access to an email service provider (ESP) to start growing and sending emails to their email list.

    Mailchimp offers a free service for businesses that send less than 2,500 emails per month. Companies only pay a fee if they want to send more emails.

    This is much cheaper than advertising on popular social media channels like Facebook or Instagram. A Facebook ad, for instance, costs $0.94 on average. If a company wants to make 2,500 impressions (clicks), it will need at least $21. An average company spends around $300 to $1,000 on Facebook ads per month.8

    Email marketing screenshot of Mailchimp pricing page StudySmarterFig. 4 - Screenshot of Mailchimp's pricing plan

    Permission-based - Another benefit of email marketing is that it is permission-based. A company can only send emails when people agree to receive them. As a result, email marketers can focus their efforts on customers who are genuinely interested in their business.

    Personalization - Email marketing allows marketers to segment the audience and send personalized messages to meet their needs, wants, and profiles. This helps increase engagement and response rates.

    High conversion rates - The conversion rate is the percentage of the number of recipients who took action after being exposed to marketing messages. According to a chart by Mailmodo, email marketing's conversion rate has remained steadily high between 2016 and 2021, at around the 15 percent level. In 2018, the figure peaked at 18.9 percent.9 This is significant compared to other digital marketing channels. According to Hubspot, the conversion of Facebook is only 1.85%, Instagram 1.08%, and Twitter only 0.77%.10

    Automation - Another perk of email marketing is that marketers can send emails upon triggers. For instance, after subscribing to a website, customers will receive a welcome email that gives them a brief intro about the business or offers them a special gift (e.g., discount, free delivery). A good thing about email automation is that it can be created from a template and sent to multiple users. Most ESPs have an archive of pre-made templates & designs for different purposes, which makes the job of an email marketer much more straightforward.

    Measurable - Email marketing provides many metrics such as open rates, click-through rates, conversion rates, bounce rates, number of subscribers, list growth rate, number of shares, etc. These are important to understand what customers are interested in and how to improve the content/offers to better match their expectations.

    A/B Testing - A/B testing means sending two or more versions of the same email variables to different customer segments. The email variables could be subject lines, CTA, or email copy. With an ESP, a marketer can efficiently conduct A/B testing to see which email variable produces more engagement.

    Email marketing weaknesses

    Email marketing is far from perfect. Here are the challenges a marketer may encounter when email marketing.

    Spams - A lot of emails are seen as spam. These are irrelevant or intrusive messages that customers are bound to delete on sight. Spams often result in negative emotions for users and decrease their productive working hours.11

    Undelivered emails - some emails are not sent at all or end up in spam folders when they contain spammy keywords, such as:

    • Earn $
    • $$$
    • Big bucks
    • Accept credit cards
    • Stock alerts
    • Get out of debt.12

    Non-responsive emails - Nowadays, people access emails on different devices, laptops, mobile, iPads, etc. Some emails are too big to fit on the small screen of phones/tablets, which hampers readability. If the audience finds reading your email too much trouble, they might not return.

    Email marketing - Key takeaways

    • Email marketing is a direct marketing method that interacts, engages, and educates customers via email.
    • The most common email marketing types are newsletters, welcome emails, and surveys.
    • Based on the customer journey and the purpose of the interaction, marketing emails can also be divided into promotional and informational emails.
    • An email marketing strategy considers customer segmentation, list growth, and contact frequency.
    • Email marketing is beneficial because it is cost-effective, permission-based, measurable, personalized, automated, and has a high conversion rate.
    • Email marketing issues include spam messages, undelivered emails, and non-responsive emails.

    References

    1. Nikolina Cveticanin, DataProt, What's On the Other Side of Your Inbox - 20 SPAM Statistics for 2022, 2022, https://dataprot.net/statistics/spam-statistics/
    2. DMA, National client email report 2015, 2015, https://dma.org.uk/uploads/ckeditor/National-client-email-2015.pdf.
    3. Todd Campell, The First Email Message, http://gunkelweb.com/coms465/email/firstemail.html.
    4. Moosend, Gary Thuerk: "People Make The Same Mistakes Over And Over Again", 2022, https://moosend.com/blog/gary-thuerk-people-make-the-same-mistakes-over-and-over-again/.
    5. National email benchmarking report 2013 - November 2014 Edition, 2014.
    6. Farnam Street, Sunday Brain Food Newsletter, https://fs.blog/newsletter/.
    7. Discover Magazine, Newsletter Signup, https://www.discovermagazine.com/newsletter-signup.
    8. Web FX, How Much Does Facebook Advertising Cost in 2022?, 2022, https://www.webfx.com/social-media/pricing/how-much-does-facebook-advertising-cost/.
    9. Aquibur Rahman, Mailmodo, Email Marketing Conversion Rate Statistics for 2022, 2022, https://www.mailmodo.com/guides/email-marketing-conversion-rate/
    10. Mark Macdonald, Shopify, Which Social Media Platforms Drive the Most Sales? [Infographic], 2015, https://www.shopify.com/blog/12731545-which-social-media-platforms-drive-the-most-sales-infographic.
    11. Kaspersky, Damage caused by spams, http://https//encyclopedia.kaspersky.com/knowledge/damage-caused-by-spam/.
    12. Karen Rubin, Hubspot, The Ultimate List of 394 Email Spam Trigger Words to Avoid in 2021, https://blog.hubspot.com/blog/tabid/6307/bid/30684/the-ultimate-list-of-email-spam-trigger-words.aspx.
    13. Mailchimp, Effects of List Segmentation on Email Marketing Stats, https://mailchimp.com/resources/effects-of-list-segmentation-on-email-marketing-stats/.
    14. Mailchimp, All the Segmenting Options, https://mailchimp.com/help/all-the-segmenting-options/
    Frequently Asked Questions about Email marketing

    What is email marketing?

    Email marketing is a form of direct marketing that uses email to educate, engage, and persuade customers to take an action. 

    What are the examples of email marketing?

    An example of email marketing is a company sending a weekly newsletter about industry news to engage customers. Another example is a welcome email series sent to first-time subscribers of a website. 

    What are the 4 types of email marketing?

    Some types of email marketing include: 


    • Newsletters
    • Welcome emails
    • Surveys
    • Promotional emails

    What are the 5 T's of email marketing?

    The 5 T's in email marketing stand for Tease, Target, Teach, Test, and Track. 

    What are the strengths of email marketing?

    The strengths of email marketing include cost-effectiveness, measurable KPIs, personalized and automated messages, and high conversion rates. 

    Test your knowledge with multiple choice flashcards

    What separates email marketing from normal emails you receive is that it is sent by a business with an intention. 

    What is the most important objective of email marketing?

    _____________ offer a specific deal for the customer. 

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