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Leveraging the power of transactional email

New innovations in commerce-enabled email are reaping benefits.

Leveraging the power of transactional e-mail

Merging e-commerce capabilities with e-mail technologies has spawned a revolutionary new e-purchasing tool that might just catch on.

By Jerri L. Ledford

In December 2000, Zagat Survey, a restaurant guide publisher, caught the attention of the e-mail marketing world by teaming with Radical Communications and Bigfoot Interactive to design and implement the first transactional e-mail campaign.

Transactional e-mail is a Web-based e-mail technology that allows the person who receives the marketing e-mail to make a purchase directly from the body of the message. Zagat's campaign, which totaled 20,000 e-mails, was split evenly-half of the e-mails sent were transactional and half were HTML-based.

The results? Zagat found that despite some hesitancy among consumers receiving the transactional e-mails, it drew a response that was about three times better than the response to the HTML-based e-mail.

"Anytime that you make purchasing easier, it's more effective," says Jared Blank, analyst, Jupiter Media Metrix. "People like to have the process streamlined. But [transactional e-mail] isn't incredibly widely used right now." Blank says that two factors have prevented more aggressive adoption of the transactional e-mail technology -- a hesitancy to spend any more money than is necessary, and "a certain feeling that simpler is better."

Simple HTML or more?

Zagat did find that some of the customers who were sent the transactional e-mail did not even open it for fear that it might be a virus. Despite the lower number of actual views, the response was still close to approximately 1.5% to 2% clickthroughs.

Although preliminary results like those Zagat garnered look promising, the benefits of transactional e-mail are still being debated. Michael Rowsom, general manager for 24/7 Media, feels that there is no real value in using transactional e-mail. "It's better to be able to drive people to your site," he says. "With transactional e-mail you lose the advantage of being able to upsell."

Upselling has its advantages, but transactional e-mail is better suited to a single-shot promotional item, such as the restaurant guide that Zagat was offering. If the objective of your e-mail marketing campaign is to push people to your Web site, then transactional e-mail is not your best choice, says Lynda Partner, co-founder and CEO of GotMarketing. A text or HTML-based e-mail campaign with a link to the Web site would be a better choice. "It's like everything else in marketing, it comes back to what is your objective?"

Why outsourcing makes cents

Technologically, any e-mail marketing campaign is going to cause a spike in the amount of traffic to your Web site, says Michael Terreta, CTO for CyBuy. For that reason, he and other e-mail marketing experts suggest that at least the technology involved in the campaign should be outsourced. "Why would anyone ever want to do e-mail marketing in-house?" asks Partner. "Most IT departments are really busy and marketing programs tend to fall at the bottom of their list."

One reason for implementing an e-mail marketing campaign in-house is the expense involved. According to Jupiter's Blank, "Anytime you add a new feature, the price goes up." For example, CyBuy's commerce-enabled services cost a one-time set up fee of $2700 and $2700 a month licensing fee for five campaigns per month. And although the campaign that Zagat participated in was free, it's estimated that the company would have paid about a penny per e-mail had it not been a test case.

For the additional costs, there are other benefits. For example, Partner says that with outsourced transactional marketing, a company can get a more complete look at the return-on-investment. And in fact, Zagat learned more about how and when customers opened the transactional e-mail, who they forwarded it to, and how many of the e-mails resulted in purchase. This is far more information than was garnered using the simple HTML mail.

"With transactional e-mail, you can actually tie in revenues directly with the e-mail campaign and the cost of that campaign," Partner says. "The correlation between cost and effectiveness is much more direct." Since transactional e-mail involves actually clicking through the e-mail to a Web page to make a purchase, clickstream movements are tracked, yielding better information.

When outsourced, result tracking is usually included in the package purchased and the cost of it depends on how immediately the information will be available and how much information is desired. However, if a transactional e-mail is developed and implemented in- house, server capacity and scalability should be considered before implementation because of the strain a traffic spike puts on a system.

A good example of how transactional e-mails are tracked, says Terreta, is that "the data from CyBuy campaigns can be transferred by CyBuy's system to the client's own, including the mapping of data fields and the file format. This can include standard data exchange formats (i.e. XML, EDI Formats, flat file, CORBA Data Formats) or any non-standard file format defined by the marketer. The communications protocol used to transfer data includes TCP/IP, FTP, HTTP, X.12, e-mail, Web access, or any other standard communications protocol.

"E-mail marketing is sophisticated, like print advertising," says Jonathan Jackson, senior analyst for eMarketer. For that reason, he suggests that any e-mail campaign should be planned with the same level of attention to detail that a print campaign relies on. "It's a great way to build brand awareness and spend less for customer acquisition."

In a recent e-mail marketing campaign, a Cy-Buy's commerce-enabled solution outperformed a non-commerce enabled version with the following results:

- Higher Conversion - 5 to 1 over non CyBuy-enabled
- Shorter Purchase Time - 75% less time
- Seamless Integration - 48-hour set-up and deployment

Jerri L. Ledford has been a freelance journalist specializing in technology for more than seven years. Contact Jerri at JerriLedford@cs.com.com

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