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The Relevancy Group LLC

The Reinvention of Email Marketing
and the Future of Connected Marketing




                          MARKET RESEARCH




                            The Reinvention of
                            Email Marketing
                            and the Future of
                            Connected Marketing




                          Discover more at
                          www.therelevancygroup.com
                          (877) 972-6886, info@therelevancygroup.com
Market Research
                  The Reinvention of Email
June 1, 2010      Marketing and the Future
Volume 1, 2010
                  of Connected Marketing
Authored by       Executive Summary
David Daniels     The continued growth of email and digital marketing is
                  creating new opportunities, but marketers are challenged by
                  non-integrated disparate channel-centric technology
                  solutions. Email Service Providers will morph to be
                  recognized as Connected Marketing Service Providers. Email
                  will remain as the hub to social and mobile marketing
                  activities. Given the need to create efficiencies across
                  channels and drive effectiveness through increased
                  sophistication, marketers must calibrate their vendor
                  selection process to reflect emerging marketing certainties
                  to understand the intersection of integration cost and value.




                  For more information on The Relevancy Group’s services, tailored to the specific needs of
                  your business, visit www.therelevancygroup.com, call (877) 972-6886, email
                  info@therelevancygroup.com or on twitter @emaildaniels

                  Reproduction by any method or unauthorized circulation is strictly prohibited. The
                  Relevancy Group’s reports are intended for the sole use of clients. All opinions and
                  projections are based on The Relevancy Group’s judgment at the time of publication and
                  are subject to change.

                  Published June 1, 2010. © 2010 The Relevancy Group, LLC
The Reinvention of Email Marketing and the Future of Connected Marketing




                           Table of Contents

      1 Executive Summary
      1 Integrated Email Marketing Empowers Marketers Across
        Disparate Channels
      6 Connected Marketing Service Providers Emerge to Satisfy
         Shifting Needs
     11 Marketers Must Adapt Email and Marketing Messaging Vendor
        Selection Processes
     18 Report Methodology



                              List of Figures

Figure 1    Connected Marketing Supports the Natural Lifecycle of
            Customer Management

Figure 2 Connected Marketing

Figure 3 Connected Marketing Vendor Selection Tool




            Published June 1, 2010. © 2010 The Relevancy Group, LLC
The Reinvention of Email Marketing and the Future of Connected Marketing


                                                     -1-
Executive Summary
The continued growth of email and digital marketing is creating new opportunities, but
marketers are challenged by non-integrated disparate channel-centric technology
solutions. Email Service Providers will morph to be recognized as Connected Marketing
Service Providers. Email will remain as the hub to social and mobile marketing activities.
Given the need to create efficiencies across channels and drive effectiveness through
increased sophistication, marketers must calibrate their vendor selection process to
reflect emerging marketing certainties to understand the intersection of integration cost
and value.

Present Market Landscape
Integrated Email Marketing Empowers Marketers Across Disparate Channels
The continued growth of email and digital marketing is creating new opportunities, but
marketers are challenged by non-integrated disparate channel-centric technology
solutions. Integrated email marketing is necessary to meet the marketer’s growing needs
for sophisticated marketing messaging management across channels and disciplines.

Email and Digital Marketing Growth Creates Market Confusion
By all accounts, spending on email, social, mobile and search marketing will continue to
grow at a compound rate anywhere from eleven percent to twenty percent over the
next five years.i Web analytics is also experiencing high growth as marketers clamor to
better understand their clients’ behavior and leverage this data in their retention
remarketing efforts. With such fast paced growth and new best practices that emerge
everyday, it is becoming increasingly difficult for marketers to understand which vendor
categories are best equipped to empower their marketing efforts in a holistic fashion.
Why? Because silos and marketing responsibilities within the organization are
constantly changing. This reshaping of the marketing buying center is being driven by
the following market conditions:
 - Emerging marketing channels lack dedicated champions and when they do exist
     they change rapidly. Today’s marketer is either a jack of all trades and a master of
     none or they are siloed in discreet functional areas such as email. Pile on emerging
     social and mobile marketing channels and the once dedicated email marketing
     specialist is often tasked with managing marketing campaigns across a variety of
     disparate channels. For those marketers that remain in silos, the team is
     challenged to do too much in a non-integrated way leaving these functional
     champions at a loss to optimize cross-channel initiatives that are not integrated.
     Even in the largest enterprises that have more labor resource than middle market
     companies, roles and responsibilities can shift often.

                            Published June 1, 2010. © 2010 The Relevancy Group, LLC
The Reinvention of Email Marketing and the Future of Connected Marketing


                                                   -2-

    The average tenure of the Chief Marketing Officer (CMO) is just 23 months,
    indicating that even in larger organizations the marketer’s responsibilities will
    change as often the marketing regime does.ii
-   Non-marketing functions have become a marketing responsibility. Customer
    service is increasingly a function that must coordinate with the marketing
    organization. The transformation of the role of customer service from that of a
    cost center to an important client retention function is evident in how Amazon.com
    has adapted over the last ten years. A decade ago, that company shunned service
    interaction; their service phone number was not promoted on their web-site. Now
    the same company spent $888 million to acquire Zappo’s a brand well known for its
    ability to embrace customer service through emerging channels such as Twitter.
    Zappo’s is passionate about customer service as a marketing function that falls
    under the CMO’s responsibility.
-   Industry consolidation extends the functionality of every marketing application
    creating a dizzying array of choice. Over the last two years we have witnessed an
    unprecedented number of acquisitions and mergers that extend a vendor’s core
    functionality into another domain. Just in the last six months email marketing
    vendors have acquired or merged with social marketing solutions, digital asset
    vendors have extended their reach into the web-analytics marketplace, and offline
    direct marketing firms have augmented their data businesses by exploiting newer
    digital marketing components. Such shifts have created artificial categories (i.e.
    Listening Platforms), recast old nomenclature (i.e. CRM) and redefined the
    expectation of what marketing analytics means. However, while not dismissing the
    progress of the expanding marketing eco-system, these changes have served to
    confuse the end-user marketer as to how to discern the value from the latest
    ballooning feature race that any one vendor can offer them.

Connected Marketing Supports the Natural Lifecycle of Customer Management
A marketer’s ability to cohesively manage subscribers through the four steps of the
customer’s lifecycle (acquisition, retention, engagement, advocacy) necessitates an
integrated approach to email marketing. In order to optimize a subscriber across the
customer lifecycle, consider the need for integration at every step across four
independent macro stages.
- Acquisition: The ability to measure the effectiveness of a marketer’s acquisition
tactics and take the appropriate follow-on action all hinge on the timeliness and quality
of the acquisition source and the data that is being generated from it. Whether it is
evaluating search engine spending in terms of its ability to grow list size, implementing
social marketing acquisition tactics, or qualifying business prospects in a sales force

                          Published June 1, 2010. © 2010 The Relevancy Group, LLC
The Reinvention of Email Marketing and the Future of Connected Marketing


                                                    -3-

automation application, the marketer’s ability to achieve success is defined by how
tightly integrated these disparate pieces are tethered to their email programs.
 - Retention: The ability to move prospects to become customers and then report on
their spending behavior and discern the appropriate timing for follow-on messages to
drive client retention also relies on integration. Our interviews reveal that most all
organizations have a dedicated transaction system and database that is separated from
their email marketing system. Here again, the marketer’s success can be determined
by how easily they can harness buyer data to spur follow-on transactions.
 - Engagement: Moving a buyer into repeat loyalist buying behavior is a matter of
understanding and managing their overall engagement with a brand. The meaning of
engagement and the underlying metrics that support it are different for every
company. Engagement data and the subsequent measures rely on web-site behavior,
email behavior, social behavior as well as non-traditional measures such as customer
servicing behavior. As with retention, integration is key to forming a holistic view of the
customer’s engagement.
 - Advocacy: Guiding clients from the engagement stage to become brand advocates is
a dream of every marketer. However without the ability to understand client
engagement in an integrated fashion and motivate the social sharing advocacy
behavior, the marketer will remain stuck in the engagement phase. The advocacy
phase closely interrelates to acquisition as successful integrated marketers can
understand the cost saving benefits that an army of advocates can have on their
acquisition spending.

