Wednesday, June 20, 2007

We'll have more women employees, if we only had a separate restroom

Since my earlier post re men vs women engineers, I have had several discussion with our offshore counterparts on why they don't have as many female employees. Something they mentioned a week or so ago was particularly funny, but also a harsh reminder of some of the unusual (from a western point of view) infrastructural challenges:

Here's the issue: the office has only 1 restroom (for a staff of about 10). And women employees don't like that.

And they aren't unique in this challenge. Most of the office buildings have restrooms built as an afterthought, and even if they have multiple restrooms, even allocated as "Ladies" and "Gentlemen" (part of old colonial legacy) -- the allocations aren't honored all the time. So, a typical complaint across all women staff is the lack of clean, and more importantly, dedicated restroom facilities.

Now, I doubt if this is a key reason for the lack of female engineers -- but in a generally reserved culture, I'm bound to assume that the female employees don't discuss this issue as much with the management, and the management (usually male) doesn't think much of the issue either to actually take some actions. Maybe it's too trivial, not core to the business -- whatever, but it is an issue nevertheless. Maybe offshore locations plagued by high turnover problems can use this as a differentiator for retention.

I should point out that our offshore counterpart has a female president.

Tuesday, June 19, 2007

Email Marketing is about Engagement First, Revenue Second

For the last couple of months, I have been trying to get my head around the analytical nuances of email-centric marketing (as a part of my new gig with Responsys). At a first glance, there seems to be a plethora of metrics – some around deliverability, then open rates, click rates, conversion rates, etc, etc. Which ones of these are the true measures of success? To some extent, they all are – but I can’t help but look for a top-down hierarchy which looks at the bottom line first, and then delves into the various supporting factors.

The success of your email (or any other customer contact for that matter) depends on whether the email was successful in influencing a desired action on the recipient’s part -- Did they actually open the email? Did they actually click on any of the external links in the email? Did they actually perform the action that was the goal of the email – like making a purchase or signing up for a program? Measuring each one of these events and understanding how they are influenced by external factors are crucial to optimizing the success of your email campaigns.

A common misperception about emails is that they are more-or-less “free”. Compared to the cost of a direct mail piece or a telemarketing call, the physical cost of sending an email is definitely lower by several orders of magnitude. As a result, what is also common is that organizations get somewhat sloppy about measuring the cost and impact of their email campaigns, and they tend to measure email campaign effectiveness on a more general level.

Particularly important are the hidden costs of email campaigns. Since it is easier and cheaper to send several emails to a recipient, often “list fatigue” is realized much sooner in the email than in offline channels. This means people in the email lists opt out more quickly and the response rates decrease more sharply, indicating a more negative experience for the email recipients.

This breakdown in relationship manifests itself in the following email engagement metrics:

  • Decreasing click-through rates and conversion rates
  • Higher opt-out and spam-out rates

However, a common trap most email marketers fall in is to address the above issues by increasing the volume of emails. The thought pattern is something like this:

I am sending out 100,000 emails today, and I only get a 0.1% conversion rate. Since my target is to drive 10,000 new web sales by email this quarter, I must send out 10,000*100 / 0.1 = 10,000,000 emails this quarter. And because it costs me only a penny per email, I am basically spending $100,000. If the gross margin per sale is higher than $10, then I even have positive ROI.

While this calculation may be mathematically correct, the major flaw in this approach is that it evaluates email purely on short-term revenue potential, and does not consider the impact of email volume on the overall quality of customer engagement. In a way, it is very similar to the bad image telemarketing has gotten over the years because telemarketers have been entirely focused on making a large volume of calls without caring much how many people get infuriated in the process. The difference is that in the case of emails, people can easily unsubscribe with a click, tag you as a spammer, or simply hit delete any time they see an email from you. They can do a lot more damage to you in a much shorter amount of time.

So, it is essential to think of email as an engagement tool first, and revenue generator second. The primary goal of your email campaign should be engagement, which in turn drives value. It does not work the other way around.

In the coming days, I will post more of my thoughts around measuring engagement and its influencers. I will also like to hear from you – what are your thoughts around measuring engagement driven by email, and/or do you see the problem space differently? What should be the role of analytics in driving success of email campaigns?

The more I think about this, it seems that analyzing success of email campaigns is not just looking at one particular success outcome, or even looking at individual metrics like open rates or click rates -- the task seems more about developing some sort of "Email Engagement Index" (EEI -- do we really need another acronym?) that incorporates all the different manifestations of engagement that were influenced by the email (open, click, purchase, forum posts, calls to the call center, web site visit, etc.) with their appropriate "weights". Then we need to track the impact of our email campaigns with respect to this index. Else we run the danger of looking at this multi-dimensional issue in a more unary manner (such as looking at only revenue or open rate, one at a time), and thus, not realize the actual impact of the email campaign.

I'll have more on this soon, but thought I should at least get the dialog started.