Case Study: 30 (meaty) tips from SoftwareCEO's first email marketing campaign

By Bruce Hadley, founder SoftwareCEO
Reprinted with permission

Recently we ran our first-ever e-mail marketing campaign, designed to get our free newsletter subscribers to become Site Members, and to get current Site Members to renew.

The results were extremely positive - a conversion rate from free to paid of 2.3%. This was much better than we'd hoped for. Still, the campaign was far from perfect.

The challenge: converting a varied base of free users to paid

Strictly speaking, SoftwareCEO is not a software company, but our marketing goals and requirements parallel those of a software firm:

• Our audience is extremely varied: 90 percent are software business people — the other 10 percent are consultants and academics — but company sizes range from startup to gargantuan.
  
  
• Ditto job titles: Our list runs from interns to CEOs and founders (though the majority are VP and above).
  
  
• Ditto business focus: Some of our readers develop open-source consumer freeware, others sell million-dollar enterprise systems.
  
  
• We get lots of "trial users" who sign up for our free newsletter, use our Discussion Forums, or take advantage of the many other free areas of the site; converting them to paid Site Member status is a challenge.
  
  
• The benefits we offer paid Site Members are somewhat ephemeral; until they use it, they don't always see it, and most won't pay until the "pain" quotient is high — e.g., they have an urgent need for a particular document in our Downloads Library.
  
  
• We are a young company; we don't have the credibility of a Fortune or Forbes, so we have to remove fear, uncertainty, and doubt.
  
  
• We're self-funded entrepreneurs; this means that our marketing budgets are tight, we value cash highly, and we worship quick ROI.

All right, there's the setup; let's dig into our results. We sent out three sets of messages over a span of two weeks:

Split-test email with 2 different Subject Lines

Click here for PDF sample of test email

"Software company disaster"

and

"Software company problems"

"Problems" won by a hair.

The offer was fairly simple: Sign up for a $195 SoftwareCEO Site Membership, and we'll send you four bonuses:

• an e-mail marketing kit
• coupons good for a free personalized evaluation of your company's e-mail campaign
• two CD archives from past Software University classes

Email #1 to entire list

Click here for PDF sample of Email #1

On Wednesday, November 5, we mailed the same message with the winning subject line to our entire newsletter list — thus, those in the October 30 test drop got it a second time.

Email #2 to existing Site Members

Click here for PDF sample of Email #2

On Monday, November 10, we mailed to our existing Site Members for the first time, with a "Sorry, my fault" subject line and an introductory apology to assure them that they could also take advantage of our offer by renewing their memberships.

Email #3 to entire list

Click here for PDF sample of Email #3

On Wednesday, November 12, we mailed to our entire list, current members included, with the subject line, "update." This message had a brief intro explaining that our allocation of bonus packages was about half gone, to encourage people to take action soon.

Below that, we repeated the first e-mail.

Final email #4

Click here for PDF sample of Email #4

On Thursday, November 20, we sent out a final e-mail to the entire list — non-members and members who'd not yet acted on our offer — with the subject line "latest."

The intro text in this e-mail let people know that we had just six bonus packages left. Because our list is entirely opt-in and we clean it once a month, our bounce rate — e-mail we got back due to bad addresses or spam filters — was quite low: 5.3 percent over the three-drop campaign.

It's safe to assume, however, that many other messages were never delivered and not returned to us. Generally speaking, if the overall bounce rate is under 10 percent, we're happy.

We had budgeted 97 bonus packs to send; figuring that 100 new subscriptions was a reasonable goal; we'd have been happy with 80. (More later on why we set the number at 97.)

Conversion rate of 2.3 percent

Well, we got nearly 140 enrollments and renewals — a conversion rate of approximately 2.3 percent — so we're pretty pleased. But was it perfect?

Heck no. Here's what we learned, from start to finish:

The budget

Tip #1: Find a direct mail expert who will work on a pay-for-play basis

A SoftwareCEO friend recommended Winton Churchill, who runs the direct marketing firm Churchill & Churchill in El Segundo, Calif. We liked his knowledge and style, but the clincher in our case was that he was willing to base his pay on the results we got from our campaign. We paid nothing upfront, and instead wrote Churchill a check for a percentage of the revenue we received from subscriptions and renewals.

"I work almost entirely on performance-based pay in my consulting work for three reasons," Churchill says. "There's little downside to the client if it doesn't work; there's higher profits for both of us when it does; and third, it's a process, not just a mailing. I find that when I have incentive over time, I continue to find ways to improve the process."

As with most such arrangements, we probably could have kept more money for ourselves if we'd just hired a consultant and paid a flat project fee — assuming the campaign pulled the results that it did. Had it done poorly, however, a flat-fee arrangement would have been a lot more expensive.

In any case, we like the philosophy and flavor of it: It makes sense to us to get the so-called experts to put some of their own skin in the game.

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The message

Tip #2: Make a personal connection with your audience

"This is where a lot of people go wrong," says Churchill. "Instead, they speak in a company-centric style. "It's important to have people connect with the individual who's writing the offer letter, in a conversational tone; you want to reflect the true personality of the person it's coming from."

Churchill captured the SoftwareCEO "voice" from several telephone interviews, and from reading our newsletter. "I had something to look at regarding your style, then tried to build that into the offer letter."

Tip #3: Who doesn't matter as much as how

OK, you're thinking, but your software company doesn't have a Bruce Hadley who cranks out a newsletter every week; then what?

"With a software company, we try to profile a person in the company," Churchill says. "It's frequently the CEO, but it also could be the VP marketing or sales, or a founder, or a technology person. The important thing is to have the communication come from that person and speak in his or her voice.