Moving clients across this lifecycle is not an easy task, but as marketer sophistication
rises to the challenge it will also overall improve the organization’s ability to be
relevant.




                           Published June 1, 2010. © 2010 The Relevancy Group, LLC
The Reinvention of Email Marketing and the Future of Connected Marketing


                                                    -4-

 Fig. 1 - Connected Marketing Supports the Natural Lifecycle of Customer Management




                                       Source: The Relevancy Group, LLC


Email Market Segmentation Is Best Served By Marketer Sophistication, Not Size
Throughout our executive interviews with email marketers, one feature that they desire
from all of the vendors that they seek to engage with is integration capabilities.
Integration of data, content, reporting and even user privileges are all top of mind with
marketers as they seek to create efficiency from legacy systems and processes that are
in place. However, outside of the desire for integration, other familiar email marketing
features, including deliverability and reporting, universally came up, but there were
stark differences once we moved beyond asking about the table-stake features of email
marketing management. These differences cut across company size, list size, as well as
the markets that they focused on whether that be a business or consumer marketplace.
The one clear distinction that grouped these marketers was their current sophistication
level as well as their aspiration to be more sophisticated. We encountered many
marketers that still see email as a blasting device where list size – not the value or
engagement of their subscribers rules the day. However it is the other group of
marketers that are much more interested in the value that they can discern from their
email program and how that value can be further augmented by integrating it with
another channel. Take for example, the following observations
 - A publisher dependent on advertising sales seeks to integrate their email marketing
     application with Salesforce.com so that there is more control put on their sales


                           Published June 1, 2010. © 2010 The Relevancy Group, LLC
The Reinvention of Email Marketing and the Future of Connected Marketing


                                                     -5-

    team to improve the management of their advertising inventory. The publisher
    stated they were making this move to improve their mailing frequency controls, in
    that their legacy situation allows sales representatives to oversell available ad
    inventory, which in part is leading to over-mailing their house list of subscribers.
-   A travel/hospitality company wants to better understand the value of their
    subscribers that are sharing their email promotions on social networks.
    Additionally the retailer is seeking to integrate hotel property review data into their
    email marketing tool in order to target customers who are acting as brand
    ambassadors. The company plans to test mailing offers to these advocate
    subscribers to further encourage sharing and viral behavior among them.
-   A retailer seeks to understand how they can leverage their web-site analytics data
    to improve the relevancy of their email marketing offers. Their first project will be
    to identify those email subscribers that viewed underperforming products but never
    carted or purchased them. The retailer plans to target these subscribers with deep
    discounts on this merchandise in order to sell these laggard products at a profit
    versus the alternative of liquidating them for pennies on the dollar.

The common theme among all of these organizations is email integration. Such an
integrated approach to email marketing will change the way in which email technology
is classified in the marketplace. Marketers must begin to think with this end-suite goal
in mind versus stitching together one-off pieces of the puzzle.




                           Published June 1, 2010. © 2010 The Relevancy Group, LLC
The Reinvention of Email Marketing and the Future of Connected Marketing


                                                    -6-

Future Market Outlook
Connected Marketing Service Providers Emerge to Satisfy Shifting Needs
Email Service Providers will morph to be recognized as Connected Marketing Service
Providers. Email will remain as the hub to social and mobile marketing activities,
requiring marketers to adapt their email vendor evaluations. Marketers and vendors
that adopt a sophisticated and holistic approach to Connected Marketing will be more
successful than those that continue to operate in silos.


Email Marketing Vendor Evaluations Will Change to Reflect Market Realities
Given the growing number of digital channels that nearly all marketers are embracing,
as well as the overwhelming need for email to be integrated with these channels, the
market must adapt the criteria that are used to evaluate vendors. The current market
segment name of Email Service Provider (ESP) has become a misnomer as this vendor
market segment has morphed to address a number of digital marketing channels. The
name of this category will change to a more apt descriptor such as Connected
Marketing. This reinvented market segment will be defined by the following vendor
attributes:

-   Marketing Messaging Management: Inclusive of email marketing, these vendors
    also have social, mobile and search solutions that allow the marketer to connect in
    an outbound and inbound manner with their clients and prospects in an integrated
    manner.
-   A Significant Social Offering: More than the ability to share content on social
    networking sites such as Facebook, these features embody the ability to launch,
    measure and manage Twitter campaigns, execute social widget applications and
    identify the social influence of subscribers.
-   Analytics and Measurement: Web Analytics are the glue that holds digital
    marketing together and are necessary to measure customer behavior across both
    the large computer based browsers as well as the mobile browsers for the small
    screen. Additionally as new channels and tactics such as social messaging emerge
    they bring a host of new measures. Marketers must seek tools that can efficiently
    and effectively deliver a dashboard as well as deep dive analytical tools to empower
    their decisions. Ultimately, Web Analytics morphs to become more generally
    Marketing Analytics, a critical component of Connected Marketing systems.
-   Segmentation, Testing and Targeting Tools: A common set of tools that can used
    across any digital marketing channel and applied to search engine marketing,
    landing page optimization as well as outbound marketing through channels such as
    email, social and mobile.
                           Published June 1, 2010. © 2010 The Relevancy Group, LLC
The Reinvention of Email Marketing and the Future of Connected Marketing


                                                     -7-

-   Content Management: Content will forever remain king and is the lifeblood that
    ultimately drives the notion of relevancy. Moreover, as marketers need to create
    content in a multitude of formats, inclusive of video, marketers must deeply
    investigate the content management capabilities of the marketing management
    provider that they seek to work with.
-   Production Management: While the marketing organization has flattened, there
    are still multiple stakeholders with specific campaign production tasks. The ability
    to have a solution that allows users to both collaborate and manage tasks on a
    centralized marketing calendar will become a feature that begins to separate the
    Connected Marketing solutions.
-   Smart Integration: The ability to intelligently integrate with disparate marketing
    channels, data sources, labor resources and applications is central to the marketer
    developing efficiencies. Whether the vendor owns the disparate pieces or has
    tightly-integrated connectors to the parts that embody the whole, these vendors
    will clearly win out over those that rely on custom programming and labor based
    solutions to stitch together these elements.
-   Best Practice Oriented Services: Every year, effective email marketing continues to
    become more difficult. Add to that the notion that marketers must become experts
    at the entire continuum of digital marketing and the customer’s lifecycle requires a
    vendor that can educate and assist their clients. The need for a vendor with strong
    strategic and tactical services as well as a effective on-going client education efforts
    must be prioritized in the marketer’s vendor selection process, even if the marketer
    initially assumes that all work will be done in-house. Marketers can improve their
    ROI dramatically by adopting best-practices which often requires additional
    strategic insight from the prospective vendor. Given the staffing limitations that
    most organization’s face and the increasing complexity of digital marketing,
    marketers must prioritize the vendor’s service capabilities in the selection process.




