• by Chad White , March 27, 2012

Email marketing’s cost-effectiveness is its greatest strength and greatest weakness. Its inexpensiveness drives some to minimize their costs to maximize their return, while others see email’s low cost and high ROI as a strong signal to invest further in the channel. These two mentalities are bifurcating the email marketing industry into the haves and have-nots.

The haves invest in analytics and use the advanced tools that many email service providers make available, while the have-nots largely send broadcast emails.

The haves test subject lines, body copy, images and other elements to learn what their subscribers respond to best, while the have-nots develop email content based on best guesses and “gut feelings.”

The haves use triggered messaging, segmentation, dynamic content and personalization to increase the relevance of their emails to maximize engagement and sales, while the have-nots have a “one size fits all” approach.

The haves monitor their deliverability and rendering across email clients and devices, while the have-nots unknowingly suffer low inbox placement and broken email designs.

Econsultancy’s Email Marketing Industry Census 2012 showed that marketers that used their ESP for additional functionality beyond just sending emails were 32% more likely to see an “excellent” or “good” return on their email marketing efforts. I would theorize that marketers that use their ESPs for more than just sending broadcast emails also have a higher standard for email success, so an “excellent” or “good” return from those folks is likely considerably higher than an “excellent” or “good” return that less sophisticated marketers say they’re getting.

There’s much hand-wringing over the Direct Marketing Association’s gradually falling ROI estimates for email marketing. In 2008 it was $45.06 for every dollar spent; this year the figure will be about $39.40, while it is projected to be $35.02 in 2016. But that aggregate number hides the schism that’s occurring in the industry.

The email programs of the have-nots are built around broadcast emails, which have lower returns and will produce progressively smaller returns in the years ahead. Meanwhile, the haves are lessening their dependence on broadcast emails and reaping the much higher returns of other email tactics.

Triggered emails are a great example of this growing divide. For example, one jewelry retailer created a triggered anniversary email program that reminded those who opted in about their wedding anniversary and suggested gifts. That program paid for itself after just one month. Another retailer created an abandoned cart program that, in less than a year, has already netted a more than 2,000% ROI. And another brand set up a triggered birthday email program that generates 14 times the revenue per email as its broadcast emails.

Create enough programs like these, and your program’s ROI will expand nicely, rather than shrink slowly. Already, some haves are building up a considerable lead over the have-nots -- a lead that will be difficult for the have-nots to close because of technology implementation and program development time requirements. By the time some marketers realize that the “excellent” ROI they thought they were getting was actually only “average,” they’ll likely be generating “poor” returns.