The power of e-mail marketing is not lost on any business owner. But for some reason, the negative stigma that marketing managers associate with e-mail advertising prevents them from taking advantage of this very powerful advertising medium. E-mail advertising can be one of the most cost-effective, efficient methods of promoting your business’ products and services. A well-developed e-mail mailing list has the power to increase revenues without substantially increasing marketing expenditures.
The marginal cost of sending an email is essentially 0
There are costs associated with using e-mail as a marketing tool, of course, but these are essentially fixed costs that are only incurred in setting up the system and occasional maintenance. Many marketing managers are under the incorrect impression that any internet-based advertising technology is inherently more expensive than traditional advertising methods simply because it’s “newer.”
But e-mail advertising is considerably cheaper – and can be much faster to implement – than traditional leaflet advertising by mail. And e-mail advertising provides the added benefit of being nearly immediate, allowing marketing managers to inform their customer bases of promotions the minute they launch them.
Here’s a simple example.
Let’s say Bob owns a pizza restaurant. Business is fine, but he’d like to promote the restaurant and increase sales. Since Bob operates a small business, he thinks that an internet marketing campaign is outside of his price range. Bob calls a local printer to have 10,000 leaflets printed to distribute around town. The printer tells them that they can print 10,000 leaflets for about $0.20 each – but they first need a design to print. They can design the leaflet themselves, but they’ll charge an additional $500 for design costs. Bob’s print and design costs: $2,500
Bob receives the leaflets one week later and is happy with them. He printed the leaflets to advertise a special on pepperoni pizza, but over the course of the week some customers have complained that they wish the special was available for other toppings as well. Unfortunately for Bob, the leaflets are already printed and he can’t include the updated special on them.
To distribute his leaflets, Bob teams up with the local newspaper and pays them to include his leaflets in the big Sunday issue. But the newspaper won’t do this cheaply – to include the leaflets in the paper, they require $2,000. Bob considers distributing the leaflets himself by going door-to-door, but he has heard that this method doesn’t convert very well. And it’s also slow: it’d take him nearly 2 weeks to distribute all of the leaflets.
So Bob spends the additional $2,000 and has the leaflets distributed in the newspaper. After $4,500 and two weeks, customers begin trickling into Bob’s store after having received the leaflets. Bob considers another campaign, but he decides to wait until next year – his entire advertising budget for the year is $5,000.
Now consider an e-mail campaign
Bob begins collecting e-mails from customers and has an impressive collection after a while. He pays a local web developer $500 to create an attractive e-mail advertisement for him. He asks for a template so that he can update it himself in the future with different promotions. He then purchases a domain and web hosting so that he can send the e-mails himself and also maintain a modest website to keep customers informed of changes to the menu. This costs Bob $15 a month. Bob then sends the e-mails to his customers – and again the next month with an updated special. And once again a month later. Bob’s expenses reach $500 upfront and $15 a month, but these are distributed across months of e-mail advertisements and an untold number of new customers.
But the first step in Bob’s journey was building an e-mail list. And if you own a small business and are not developing an e-mail list, you’re missing out on one of the most effective methods of direct marketing available.