                           Published June 1, 2010. © 2010 The Relevancy Group, LLC
The Reinvention of Email Marketing and the Future of Connected Marketing


                                                    -8-

Fig. 2 – Connected Marketing




                                     Source: The Relevancy Group, LLC


Social Network Communication Will Reinforce Email, Not Replace It
With Facebook growing to over 300 million users in such a short period of time and the
rising popularity of Twitter, many have speculated that these new forms of social
communication will replace email. Email was the first online social communication tool
that empowered consumers to share and connect with their friends and coworkers
quickly in a universal manner. The fact that 90% of the online population use email
daily and many of whom have more than one email address is evidence that email
usage remains strong. Solidifying email’s future is the fact that our email addresses are
akin to our digital fingerprint.

We need an email address to purchase goods online, conduct online banking and even
create social profiles or contribute to online discussions. With the likes of MySpace
opening up its closed network to email traffic and the understanding that Facebook has
similar plans, these social networks will look more like an ISP or communication portal
than the closed network that they now resemble. With every poke, friend request or
new follower an email is generated and such social activities have only increased the
overall volume of email messages. These volume increases will continue to underscore
the need for marketers to integrate social practices into their email tactics and enlist
segmentation tactics to breakthrough the ballooning email inbox clutter.

                          Published June 1, 2010. © 2010 The Relevancy Group, LLC
The Reinvention of Email Marketing and the Future of Connected Marketing


                                                    -9-

Sophisticated Email Marketers Will Be More Relevant, Effective and Successful
Numerous studies have detailed that marketers that employ more segmentation,
integrated data and tactics such as testing have higher open, click and conversion
metrics than marketers that employ a one-size fits all approach. For example, the use of
Web Analytics to target email campaigns improves revenue by nine times more than
does the use of broadcast mailings. Despite additional campaign costs, relevant
campaigns increase net profits by an average of 18 times more than do broadcast
mailings where every subscriber gets the same message.iii Email marketers that employ
sophisticated tactics, including connecting email with other channels and data sources
will continue to be more effective than those that simply “spray and pray.” Such a need
to continually drive the marketer’s sophistication will be necessitated by the growing
number of messages in the subscriber’s inbox, increased use of the email marketing
channel and the need to create a holistic approach towards digital marketing
management in order to drive the efficacy of marketing programs.

Email Marketing Vendors That Adapt to a Holistic Approach to Connected Marketing
Will Prosper More Than Those That Remain Pure Play ESPs
Our interviews with marketers reveal that those changing their ESP often do so because
of the inflated costs related to building custom integrated solutions to emerging
channels and outside data repositories. Much like Apple’s success with the iPhone and
App store, successful email marketing vendors will take a holistic approach to extend
email functionality in a repeatable and scalable fashion. Additionally given the
continued growth of the marketer’s email list and send size, further email sending price
compression is inevitable. Visionary email marketing vendors will off-set this trend by
offering a broad array of applications that address the marketers needs across the
entire digital marketing continuum and focus on unlocking the true return on
investment that is possible with an integrated approach to email marketing. Whether
the vendor’s approach is that of acquiring and owning these disparate pieces or
delivering them to the market through a tightly integrated approach will be a less
important distinction of the vendor’s success. Vendors will be differentiated based on
those that address and improve the integration of digital marketing channels from
campaign production to analytics with every new product iteration or version release.
This emerging crop of Connected Marketing vendors will also be subject to a new array
of vendor selection attributes that we encourage marketers to embrace.




                          Published June 1, 2010. © 2010 The Relevancy Group, LLC
The Reinvention of Email Marketing and the Future of Connected Marketing


                                                   - 10 -

Marketers Must Understand the Intersection of Integration Cost and Value
Given the overwhelming need to powerfully integrate email marketing into a broad
array of channels and data sets, marketers should emphasize the value delivered from
these integrations by taking the following into consideration. There are essentially
three types of email marketing vendors:
 1. Email Only: Those vendors that are solely email marketing tools and offer little or no
    integration to other channels, applications and data sources. Working with these
    vendors will raise marketing costs as the marketer will lack necessary functionality
    or create work-arounds to stitch multi-channel functionality together.
 2. Email Supplemented Through Custom: Vendors that can offer additional channels
    and functionality but can only do so through custom integration and loose
    partnerships with additional vendors.
 3. Email Tightly Integrated: These vendors offer a true tightly integrated online
    marketing suite to manage all forms of marketing messaging functionality. These
    vendors accomplish this through their own native applications or through
    standardized apps and tight connectors to the disparate functions that embody a
    digital marketing solution.

Marketers must understand the value of native inherent functionality versus the cost of
integrating and acquiring disparate pieces. Email vendors that offer tight integration to
other functionality will be at the forefront of the Connected Marketing revolution and
will ultimately provide a more satisfying and cost-effective solution for the marketer.




                           Published June 1, 2010. © 2010 The Relevancy Group, LLC
The Reinvention of Email Marketing and the Future of Connected Marketing


                                                    - 11 -

Recommendations
Marketers Must Adapt Email and Marketing Messaging Vendor Selection Processes
Given the need to create efficiencies across channels and drive effectiveness through
increased sophistication, marketers must calibrate their vendor selection process to
reflect emerging marketing certainties. Additionally marketers must understand the
intersection of integration cost and value to select vendors that can deploy, manage and
measure messaging across a variety of digital channels.

Email Marketers Must Calibrate Vendor Selection Criteria to Reflect Emerging Market
Certainties
Considering the evolution of the current market and the expectations for its continued
change, marketers must adapt their email marketing vendor selection by mapping it to
these three major categories.
   1. Channels Served – encompassing the entire digital marketing continuum that is
       necessary to empower the aforementioned customer lifecycle (figure 1).
            Email – the ability to schedule, throttle and manage outbound email
              marketing and inbound reply handling. This includes segmentation,
              testing, dynamic content, triggered messaging, transactional message
              support, a full compliment of deliverability tools and custom reporting.
            Social – the ability to extend email’s reach to social networks, launch and
              manage social marketing campaigns (e.g. Twitter) as well as the ability to
              measure and analyze subscribers social behavior.
            Mobile – the ability to leverage SMS messaging as an email opt-in point
              and manage outbound campaigns through mobile messaging as well as
              ensure that email and landing pages render appropriately on small
              screens.
            Web-sites – the ability to deploy and measure micro-sites, landing pages
              and blogging functionality as well as optimize these pages for search
              engine marketing placement.
            Search – the ability to leverage the relationship between paid search
              (SEM), as the second-highest ROI form of online marketing, and email
              marketing in terms of enabling efficient list building and relevancy. Also,
              the ability for email recipients to share content in emails to the web that
              is automatically optimized for natural search.




