Can Email Work as a Customer Acquisition Channel?

Can Email Work as a Customer Acquisition Channel?
A lot of savvy email marketers ask the question of whether email can work as an acquisition channel. Because the power of email marketing is based on permission (which can’t be transferred), the assumption is that email can’t be used to acquire new customers.

In reality, email can be a tremendously powerful customer acquisition channel when it’s handled right. I am, of course, biased, since ividence is an ad exchange for acquisition email. Still the numbers bear me out.

Acquisition Email by The Numbers
The DMA found that the average return on investment for every $1 spent on email was $40.56 in 2011. That number far outstrips other marketing channels. Though that number is an average that includes retention email, it gives a good idea of the potential that email has as an acquisition channel.


Additionally, click through rates on email beat out those for display. The average CTR for online display ads is 0.09%.

Email by contrast has an average CTR of 5.2% according to Epsilon’s most recent data. Acquisition email CTRs are lower on average (because there’s not an established relationship with the recipient). Still, ividence’s average CTR for acquisition email is 1.5%, or more than 16 times the CTR on display.

Facebook ads have an even lower CTR than display—0.051%—or 30 times lower than the acquisition email CTRs that we see.

And last, but not least, eMarketer’s 2011 figures show online ad spending up by 23% YOY, which an anticipated growth rate of 23.3% for 2012. That means more advertising dollars available for trying new, efficient channels.

So if email can work as a customer acquisition channel if done well, how do you do it well?

Getting Acquisition Email Right
Because the inbox is a very personal space, email marketers must work very hard to respect consumers in that space. That’s never truer than when you’re introducing a brand to a consumer via email. For acquisition email to work for all parties (the brand, the consumer, and the list owner), there are three concepts that must be followed:

1. Respect subscribers
Email marketing derives much of its power from permission and trust. When a consumer subscribes to an email list, there’s an implied expectation that the list owner respect that trust. For acquisition email to be effective, it needs:

 • Permission – Just as retention campaigns should only be sent to opt-in subscribers, acquisition email campaigns should only be sent to subscribers who have given the list owner permission to send third-party offers. There also needs to be an option for the recipient to unsubscribe from advertiser’s offers or to unsubscribe from the list all together.

Clarity – Only the list owner has permission to send emails to their list, so their brand name (or the name of the list) should be in the mailfrom and mailfrom friendly fields. This makes it easy for the subscriber to understand why they’re receiving the email, reducing spam complaints and increasing open rates.

2. Ban “batch and blast” from your vocabulary
To be welcome, emails need to be relevant to the recipient. Send too many emails that a subscriber doesn’t relate to, and they’ll become an unsubscriber (or worse, will report your email as spam).

Any acquisition emails needed to be carefully targeted to the recipients most likely to be interested. Behavioral targeting is among the most effective segmentation techniques, driving higher open, click through, and conversion rates.

However, if the publisher you are working with can’t offer behavioral targeting, you should at least narrow by demographics or geographic data. Alternatively, you could send different offers to different targets: a clothing retailer could segment by gender or an insurance company could include different package options to people at different income levels.

3. Continually optimize
Just as importantly, don’t send to the entire (targeted) list at once. If you send in smaller waves, you can use the information gathered at each stage to optimize your target. If you’re testing two different creatives or subject lines, you can also pause the losing treatment once you have enough data to select a winner and get a better response from the full campaign.

An example of how this played out for a real brand is a bank client that we worked with at ividence. Our client was looking to drive acquisition of new real estate loan prospects.

In addition to the typical challenges that all brands face with deliverability and following legal requirements, financial institutions are very sensitive to concerns about phishing and fraud as well as the unique regulation around the banking industry. In a study by David Daniels of The Relevancy Group, 41% of banks and credit unions surveyed said they were somewhat to very challenged in overcoming fears of phishing and fraud.

Using the above approach of respecting subscribers, targeting smaller email sends, and continually optimizing the campaign, we were able help them drive new leads. The ividence team and platform monitored and adjusted the targeting of the campaign after its launch, which resulted in an over 1800% increase in the number of leads generated by the campaign between its first and last month. There was a simultaneous 233% increase in effectiveness (ratio of leads generated to emails sent).

Unsubscribe rates for the campaign were in line with those of retention campaigns in finance, and abuse complaints were below the average seen in retention campaigns (below 0.01%).


Have you used acquisition email to grow your business or to generate revenue from your email list? What tips would you add to this list?

Eric Didier, ividence