Email Marketing: A Small Business Guide Credit: Email Image via Shutterstock

Businesses that aren't using email marketing are missing out on one of the best ways to reach consumers.

Instead of concentrating on direct marketing, as most businesses have traditionally done, many are now focusing their efforts on email campaigns. A study from email marketing provider iContact revealed that small and midsize businesses are now dedicating the largest share of their marketing budgets to email campaigns.

Whether it's to share company news, highlight products and services, or entice consumers with promotions, businesses are finding a wide variety of uses for email marketing.

They're also seeing a lot of benefits in its use. Email marketing campaigns are cost-effective and easy to create, and offer plenty of opportunities to see if they are making an impression on recipients.

Businesses that are new to email marketing should know that there are both services and software that will help them create professional campaigns and track their results so they can gauge the effectiveness of their messaging.

Editor’s Note: Need help choosing an Email Marketing Service for your business? Fill in the following form for a quote.

To help small businesses, Business News Daily has created a complete guide to email marketing that features its pros and cons, popular strategies, how much it costs, the services that will help them with the process and advice from others who are finding success with it.

What is email marketing?

Email marketing is essentially the online version of direct mail. Instead of sending fliers and coupons to a customer's home, email marketing can send those same items digitally to a customer's inbox. However, whereas the impact of direct-mail marketing can be difficult to track, email marketing gives businesses the chance to see exactly who is opening their mail and who is actually using and reading what's sent out.

As with other forms of marketing, businesses owners can use email marketing in a variety of ways, from building brand loyalty and finding new customers to encouraging customer loyalty and repeat business. Because there are many different strategies and ways for email marketing to be used, every type of business — business-to-business or business-to-consumer — can find a way to include it in their overall marketing plan.

Types of email marketing

There are many ways for businesses to use email marketing. Options include the following:

  • Newsletters: These are a quick way to keep your customers informed on any business news or upcoming promotions. Newsletters are sent on a recurring basis, such as every week or every month.
  • Promotional campaigns: These can be used to let customers know about upcoming sales. They can be sent in the days leading up to the sale, as well during the sale, as a reminder for customers.
  • Invitation emails: These keep clients up-to-date on upcoming special events. Invitation emails can be sent weeks or days before an event occurs as a way to encourage a customer to attend.
  • Catalog emails: These are sent out to highlight a specific product or service. The entire email is focused on that single item.
  • Lead-nurturing emails: These are designed to keep your brand top-of-mind for a prospective client. They are sent out regularly until a potential customer is converted into a paying customers.
  • Survey emails: These are sent as a way to learn more about your customers' needs and wants.
  • Transactional emails: These are sent after a purchase is made, as a way to confirm the transaction and thank the customer.

Pros and cons of email marketing

Email marketing offers businesses several advantages over other types of marketing strategies. Cost is a key differentiator, as email marketing doesn't require any printing or mailing fees. All of the emails can be sent for free, just like any other email. In addition, they can also be designed and sent in mere days, as opposed to direct mail, which can take weeks or months to plan and execute. Email marketing also provides businesses with greater tracking options.

With email marketing software, a business owner can see which emails were received, which ones went to email addresses that were no longer active, which emails were opened, which ones were deleted before they were read and which ones enticed clients to click through to the website. The main drawback to email marketing is that many consumers can consider the emails as spam and hold it against a brand's reputation. If customers feel they are being bombarded by unwanted emails from a business, they will be less likely to become a new or repeat customer.

What is an email marketing service?

An email marketing service provides all of the software and tools needed to create and execute email marketing campaigns. Specifically, they provide users with templates to design and create all types of email marketing campaigns. The design tools are created so that even those who don't have Web design experience can easily develop something eye-catching. Email marketing services also include features to collect and store customer email addresses, as well as keep track of what happens with each email that is sent out. The data and statistics provided by email marketing services make it simple to determine the success of a campaign. The services also provide the tools needed to send out a large number of emails at one time.

Cost of an email marketing service

Email marketing services charge users a monthly fee for access to all the tools and software needed for a successful campaign. The best services offer pricing options for businesses of all sizes. The fees vary by provider, but email marketing services providers generally offer the same type of pricing structure. The most common pricing plans are based on the number of emails that will be sent out each month. Prices range from $7 to $15 to send emails to 500 consumers to as much as $90 to $300 to send out 25,000. Depending on the size of the campaign, some services offer options for sending out even more — from 150,000 emails for $400 a month to 4 million emails for $4,000 a month.

What to look for in an email marketing service

When choosing among email marketing services, there are certain things business owners should look out for. Specifically, businesses should choose a service that provides an extensive feature list, including campaign wizards and templates to help get a new project started, preview options that show what an email will look like on a variety of devices and the ability to test certain wording to ensure the email won't be flagged as spam. The best services offer robust campaign reporting options that show everything from how many people opened an email to how many forwarded it to someone else. As with any other type of marketing campaign, there will be times when a business runs into trouble in crafting a campaign. When those situations occur, it is important that a business owner has chosen an email marketing service that provides a vast amount of support, including a blog, tutorials and articles that explain how to create effective campaigns. The service should also provide contact methods such as email, phone or live chat.