                           Published June 1, 2010. © 2010 The Relevancy Group, LLC
The Reinvention of Email Marketing and the Future of Connected Marketing


                                               - 12 -

2. Functionality
       Usability – while ease of use is placed firmly in the eye of the beholder,
          marketers must judge usability by the solution’s ability to easily re-use,
          store and organize mailings, campaigns, data and content. Such an
          emphasis on re-use and overall usability will create much-needed
          efficiency for the marketer.
       Subscriber Management – the ability to manage not just subscriber data
          for email, but also additional marketing channels so that markets can
          understand and manage the interrelation of a subscriber’s channel
          preference across the entire customer lifecycle. A differentiation in this
          attribute is the integration of relational data into email databases to
          allow the marketer to utilize a broad dataset for segmentation and
          targeting.
       Content – often a missing piece of functionality within email marketing
          applications, the need to augment legacy content management systems
          will grow as marketers embrace a variety of digital channels. The ability
          for the vendor to store, manage and organize a host of content attributes
          and formats are functions where there is a great lack of parity within the
          marketplace.
       Smart Integration – the ability for a vendor to intelligently integrate to
          common external solutions, such as popular salesforce automation tools
          and databases must extend beyond a robust application programmable
          interface and manifest into tight integrations with critical applications.
       Analytics – the ability to measure and analyze not only email marketing
          performance, but all relevant digital marketing channels including web-
          site measurement. The keys to improving the marketer’s relevance
          among their subscribers will be found within this piece of functionality.
3. Services
       Strategic – the common thread of email marketing over the last decade
          was that each brought new challenges and our outlook details that the
          perpetual bar of sophistication will continue to be raised. The
          importance of a comprehensive methodology of strategic best practices
          advice and services will continue to grow in importance. Marketers must
          use the vendor’s capabilities in this regard as a wedge to separate
          vendors in the selection process even when functionality differences
          cannot be easily discerned.
       Tactical – as important as strategic advice is, it is imperative that
          prospective vendors can provide the tactical services to lend a hand with

                       Published June 1, 2010. © 2010 The Relevancy Group, LLC
The Reinvention of Email Marketing and the Future of Connected Marketing


                                                    - 13 -

           the production and management aspects across the digital marketing
           spectrum. We consistently find the single reason why marketers that fail to
           become more sophisticated is because they lack the staffing resources to do
           so – severely affecting overall marketing ROI.
          Support – the relationship that marketers have with their vendors is
           tempered by the quality of the vendor’s support services. While the cost of
           message deployment can be commoditized, marketers must recognize the
           premium associated with satisfying support services. Beyond functionality,
           we consistently find that the vendor’s inability to delight their clients is the
           single biggest issue that drives marketers to switch vendors. Pay close
           attention to service level agreements including up-time as well as response
           time to support issues.

Successful Vendor Selection Necessitates a New Vendor Evaluation Process
Beyond evaluating email functionality, marketers must adapt their email-only-centric
request for proposal processes to an approach that embodies the broadening scope of
Connected Marketing. To fully appreciate the critical capabilities of a prospective
vendor, we advise marketers to leverage our vendor selection scorecard process.

For each one of the capability categories you will assign the following scores based on
the vendor’s offerings.

+0 If the vendor can only support limited capabilities at an additional cost
+1 If the capability is provided within the vendor’s offering at an additional cost
+2 If the capability is included within the vendor’s offering at no additional cost
-1 If the vendor can facilitate the capability on a custom basis with custom costs
-2 If the vendor does not offer this capability

At the end of the process, sum the total of these scores and rank the prospective
vendors based according to the total score.




                           Published June 1, 2010. © 2010 The Relevancy Group, LLC
The Reinvention of Email Marketing and the Future of Connected Marketing


                                                          - 14 -

Channels Served – The following is an example scorecard of how three prospective
vendors might be scored on the channel capabilities.

                                                           Vendor       Vendor       Vendor
  Capability   Defined                                     A            B            C
  Email        the ability to schedule, throttle and
               manage outbound email marketing
               and inbound reply handling. This
               includes, segmentation, testing,
               dynamic content, triggered messaging,
               transactional message support, a full
               compliment of deliverability tools and
               custom reporting.                                    1            2             1
  Social
               the ability to extend email’s reach to
  Marketing
               social networks, launch and manage
               social marketing campaigns (e.g.
               Twitter) as well as the ability to
               measure and analyze subscribers
               social behavior.                                     0            2         -1
  Mobile       the ability to leverage SMS messaging
               as an email opt-in point and manage
               outbound campaigns through mobile
               messaging as well as ensure that email
               and landing pages render
               appropriately on small screens.                      1            1             0
  Web-sites    the ability to deploy and measure
               micro-sites, landing pages and
               blogging functionality as well as
               optimize these pages for search engine
               marketing placement.                                 1            1             1
  Search       the ability to leverage the relationship
               between paid search (SEM) and email
               marketing in terms of enabling
               efficient list building and relevancy of
               emails. Also, the ability for email
               recipients to share content in emails to
               the web that is automatically
               optimized for natural search.                        0            1             0
                     Channels Served Sub-Total                      3            7             1




                             Published June 1, 2010. © 2010 The Relevancy Group, LLC
The Reinvention of Email Marketing and the Future of Connected Marketing


                                                          - 15 -

Functionality – The following is an example scorecard of how three prospective vendors
might be scored on the functionality capabilities.

                                                                   Vendor       Vendor       Vendor
  Capability          Defined                                      A            B            C
  Usability           the ability to easily re-use, store and
                      organize mailings, campaigns, data and
                      content. This includes a common
                      foldering and search system for
                      subscriber lists, segments, mailings,
                      templates and content                                 0            2        -1
  Subscriber          the ability to manage not just
  Management          subscriber data for email, but also
                      additional marketing channels so that
                      markets can understand and manage
                      the interrelation of a subscribers'
                      channel preference across the entire
                      customer lifecycle. A differentiation in
                      this attribute is the integration of
                      relational data into email databases to
                      allow the marketer to utilize a broad
                      dataset for segmentation and
                      targeting.                                            1            2            0
  Content             the ability for the vendor to store,
                      manage and organize a host of content
                      attributes and formats are functions
                      where there is a great lack of parity
                      within the marketplace.                           -1               2            0
  Smart Integration   the ability for a vendor to integrate to
                      common external solutions, such as
                      popular salesforce automation tools
                      and databases must extend beyond a
                      robust application programmable
                      interface and manifest into tight
                      integrations with critical applications.              1            2            1
  Analytics           the ability to measure and analyze not
                      only email marketing performance,
                      but all relevant digital marketing
                      channels including web-site
                      measurement.                                          0         2               1
                                Functionality Sub-Total                     1        10               1




                               Published June 1, 2010. © 2010 The Relevancy Group, LLC
The Reinvention of Email Marketing and the Future of Connected Marketing


                                                             - 16 -

Services – The following is an example scorecard of how three prospective vendors
might be scored on the services capabilities.

  Services
                                                                      Vendor       Vendor       Vendor
  Capability           Defined                                        A            B            C
  Strategic Services

                       the ability to offer packaged strategic
                       services based on the vendor's own
                       methodology. Seek vendors that have
                       a documented playbook for common
                       needs such as email re-activation and
                       driving social advocacy                                 0            1            1
  Tactical Services
                       the ability to offer tactical services
                       support on a project or retainer basis.
                       In this attribute the costs are typically
                       additional, score the vendor as a 2 if
                       the services staff has more than 5
                       years of experience and the vendor
                       has an auditing and training function
                       to monitor and improve their staff.                     1            2            2
  Support Services
                       the ability to offer 24/7 support via
                       multiple channels. Score the vendor as
                       a 2 if they offer dedicated support
                       staff that are assigned to your account.
                       Typically most vendors will receive a
                       score of 1 on this attribute.                           1            2            2
                                        Services Sub-Total                     2            5            5
                                                                      Vendor       Vendor       Vendor
                                                                      A            B            C
                                               Total Score                     6        21               7

In our above example, fictional vendor B clearly wins out over vendors A and C.




                                 Published June 1, 2010. © 2010 The Relevancy Group, LLC
                       The Reinvention of Email Marketing and the Future of Connected Marketing
- 17 -

Fig. 3 - Connected Marketing Vendor Selection Tool




                                      Source: The Relevancy Group, LLC


Connected Marketing Is A Necessary Evolution
We are confident that email will remain as the critical hub of digital marketing activities.
Having said this, market forces and the ever-increasing demands on email marketers will
force Email Service Providers to become full-fledged Connected Marketing Service
Providers. This development will ensure that online marketing in general, and email
marketing in particular, continues to demonstrate the highest and most provable ROI of
any marketing activity.




