Email marketing is without doubt, one of the most important channels for lead nurturing as evinced by a number of studies and research reports in recent times. It has also been argued that it serves as an important channel for lead acquisition although the jury is still out on that point. When it comes to continued business development, or maximizing customer lifetime value, email marketing appears to be the foremost channel that is tapped. It is essential for every business looking to service their customer base as well.

So what governs the final decision when it comes to a choice of email marketing technology?

In our first post on unlocking the potential of email marketing, we focused on the three email marketing metrics that one should measure, set certain targets for and try to achieve with their email marketing technology. To sum up, these were:

  • Customer Lifetime Value
  • Contribution to Corporate Revenue
  • Deliverability and Average Monthly Revenue

For the second part in this series, we’re going to look at the reasons why email marketers choose in-house email solutions or on-premise email marketing technology over outsourced email marketing technology as highlighted in The Relevancy Group’s survey of 400 email marketing professionals.

Reason #1 & #2: Cost & Effectiveness

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Email marketers are generally concerned with cost (45%) and email deliverability (37%).  That’s understandable. Everyone wants to get the best value out of their selected solutions for a reasonable price. This is not something that applies specifically to email technology but to almost every purchase decision that is being made (luxury items being excluded from the conversation). These considerations tie in nicely with the top three benefits marketers cite when using on-premise or in-house email solutions.

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55% of marketers found that they could deploy campaigns more rapidly, 41% experienced an increase in targeting and relevance and 36% had a lower cost of ownership.

Upon reaching a certain organizational size, using outsourced solutions can simply become too expensive for many organizations – that’s probably the case in most industries, simply because that is the business model on which most outsourced services are based. For smaller organizations, outsourced solutions are cheaper and easy to adopt – it works for a small database of customers and a fledgling email marketing campaign. However, outsourced solutions may simply become too expensive once an organization scales and starts looking into sending a few million email messages a day. When that happens, these businesses are looking at a whole new tier when it comes to payment – and ultimately, a bigger bill.  This is the time when businesses that turn to an in-house email solution begin to see economies of scale on an investment in an on-premise email technology.

Reason #3: Control

Aside from effectiveness and cost, marketers are turning to in-house email solutions due to the increased ability to maintain control over production and integration with other applications and platforms, as well as security.

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While a small percentage, it is interesting to note that 7% of businesses are opting for on-premise solutions out of compliance with government regulations. Security has often been cited as a reason why businesses choose to use on-premise solutions. Having data stored in a business’ email servers rather than in the cloud increases control and protection of that data. The European Union’s Data Protection Directive mandates that personal data can only be transferred across borders if the third party country is able to adequately protect such data. With many outsourced providers operating through cloud services, geographical location and ownership of data becomes a grey area for many companies seeking compliance with government regulation. In this scenario, using an on-premise or in-house email solution is thus equivalent with adhering to industry best practices in terms of data protection.

Do you agree with the survey findings? What are some of the other reasons why marketers might turn to in-house email solutions?

The lines between what constitutes a CRM solution and what constitutes a marketing service provider (MSP) get blurrier all the time. Our client Infusionsoft is a great example of that. They’re known as an MSP, but CRM is a key component in their all-in-one offering that also combines email + social marketing and e-commerce features. Quite a few companies that come from the direct email and customer engagement world are doing innovative things with marketing automation by bringing CRM capabilities into the mix. But we haven’t seen many providers of conventional CRM software moving decisively into the customer engagement / direct marketing realm. But that might be changing.

Our recently launched Momentum for CRM is a something of a step in that direction, and how the solution got its start might tell us where things could be headed. Our team in Europe began working with a large manufacturer of mobile electronics last year to upgrade that company’s messaging capabilities. The primary marketing team was managing customer communications using a Siebel CRM implementation to handle email, and they worked with outside vendors to manage their SMS/MMS mobile campaigns. Of course, Siebel’s a powerful tool for engaging with large customer bases. But for our client, certain limitations in messaging capabilities – especially in timing sends for optimum response and volume limits – meant that campaign performance was consistently below expectations. Additionally, lack of integration between email and mobile, and control over the volume and cadence of outgoing SMS/MMS text messages, meant that marketing teams routinely exceeded their monthly budget for mobile operations, leading to out-of-control costs.

Our product team crafted a bundled solution that would enable the firm to address all of these challenges by facilitating greater message delivery capacity, timed delivery, email + mobile integration, and on-the-fly message development drawing on data sources outside the Siebel system. Integrating SMS/MMS messaging meant that marketers could manage mobile campaigns through Siebel now too, and limit outgoing messages to control spending. You can read a lot more about this project here (PDF). Essentially, the combination of powerful CRM and flexible cross-channel messaging turned the internal marketing department and its Seibel system into a full service, multi-channel MSP.

Might we start to see the big CRM providers take some cues from their MSP competitors and begin treating messaging as a first-class citizen in their product offerings? Salesforce, of course, is out in front here with its native outgoing mail capability and Chatter platform, which with its multi-channel messaging capabilities clearly has compelling uses for customer care and marketing beyond its core team collaboration use cases. Should other CRM vendors begin to take messaging capabilities more seriously? I’d argue that CRM vendors need to make greater messaging capabilities a priority, especially since messaging is more and more the main way the customer stays connected with the business in our smartphone and social media-dominated communications environment.

I participated in a lively exchange online with some email industry colleagues recently around the topic of improving deliverability through permission-based lists versus data management techniques, such as list hygiene. My contention was that for years the industry has been hung-up on the term ‘permission’ – single opt-in, confirmed opt-in, double opt-in, etc. But at the end of the day, does permission really matter? (more…)