The best email marketing services

Our sister site Top Ten Reviews has done extensive research on email marketing services. The services they rank as the best include iContact, which features design tools for both marketing experts and novices, as well as an easy-to-use interface; Benchmark Email, which lets users include video, images and customization unique to their company and offers excellent reporting capabilities; and Constant Contact, which offers more than 400 different templates and a comprehensive help and support center.

Difference between an email marketing service and email marketing software

In addition to email marketing services, businesses also have the option of using email marketing software. While both methods help create and track email campaigns, there are some major differences between the two. One of the largest areas where the services and software differ is in reporting features. Whereas email marketing software can provide businesses with reports on the number of successfully sent emails, unsubscribe numbers and opened emails, the tracking features aren't nearly as comprehensive as what email marketing services can offer. A good online service offers valuable reports on click-throughs, conversions, replies, forwards, opened emails, bounced emails and subscribed/unsubscribed numbers.

Cost is another area where the two methods differ. Email software has just a one-time cost, which can range from $49 to $1,000, whereas email marketing services have a monthly price or a fee for the number of emails sent.The final major difference is the computer system needed to run each one. Email marketing software requires that businesses connect their Simple Mail Transfer Protocol (SMTP) server to the software in order to send the emails. With email marketing software, the number of emails that can be sent and the speed of delivery depend on each user's SMTP server. Because email marketing services send out emails for businesses, all that's needed for this option is an Internet connection.

Email marketing success stories

There are many factors that can make an email marketing campaign successful, including how many people opened the email or forwarded it to others and how many clicked through to the brand's website and actually spent money there.

Annie Brody, founder of Camp Unleashed, which offers retreats for people and their dogs, has been using email marketing for the past several years, and she said she has seen increasingly better results. What has encouraged her the most, she said, has been a rise in the number of people opening the emails she sends.

Specifically, Brody sends her clients and potential clients newsletter-type emails that highlight new aspects of the camp, registration information and links to other dog-related sources.

Brody said her most recent campaign, which she created with the help of the email marketing service Constant Contact, had a more than 50 percent open rate — the first time one of her campaigns had enticed more than 40 percent of her audience to open the email. [Email Marketing in the Age of Gmail: How to Make It Work]

"When I see a high open rate, I feel good, because I feel like people want to hear from me," Brody told Business News Daily. "I don't expect a high conversion off of that one email; what I expect is that people are interested enough to go to the website and consider [attending the camp]."

Gary Briggs, co-founder of candlemaker Aunt Sadie's, uses the Mad Mimi email marketing service to send his customers coupons and other promotions regularly. He saw huge success right out of the gate.

For the company's first campaign in November 2012, Briggs sent all previous customers a coupon for 20 percent off any purchase over $50. The email enticed 40 percent of recipients to make a purchase.

"November 2012 was our biggest retail sales month ever," Briggs said.

Aunt Sadie's has continued to send promotional emails every month, which keeps paying off, Briggs said.

"We've continued to do our monthly retail email offer campaign and were surpassing the previous year's monthly sales from 30 to 50 percent," he said.

Online clothing, accessories and decor retailer ModCloth has been widely praised for its use of email marketing.

Megan Walsh, ModCloth's director of retention marketing, pointed to a recent campaign supporting the company's "Style Gallery" feature as a notable success. She said the campaign was designed to notify contributors when the photos they submitted received a certain number of "loves" from other community members.

Walsh said the campaign had high engagement, with a 65 percent unique open rate and a click-through rate of 22 percent, which was significantly higher than the company's 10 percent average. Even though the campaign resulted in a 0 percent conversion rate on immediate clicks, it was deemed a big success by ModCloth.

"It had a high interaction rate amongst our best customers, and drove those contributors to submit again based on the great feedback they received," Walsh said. "This reinforces the 'love triangle' we are building with our customer: content creation, crowd sourcing and curation."

Email marketing advice

Those who have found success using email marketing say there are several keys to getting the most out of it. Before getting started with email marketing, businesses should determine their target audience, how they will get their email addresses and what their goals are for their campaigns, Brody said.

"For me, it was growing Camp Unleashed and getting our name out to dog lovers, as opposed to a specific sales campaign," Brody said.

In addition, Brody said email marketing should be considered just one tool within a business's overall marketing strategy. "It should be integrated as much as possible with all your other marketing and communication efforts," she said.

Briggs said he would advise businesses that are just getting started in email marketing to set a strategy for a whole year — charting out what they want to send out and what each email would entail — rather than focusing on a single campaign.

"Just like print advertising — where a consistent series of ads run for a number of months is going to have much more success in building brand identity than an ad placed once and never again — the same can be said for email marketing," Briggs said.

Walsh recommended focusing email campaigns on your core customer base rather than prospective customers. "Focus on keeping your engaged customers happy and coming back, before focusing on chasing those who are ignoring you," Walsh said. "The return is better."

Editor’s Note: Need help choosing an Email Marketing Service for your business? Fill in the following form for a quote.