                           Published June 1, 2010. © 2010 The Relevancy Group, LLC
                   The Reinvention of Email Marketing and the Future of Connected Marketing
- 18 -

    Report Methodology
    The core of The Relevancy Group’s products is the perspective and opinion of
    The Relevancy Group’s professionals. The Relevancy Group is immersed in the
    industries we cover through ongoing contact with corporate and technology leaders,
    daily study of trends and events in the online world, as well as our collective
    professional experience. Individual perspectives are filtered through rigorous
    collective debate and deliberation, producing research that reflects the combined
    sensibility of The Relevancy Group’s entire team.




i
   Forrester Research said in a June 15, 2009 press release that the email marketing sector will “balloon to
$2 billion by 2014 — a nearly 11 percent compound annual growth rate.”
ii
    For the past three years, an annual survey conducted by executive-search firm SpencerStuart has shown
that the tenure for CMOs at the top-100 consumer-branded companies has averaged a scant 23 months.
iii
    Email Marketing An Hour A Day – Jeanniey Mullen and David Daniels, Wiley Publishing/Sybex ISBN 978-
0470386736




                              Published June 1, 2010. © 2010 The Relevancy Group, LLC
The Reinvention of Email Marketing

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The Reinvention of Email Marketing

  • 1. The Relevancy Group LLC The Reinvention of Email Marketing and the Future of Connected Marketing MARKET RESEARCH The Reinvention of Email Marketing and the Future of Connected Marketing Discover more at www.therelevancygroup.com (877) 972-6886, info@therelevancygroup.com
  • 2. Market Research The Reinvention of Email June 1, 2010 Marketing and the Future Volume 1, 2010 of Connected Marketing Authored by Executive Summary David Daniels The continued growth of email and digital marketing is creating new opportunities, but marketers are challenged by non-integrated disparate channel-centric technology solutions. Email Service Providers will morph to be recognized as Connected Marketing Service Providers. Email will remain as the hub to social and mobile marketing activities. Given the need to create efficiencies across channels and drive effectiveness through increased sophistication, marketers must calibrate their vendor selection process to reflect emerging marketing certainties to understand the intersection of integration cost and value. For more information on The Relevancy Group’s services, tailored to the specific needs of your business, visit www.therelevancygroup.com, call (877) 972-6886, email info@therelevancygroup.com or on twitter @emaildaniels Reproduction by any method or unauthorized circulation is strictly prohibited. The Relevancy Group’s reports are intended for the sole use of clients. All opinions and projections are based on The Relevancy Group’s judgment at the time of publication and are subject to change. Published June 1, 2010. © 2010 The Relevancy Group, LLC
  • 3. The Reinvention of Email Marketing and the Future of Connected Marketing Table of Contents 1 Executive Summary 1 Integrated Email Marketing Empowers Marketers Across Disparate Channels 6 Connected Marketing Service Providers Emerge to Satisfy Shifting Needs 11 Marketers Must Adapt Email and Marketing Messaging Vendor Selection Processes 18 Report Methodology List of Figures Figure 1 Connected Marketing Supports the Natural Lifecycle of Customer Management Figure 2 Connected Marketing Figure 3 Connected Marketing Vendor Selection Tool Published June 1, 2010. © 2010 The Relevancy Group, LLC
  • 4. The Reinvention of Email Marketing and the Future of Connected Marketing -1- Executive Summary The continued growth of email and digital marketing is creating new opportunities, but marketers are challenged by non-integrated disparate channel-centric technology solutions. Email Service Providers will morph to be recognized as Connected Marketing Service Providers. Email will remain as the hub to social and mobile marketing activities. Given the need to create efficiencies across channels and drive effectiveness through increased sophistication, marketers must calibrate their vendor selection process to reflect emerging marketing certainties to understand the intersection of integration cost and value. Present Market Landscape Integrated Email Marketing Empowers Marketers Across Disparate Channels The continued growth of email and digital marketing is creating new opportunities, but marketers are challenged by non-integrated disparate channel-centric technology solutions. Integrated email marketing is necessary to meet the marketer’s growing needs for sophisticated marketing messaging management across channels and disciplines. Email and Digital Marketing Growth Creates Market Confusion By all accounts, spending on email, social, mobile and search marketing will continue to grow at a compound rate anywhere from eleven percent to twenty percent over the next five years.i Web analytics is also experiencing high growth as marketers clamor to better understand their clients’ behavior and leverage this data in their retention remarketing efforts. With such fast paced growth and new best practices that emerge everyday, it is becoming increasingly difficult for marketers to understand which vendor categories are best equipped to empower their marketing efforts in a holistic fashion. Why? Because silos and marketing responsibilities within the organization are constantly changing. This reshaping of the marketing buying center is being driven by the following market conditions: - Emerging marketing channels lack dedicated champions and when they do exist they change rapidly. Today’s marketer is either a jack of all trades and a master of none or they are siloed in discreet functional areas such as email. Pile on emerging social and mobile marketing channels and the once dedicated email marketing specialist is often tasked with managing marketing campaigns across a variety of disparate channels. For those marketers that remain in silos, the team is challenged to do too much in a non-integrated way leaving these functional champions at a loss to optimize cross-channel initiatives that are not integrated. Even in the largest enterprises that have more labor resource than middle market companies, roles and responsibilities can shift often. Published June 1, 2010. © 2010 The Relevancy Group, LLC
  • 5. The Reinvention of Email Marketing and the Future of Connected Marketing -2- The average tenure of the Chief Marketing Officer (CMO) is just 23 months, indicating that even in larger organizations the marketer’s responsibilities will change as often the marketing regime does.ii - Non-marketing functions have become a marketing responsibility. Customer service is increasingly a function that must coordinate with the marketing organization. The transformation of the role of customer service from that of a cost center to an important client retention function is evident in how Amazon.com has adapted over the last ten years. A decade ago, that company shunned service interaction; their service phone number was not promoted on their web-site. Now the same company spent $888 million to acquire Zappo’s a brand well known for its ability to embrace customer service through emerging channels such as Twitter. Zappo’s is passionate about customer service as a marketing function that falls under the CMO’s responsibility. - Industry consolidation extends the functionality of every marketing application creating a dizzying array of choice. Over the last two years we have witnessed an unprecedented number of acquisitions and mergers that extend a vendor’s core functionality into another domain. Just in the last six months email marketing vendors have acquired or merged with social marketing solutions, digital asset vendors have extended their reach into the web-analytics marketplace, and offline direct marketing firms have augmented their data businesses by exploiting newer digital marketing components. Such shifts have created artificial categories (i.e. Listening Platforms), recast old nomenclature (i.e. CRM) and redefined the expectation of what marketing analytics means. However, while not dismissing the progress of the expanding marketing eco-system, these changes have served to confuse the end-user marketer as to how to discern the value from the latest ballooning feature race that any one vendor can offer them. Connected Marketing Supports the Natural Lifecycle of Customer Management A marketer’s ability to cohesively manage subscribers through the four steps of the customer’s lifecycle (acquisition, retention, engagement, advocacy) necessitates an integrated approach to email marketing. In order to optimize a subscriber across the customer lifecycle, consider the need for integration at every step across four independent macro stages. - Acquisition: The ability to measure the effectiveness of a marketer’s acquisition tactics and take the appropriate follow-on action all hinge on the timeliness and quality of the acquisition source and the data that is being generated from it. Whether it is evaluating search engine spending in terms of its ability to grow list size, implementing social marketing acquisition tactics, or qualifying business prospects in a sales force Published June 1, 2010. © 2010 The Relevancy Group, LLC
