Email Marketers Must Be Portfolio Managers

josecebrianData-Driven Thinking" is written by members of the media community and contains fresh ideas on the digital revolution in media.

Today’s column is written by Jose Cebrian, vice president and general manager of email and mobile messaging at Merkle.

Data-driven marketing has multiple meanings. In the traditional definition, marketers use data to drive their decisions.

The definition has evolved to include using data on prospects and customers to better refine things like offers and ad placement. Using first- and third-party data is great, but marketers cannot forget that they also need to use their own reasoning to drive decisions.

If we take a look at email as a microcosm of marketing in general, it can offer an important lesson in how to distinguish campaigns from each other and marketing from customer communications.

Email is the cash cow that keeps on giving to marketing departments, along with search. It drives revenue quickly and at a level of scale. Many other channels, such as display, are very effective but ultimately passive because they wait for someone to act. Direct mail is active and has scale but is slow and expensive.

Email is the right mix of scale, cost and speed. But people who own marketing programs need to look at their email campaigns as parts of a broader portfolio and make good choices about where to invest and what to sunset.

Respect The Matrix

The classic Boston Consulting Group (BCG) matrix from the 1970s still holds up today as a portfolio planning tool. The four-box matrix was originally developed to evaluate business units within an organization, with growth rate as the vertical axis and cash generation or revenue as the horizontal axis.

Cash cows have high cash generation but low growth. Stars have high growth and high cash generation. Question marks have high growth and low cash. Dogs have low cash and low growth. Marketers can easily switch cash generation for ROMI or ROI to apply it to their own situation.

The BCG matrix can have applications beyond organizational structure. Its philosophy pertains effectively to marketing strategy as well. Tactics are constantly shifting among quadrants as companies evolve their portfolios. That evolution means evaluation, tinkering and trying new things to understand what programs you want to milk (cows), which you want to retire (dogs), which you want to invest in (stars) and the unproven ones that you want to watch closely (question marks).

Milk Your Cash Cows

Cash cows are regular or recurring campaigns that are deployed to a large group of customers and produce predictable, reliable and measureable results. The easiest examples of this type of campaign are the large campaigns retailers send on a regular basis; the products promoted will likely change, but the target audience and the schedule vary little.

These campaigns should be kept going because they tend to produce the bulk of a marketer’s desired results, which for many is revenue that not only contributes to the company’s growth, but also funds the less proven, more exploratory marketing tactics. In keeping with the BCG model, these are the campaigns from which to extract the most cash, but unlike the BCG model, these are not the campaigns to starve. They require care and feeding in the form of new testing.

Timing, subject line, format, product/component sequence, audience, resends and retargeting all become easily testable options to drive revenue. Many don’t want to do big tests because of the potential risk to results or because email teams are too busy. Those things shouldn’t stand in the way. One can test small and project results with a fair level of certainty. What many companies find difficult, though, is creating the time to plan and measure tests so they can act on them. That’s where the dogs come in.

Put The Dogs Out Of Their Misery

Dogs are the campaigns that you work on for somebody else, in many cases, because “we’ve always done it.” They don’t have any meaningful, quantifiable result beyond opens and clicks. When you ask for the campaign objective, the answer is unclear or unmeasurable.

If teams weren’t forced to focus on dogs, they could turn their attention toward improving parts of the program that generate the results that are wanted and needed. Many will say that revenue is not the sole purpose of a particular campaign. That may well be true, but if it isn’t, then it probably isn’t marketing – it’s a customer communication or a cost take-out effort. If this is the case, it should be evaluated to understand if it could generate revenue, such as an order confirmation.

If it can’t, then in order to avoid dog status, it should be moved out from under the marketing umbrella and have its own customer communications budget and resources.

Shine The Light On Your Stars

Make them tell the truth and ensure they are the stars they seem to be. In the retail industry, for example, most would argue that the abandoned cart email campaign is a star. But what if retailers have already trained their customers to put items in their cart and abandon so they get a follow-up email with a sweeter offer? The results might be great from a revenue-per-email perspective, but you may have cannibalized website sales by training people to wait for an email to complete the purchase.

Don’t get me wrong – stars are great. Marketers should just make sure that they know why campaigns are stars. And if they map a program on a matrix and they don’t have any stars, there’s a problem. They should think hard about what they are doing and try something new.

The Question Marks

If they have a low revenue amount, you need to figure out if you are going to do anything more with them. Can they grow? Can the targeting be expanded to reasonably include others and create more? The question marks are where the email “game” will be won. These are the new ideas – the new segments matched with a very specific objective.

Every marketing program can be improved. Improvement comes from having clear business objectives in the aggregate and at the campaign level, with a measurement strategy for those objectives. And while many marketers seek to add new campaigns and tactics, improvement can also come from killing certain programs or campaigns that take resources away from more productive ones.

Follow Merkle (@merkleCRM) and AdExchanger (@adexchanger) on Twitter.

 

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