  • 6. The Reinvention of Email Marketing and the Future of Connected Marketing -3- automation application, the marketer’s ability to achieve success is defined by how tightly integrated these disparate pieces are tethered to their email programs. - Retention: The ability to move prospects to become customers and then report on their spending behavior and discern the appropriate timing for follow-on messages to drive client retention also relies on integration. Our interviews reveal that most all organizations have a dedicated transaction system and database that is separated from their email marketing system. Here again, the marketer’s success can be determined by how easily they can harness buyer data to spur follow-on transactions. - Engagement: Moving a buyer into repeat loyalist buying behavior is a matter of understanding and managing their overall engagement with a brand. The meaning of engagement and the underlying metrics that support it are different for every company. Engagement data and the subsequent measures rely on web-site behavior, email behavior, social behavior as well as non-traditional measures such as customer servicing behavior. As with retention, integration is key to forming a holistic view of the customer’s engagement. - Advocacy: Guiding clients from the engagement stage to become brand advocates is a dream of every marketer. However without the ability to understand client engagement in an integrated fashion and motivate the social sharing advocacy behavior, the marketer will remain stuck in the engagement phase. The advocacy phase closely interrelates to acquisition as successful integrated marketers can understand the cost saving benefits that an army of advocates can have on their acquisition spending. Moving clients across this lifecycle is not an easy task, but as marketer sophistication rises to the challenge it will also overall improve the organization’s ability to be relevant. Published June 1, 2010. © 2010 The Relevancy Group, LLC
  • 7. The Reinvention of Email Marketing and the Future of Connected Marketing -4- Fig. 1 - Connected Marketing Supports the Natural Lifecycle of Customer Management Source: The Relevancy Group, LLC Email Market Segmentation Is Best Served By Marketer Sophistication, Not Size Throughout our executive interviews with email marketers, one feature that they desire from all of the vendors that they seek to engage with is integration capabilities. Integration of data, content, reporting and even user privileges are all top of mind with marketers as they seek to create efficiency from legacy systems and processes that are in place. However, outside of the desire for integration, other familiar email marketing features, including deliverability and reporting, universally came up, but there were stark differences once we moved beyond asking about the table-stake features of email marketing management. These differences cut across company size, list size, as well as the markets that they focused on whether that be a business or consumer marketplace. The one clear distinction that grouped these marketers was their current sophistication level as well as their aspiration to be more sophisticated. We encountered many marketers that still see email as a blasting device where list size – not the value or engagement of their subscribers rules the day. However it is the other group of marketers that are much more interested in the value that they can discern from their email program and how that value can be further augmented by integrating it with another channel. Take for example, the following observations - A publisher dependent on advertising sales seeks to integrate their email marketing application with Salesforce.com so that there is more control put on their sales Published June 1, 2010. © 2010 The Relevancy Group, LLC
  • 8. The Reinvention of Email Marketing and the Future of Connected Marketing -5- team to improve the management of their advertising inventory. The publisher stated they were making this move to improve their mailing frequency controls, in that their legacy situation allows sales representatives to oversell available ad inventory, which in part is leading to over-mailing their house list of subscribers. - A travel/hospitality company wants to better understand the value of their subscribers that are sharing their email promotions on social networks. Additionally the retailer is seeking to integrate hotel property review data into their email marketing tool in order to target customers who are acting as brand ambassadors. The company plans to test mailing offers to these advocate subscribers to further encourage sharing and viral behavior among them. - A retailer seeks to understand how they can leverage their web-site analytics data to improve the relevancy of their email marketing offers. Their first project will be to identify those email subscribers that viewed underperforming products but never carted or purchased them. The retailer plans to target these subscribers with deep discounts on this merchandise in order to sell these laggard products at a profit versus the alternative of liquidating them for pennies on the dollar. The common theme among all of these organizations is email integration. Such an integrated approach to email marketing will change the way in which email technology is classified in the marketplace. Marketers must begin to think with this end-suite goal in mind versus stitching together one-off pieces of the puzzle. Published June 1, 2010. © 2010 The Relevancy Group, LLC
  • 9. The Reinvention of Email Marketing and the Future of Connected Marketing -6- Future Market Outlook Connected Marketing Service Providers Emerge to Satisfy Shifting Needs Email Service Providers will morph to be recognized as Connected Marketing Service Providers. Email will remain as the hub to social and mobile marketing activities, requiring marketers to adapt their email vendor evaluations. Marketers and vendors that adopt a sophisticated and holistic approach to Connected Marketing will be more successful than those that continue to operate in silos. Email Marketing Vendor Evaluations Will Change to Reflect Market Realities Given the growing number of digital channels that nearly all marketers are embracing, as well as the overwhelming need for email to be integrated with these channels, the market must adapt the criteria that are used to evaluate vendors. The current market segment name of Email Service Provider (ESP) has become a misnomer as this vendor market segment has morphed to address a number of digital marketing channels. The name of this category will change to a more apt descriptor such as Connected Marketing. This reinvented market segment will be defined by the following vendor attributes: - Marketing Messaging Management: Inclusive of email marketing, these vendors also have social, mobile and search solutions that allow the marketer to connect in an outbound and inbound manner with their clients and prospects in an integrated manner. - A Significant Social Offering: More than the ability to share content on social networking sites such as Facebook, these features embody the ability to launch, measure and manage Twitter campaigns, execute social widget applications and identify the social influence of subscribers. - Analytics and Measurement: Web Analytics are the glue that holds digital marketing together and are necessary to measure customer behavior across both the large computer based browsers as well as the mobile browsers for the small screen. Additionally as new channels and tactics such as social messaging emerge they bring a host of new measures. Marketers must seek tools that can efficiently and effectively deliver a dashboard as well as deep dive analytical tools to empower their decisions. Ultimately, Web Analytics morphs to become more generally Marketing Analytics, a critical component of Connected Marketing systems. - Segmentation, Testing and Targeting Tools: A common set of tools that can used across any digital marketing channel and applied to search engine marketing, landing page optimization as well as outbound marketing through channels such as email, social and mobile. Published June 1, 2010. © 2010 The Relevancy Group, LLC
  • 10. The Reinvention of Email Marketing and the Future of Connected Marketing -7- - Content Management: Content will forever remain king and is the lifeblood that ultimately drives the notion of relevancy. Moreover, as marketers need to create content in a multitude of formats, inclusive of video, marketers must deeply investigate the content management capabilities of the marketing management provider that they seek to work with. - Production Management: While the marketing organization has flattened, there are still multiple stakeholders with specific campaign production tasks. The ability to have a solution that allows users to both collaborate and manage tasks on a centralized marketing calendar will become a feature that begins to separate the Connected Marketing solutions. - Smart Integration: The ability to intelligently integrate with disparate marketing channels, data sources, labor resources and applications is central to the marketer developing efficiencies. Whether the vendor owns the disparate pieces or has tightly-integrated connectors to the parts that embody the whole, these vendors will clearly win out over those that rely on custom programming and labor based solutions to stitch together these elements. - Best Practice Oriented Services: Every year, effective email marketing continues to become more difficult. Add to that the notion that marketers must become experts at the entire continuum of digital marketing and the customer’s lifecycle requires a vendor that can educate and assist their clients. The need for a vendor with strong strategic and tactical services as well as a effective on-going client education efforts must be prioritized in the marketer’s vendor selection process, even if the marketer initially assumes that all work will be done in-house. Marketers can improve their ROI dramatically by adopting best-practices which often requires additional strategic insight from the prospective vendor. Given the staffing limitations that most organization’s face and the increasing complexity of digital marketing, marketers must prioritize the vendor’s service capabilities in the selection process. Published June 1, 2010. © 2010 The Relevancy Group, LLC
  • 11. The Reinvention of Email Marketing and the Future of Connected Marketing -8- Fig. 2 – Connected Marketing Source: The Relevancy Group, LLC Social Network Communication Will Reinforce Email, Not Replace It With Facebook growing to over 300 million users in such a short period of time and the rising popularity of Twitter, many have speculated that these new forms of social communication will replace email. Email was the first online social communication tool that empowered consumers to share and connect with their friends and coworkers quickly in a universal manner. The fact that 90% of the online population use email daily and many of whom have more than one email address is evidence that email usage remains strong. Solidifying email’s future is the fact that our email addresses are akin to our digital fingerprint. We need an email address to purchase goods online, conduct online banking and even create social profiles or contribute to online discussions. With the likes of MySpace opening up its closed network to email traffic and the understanding that Facebook has similar plans, these social networks will look more like an ISP or communication portal than the closed network that they now resemble. With every poke, friend request or new follower an email is generated and such social activities have only increased the overall volume of email messages. These volume increases will continue to underscore the need for marketers to integrate social practices into their email tactics and enlist segmentation tactics to breakthrough the ballooning email inbox clutter. Published June 1, 2010. © 2010 The Relevancy Group, LLC
  • 12. The Reinvention of Email Marketing and the Future of Connected Marketing -9- Sophisticated Email Marketers Will Be More Relevant, Effective and Successful Numerous studies have detailed that marketers that employ more segmentation, integrated data and tactics such as testing have higher open, click and conversion metrics than marketers that employ a one-size fits all approach. For example, the use of Web Analytics to target email campaigns improves revenue by nine times more than does the use of broadcast mailings. Despite additional campaign costs, relevant campaigns increase net profits by an average of 18 times more than do broadcast mailings where every subscriber gets the same message.iii Email marketers that employ sophisticated tactics, including connecting email with other channels and data sources will continue to be more effective than those that simply “spray and pray.” Such a need to continually drive the marketer’s sophistication will be necessitated by the growing number of messages in the subscriber’s inbox, increased use of the email marketing channel and the need to create a holistic approach towards digital marketing management in order to drive the efficacy of marketing programs. Email Marketing Vendors That Adapt to a Holistic Approach to Connected Marketing Will Prosper More Than Those That Remain Pure Play ESPs Our interviews with marketers reveal that those changing their ESP often do so because of the inflated costs related to building custom integrated solutions to emerging channels and outside data repositories. Much like Apple’s success with the iPhone and App store, successful email marketing vendors will take a holistic approach to extend email functionality in a repeatable and scalable fashion. Additionally given the continued growth of the marketer’s email list and send size, further email sending price compression is inevitable. Visionary email marketing vendors will off-set this trend by offering a broad array of applications that address the marketers needs across the entire digital marketing continuum and focus on unlocking the true return on investment that is possible with an integrated approach to email marketing. Whether the vendor’s approach is that of acquiring and owning these disparate pieces or delivering them to the market through a tightly integrated approach will be a less important distinction of the vendor’s success. Vendors will be differentiated based on those that address and improve the integration of digital marketing channels from campaign production to analytics with every new product iteration or version release. This emerging crop of Connected Marketing vendors will also be subject to a new array of vendor selection attributes that we encourage marketers to embrace. Published June 1, 2010. © 2010 The Relevancy Group, LLC
  • 13. The Reinvention of Email Marketing and the Future of Connected Marketing - 10 - Marketers Must Understand the Intersection of Integration Cost and Value Given the overwhelming need to powerfully integrate email marketing into a broad array of channels and data sets, marketers should emphasize the value delivered from these integrations by taking the following into consideration. There are essentially three types of email marketing vendors: 1. Email Only: Those vendors that are solely email marketing tools and offer little or no integration to other channels, applications and data sources. Working with these vendors will raise marketing costs as the marketer will lack necessary functionality or create work-arounds to stitch multi-channel functionality together. 2. Email Supplemented Through Custom: Vendors that can offer additional channels and functionality but can only do so through custom integration and loose partnerships with additional vendors. 3. Email Tightly Integrated: These vendors offer a true tightly integrated online marketing suite to manage all forms of marketing messaging functionality. These vendors accomplish this through their own native applications or through standardized apps and tight connectors to the disparate functions that embody a digital marketing solution. Marketers must understand the value of native inherent functionality versus the cost of integrating and acquiring disparate pieces. Email vendors that offer tight integration to other functionality will be at the forefront of the Connected Marketing revolution and will ultimately provide a more satisfying and cost-effective solution for the marketer. Published June 1, 2010. © 2010 The Relevancy Group, LLC
  • 14. The Reinvention of Email Marketing and the Future of Connected Marketing - 11 - Recommendations Marketers Must Adapt Email and Marketing Messaging Vendor Selection Processes Given the need to create efficiencies across channels and drive effectiveness through increased sophistication, marketers must calibrate their vendor selection process to reflect emerging marketing certainties. Additionally marketers must understand the intersection of integration cost and value to select vendors that can deploy, manage and measure messaging across a variety of digital channels. Email Marketers Must Calibrate Vendor Selection Criteria to Reflect Emerging Market Certainties Considering the evolution of the current market and the expectations for its continued change, marketers must adapt their email marketing vendor selection by mapping it to these three major categories. 1. Channels Served – encompassing the entire digital marketing continuum that is necessary to empower the aforementioned customer lifecycle (figure 1).  Email – the ability to schedule, throttle and manage outbound email marketing and inbound reply handling. This includes segmentation, testing, dynamic content, triggered messaging, transactional message support, a full compliment of deliverability tools and custom reporting.  Social – the ability to extend email’s reach to social networks, launch and manage social marketing campaigns (e.g. Twitter) as well as the ability to measure and analyze subscribers social behavior.  Mobile – the ability to leverage SMS messaging as an email opt-in point and manage outbound campaigns through mobile messaging as well as ensure that email and landing pages render appropriately on small screens.  Web-sites – the ability to deploy and measure micro-sites, landing pages and blogging functionality as well as optimize these pages for search engine marketing placement.  Search – the ability to leverage the relationship between paid search (SEM), as the second-highest ROI form of online marketing, and email marketing in terms of enabling efficient list building and relevancy. Also, the ability for email recipients to share content in emails to the web that is automatically optimized for natural search. Published June 1, 2010. © 2010 The Relevancy Group, LLC
  • 15. The Reinvention of Email Marketing and the Future of Connected Marketing - 12 - 2. Functionality  Usability – while ease of use is placed firmly in the eye of the beholder, marketers must judge usability by the solution’s ability to easily re-use, store and organize mailings, campaigns, data and content. Such an emphasis on re-use and overall usability will create much-needed efficiency for the marketer.  Subscriber Management – the ability to manage not just subscriber data for email, but also additional marketing channels so that markets can understand and manage the interrelation of a subscriber’s channel preference across the entire customer lifecycle. A differentiation in this attribute is the integration of relational data into email databases to allow the marketer to utilize a broad dataset for segmentation and targeting.  Content – often a missing piece of functionality within email marketing applications, the need to augment legacy content management systems will grow as marketers embrace a variety of digital channels. The ability for the vendor to store, manage and organize a host of content attributes and formats are functions where there is a great lack of parity within the marketplace.  Smart Integration – the ability for a vendor to intelligently integrate to common external solutions, such as popular salesforce automation tools and databases must extend beyond a robust application programmable interface and manifest into tight integrations with critical applications.  Analytics – the ability to measure and analyze not only email marketing performance, but all relevant digital marketing channels including web- site measurement. The keys to improving the marketer’s relevance among their subscribers will be found within this piece of functionality. 3. Services  Strategic – the common thread of email marketing over the last decade was that each brought new challenges and our outlook details that the perpetual bar of sophistication will continue to be raised. The importance of a comprehensive methodology of strategic best practices advice and services will continue to grow in importance. Marketers must use the vendor’s capabilities in this regard as a wedge to separate vendors in the selection process even when functionality differences cannot be easily discerned.  Tactical – as important as strategic advice is, it is imperative that prospective vendors can provide the tactical services to lend a hand with Published June 1, 2010. © 2010 The Relevancy Group, LLC
  • 16. The Reinvention of Email Marketing and the Future of Connected Marketing - 13 - the production and management aspects across the digital marketing spectrum. We consistently find the single reason why marketers that fail to become more sophisticated is because they lack the staffing resources to do so – severely affecting overall marketing ROI.  Support – the relationship that marketers have with their vendors is tempered by the quality of the vendor’s support services. While the cost of message deployment can be commoditized, marketers must recognize the premium associated with satisfying support services. Beyond functionality, we consistently find that the vendor’s inability to delight their clients is the single biggest issue that drives marketers to switch vendors. Pay close attention to service level agreements including up-time as well as response time to support issues. Successful Vendor Selection Necessitates a New Vendor Evaluation Process Beyond evaluating email functionality, marketers must adapt their email-only-centric request for proposal processes to an approach that embodies the broadening scope of Connected Marketing. To fully appreciate the critical capabilities of a prospective vendor, we advise marketers to leverage our vendor selection scorecard process. For each one of the capability categories you will assign the following scores based on the vendor’s offerings. +0 If the vendor can only support limited capabilities at an additional cost +1 If the capability is provided within the vendor’s offering at an additional cost +2 If the capability is included within the vendor’s offering at no additional cost -1 If the vendor can facilitate the capability on a custom basis with custom costs -2 If the vendor does not offer this capability At the end of the process, sum the total of these scores and rank the prospective vendors based according to the total score. Published June 1, 2010. © 2010 The Relevancy Group, LLC
  • 17. The Reinvention of Email Marketing and the Future of Connected Marketing - 14 - Channels Served – The following is an example scorecard of how three prospective vendors might be scored on the channel capabilities. Vendor Vendor Vendor Capability Defined A B C Email the ability to schedule, throttle and manage outbound email marketing and inbound reply handling. This includes, segmentation, testing, dynamic content, triggered messaging, transactional message support, a full compliment of deliverability tools and custom reporting. 1 2 1 Social the ability to extend email’s reach to Marketing social networks, launch and manage social marketing campaigns (e.g. Twitter) as well as the ability to measure and analyze subscribers social behavior. 0 2 -1 Mobile the ability to leverage SMS messaging as an email opt-in point and manage outbound campaigns through mobile messaging as well as ensure that email and landing pages render appropriately on small screens. 1 1 0 Web-sites the ability to deploy and measure micro-sites, landing pages and blogging functionality as well as optimize these pages for search engine marketing placement. 1 1 1 Search the ability to leverage the relationship between paid search (SEM) and email marketing in terms of enabling efficient list building and relevancy of emails. Also, the ability for email recipients to share content in emails to the web that is automatically optimized for natural search. 0 1 0 Channels Served Sub-Total 3 7 1 Published June 1, 2010. © 2010 The Relevancy Group, LLC
  • 18. The Reinvention of Email Marketing and the Future of Connected Marketing - 15 - Functionality – The following is an example scorecard of how three prospective vendors might be scored on the functionality capabilities. Vendor Vendor Vendor Capability Defined A B C Usability the ability to easily re-use, store and organize mailings, campaigns, data and content. This includes a common foldering and search system for subscriber lists, segments, mailings, templates and content 0 2 -1 Subscriber the ability to manage not just Management subscriber data for email, but also additional marketing channels so that markets can understand and manage the interrelation of a subscribers' channel preference across the entire customer lifecycle. A differentiation in this attribute is the integration of relational data into email databases to allow the marketer to utilize a broad dataset for segmentation and targeting. 1 2 0 Content the ability for the vendor to store, manage and organize a host of content attributes and formats are functions where there is a great lack of parity within the marketplace. -1 2 0 Smart Integration the ability for a vendor to integrate to common external solutions, such as popular salesforce automation tools and databases must extend beyond a robust application programmable interface and manifest into tight integrations with critical applications. 1 2 1 Analytics the ability to measure and analyze not only email marketing performance, but all relevant digital marketing channels including web-site measurement. 0 2 1 Functionality Sub-Total 1 10 1 Published June 1, 2010. © 2010 The Relevancy Group, LLC
  • 19. The Reinvention of Email Marketing and the Future of Connected Marketing - 16 - Services – The following is an example scorecard of how three prospective vendors might be scored on the services capabilities. Services Vendor Vendor Vendor Capability Defined A B C Strategic Services the ability to offer packaged strategic services based on the vendor's own methodology. Seek vendors that have a documented playbook for common needs such as email re-activation and driving social advocacy 0 1 1 Tactical Services the ability to offer tactical services support on a project or retainer basis. In this attribute the costs are typically additional, score the vendor as a 2 if the services staff has more than 5 years of experience and the vendor has an auditing and training function to monitor and improve their staff. 1 2 2 Support Services the ability to offer 24/7 support via multiple channels. Score the vendor as a 2 if they offer dedicated support staff that are assigned to your account. Typically most vendors will receive a score of 1 on this attribute. 1 2 2 Services Sub-Total 2 5 5 Vendor Vendor Vendor A B C Total Score 6 21 7 In our above example, fictional vendor B clearly wins out over vendors A and C. Published June 1, 2010. © 2010 The Relevancy Group, LLC The Reinvention of Email Marketing and the Future of Connected Marketing
  • 20. - 17 - Fig. 3 - Connected Marketing Vendor Selection Tool Source: The Relevancy Group, LLC Connected Marketing Is A Necessary Evolution We are confident that email will remain as the critical hub of digital marketing activities. Having said this, market forces and the ever-increasing demands on email marketers will force Email Service Providers to become full-fledged Connected Marketing Service Providers. This development will ensure that online marketing in general, and email marketing in particular, continues to demonstrate the highest and most provable ROI of any marketing activity. Published June 1, 2010. © 2010 The Relevancy Group, LLC The Reinvention of Email Marketing and the Future of Connected Marketing
  • 21. - 18 - Report Methodology The core of The Relevancy Group’s products is the perspective and opinion of The Relevancy Group’s professionals. The Relevancy Group is immersed in the industries we cover through ongoing contact with corporate and technology leaders, daily study of trends and events in the online world, as well as our collective professional experience. Individual perspectives are filtered through rigorous collective debate and deliberation, producing research that reflects the combined sensibility of The Relevancy Group’s entire team. i Forrester Research said in a June 15, 2009 press release that the email marketing sector will “balloon to $2 billion by 2014 — a nearly 11 percent compound annual growth rate.” ii For the past three years, an annual survey conducted by executive-search firm SpencerStuart has shown that the tenure for CMOs at the top-100 consumer-branded companies has averaged a scant 23 months. iii Email Marketing An Hour A Day – Jeanniey Mullen and David Daniels, Wiley Publishing/Sybex ISBN 978- 0470386736 Published June 1, 2010. © 2010 The Relevancy Group, LLC