"When people read e-mail nowadays, they're sort of asking themselves, ‘Is this spam or is this authentic?' Even if they're not used to hearing from an individual, if the copy rings true, they're more likely to respond."

Tip #4: Don't be afraid to trumpet your strengths

Our e-mails were not subtle: They were direct, energetic, and emphatic — so much so that this is where we spent the most time fine-tuning with Churchill, mainly because we were nervous.

"The results speak for themselves," he says. "I've found that most people think they're marketing geniuses — and they may be in some context, but not in direct mail. "I've found that a certain amount of hype-iness is necessary to deliver the message. Having said that, every time I write one of these things, I always wonder, did I take it too far? Is this too much? Half of my career has been spent selling to engineers, so I'm acutely aware of how they react to that sort of thing.

"But the people being exposed to it for the first time feel the energy of your personality. I wanted to have the copy reflect your commitment of having people in the software business get the information they need.

"I think that's something you don't need to shy away from or apologize for. That's deserving of a reasonable amount of emotion to communicate that message.

Tip #5: Don't switch voices midstream

Once you've established that voice, stick with it through the life of your campaign — don't try to introduce the rest of your team.

"Once you've established the voice and the connection, you want to build on that equity, and insure that any subsequent mail is read," Churchill says. "My experience is you should wait three or four months before you try a new voice."

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The offer

Tip #6: Find an offer that has real worth

Before we wrote a word of our e-mail text, we talked with Churchill at length about the bonus offer: What could we offer that represent real value to our audience?

"That cannot be trivialized," Churchill says. "You have to offer something that's of value. The seminar CDs were offered by people who are brand names in the industry — Corum Group and Chasm Group — so the wisdom of those people translates into the value of the offer.

"Of course, different things will appeal to different people. In a perfect world, we would test a different set of bonuses for different audiences; there might be things that would appeal to a CFO audience, or to an HR audience.

"But our thinking was that since most software companies are interested in improving sales and marketing, we thought that the combination we came up with would have the broadest appeal. I could see a CFO ordering it, then passing along one of the bonuses to the appropriate person in the organization.

"We got a little bit lucky as well; sometimes the first bonus offer doesn't work, and you have to rework the bonus cluster."

Tip #7: Never try to run with a single bonus item

"It's always better to have multi-pack bonuses," Churchill says. "It's the difference between buckshot and a rifle shot.

"If you have four bonuses, and one or two of them appeal to a person, that person will tend to order — they'll figure they can give the other two away.

"I like to see four or five. SoftwareCEO's offer, as you know, was a really good offer. I think where some people go wrong is by offering five e-books, and the perceived value of an e-book is just not very high."

Tip #8: Make it something tangible

Even if you're offering a seminar or future services, make sure there's some physical representation: a coupon, an embossed plastic membership card, a welcome kit.

"Mechanically, the coupons work, because they can hold on to them and use them at the appropriate time, or even give them to someone else," Churchill says.

"That's an important concept: You need to make the abstract tangible. Where possible, I push my software clients to include tools that would help their prospects make the decision to buy, even in campaigns where we're not trying to sell anything.

"Even if we're just trying to engage them, we might offer an Excel template that allows the user to put in their own numbers a template — for example, something that will help the user assess their cost of doing a process the way they're doing it now versus the way they could be doing it.

Tip #9: Steer clear of additional selling until you've got a proven program

With bonus offers, there's always the opportunity — and temptation — to sell more. You've seen these upsell pitches: Sign up for an extra 12 months, save 50 percent; register two people, send a third free; and so on.

But when it's your first time out of the chute — as it was for us — Churchill advises caution. "Added selling with the bonus package at the time of the order can be effective, but I would tread lightly," he says.

"As we did in this promo, I would first get the program running at a level you're happy with, and the next time we run it, test that variable."

Tip #10: The dollar value of your bonus is only semi-relevant

"I don't believe the price matters," Churchill says, "and in today's over-communicated world, I think there's a lot of skepticism about what the value of the bonus might be.

"A little bit of romancing in your text about what that bonus can do is worth more than the price you set on it."

Still, there's certainly a part in most people's brains that will focus on the number you attach to your bonus; therefore, make it realistic.

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The format

Tip #11: Use a real person in the "from" field

"The ‘from' address should be the person's name, the ‘voice' you've chosen," Churchill says.

"That's one of the biggest mistakes people make: They use the name of the company, and that's a guaranteed way to leave most of your e-mails unopened."

Tip #12: Stick with plain text

"I prefer text very much over HTML, because of spam filtering," Churchill says, "and because it has a more personal quality. It's almost an analog to the handwritten note."

Tip #13: Use short, "magnetic" subject lines

Obviously, the point of your subject line is to get the recipient to open your e-mail.

Short is best, Churchill believes, and an intelligent spark to curiosity is good.

"Your subject line can be intriguing or cryptic," he says, "as long as it's authentic. The irritation that people have is when they get a subject line like ‘I saw you at work today,' and they open it up and it's spam about organ enlargement. Your message has to be congruent with the subject line."

Our last two e-mails were the most effective in terms of conversion, and each of those had one-word, lower case subject lines: "update" and "latest."

You probably can't get away with anything that short in your first drop, but Churchill advises that you always keep it under 35 characters, and he's a fan of lower case text.

"The Japanese have this concept in their art that the tea sets that the ones that are the most valuable are the ones that have their own subtle differences," Churchill says.

"The same applies to e-mail. "It would be an obvious mistake from a proofreader's point of view to not capitalize the subject line — so when you do just the opposite, you're likely to increase your open rate."

Tip #14: Don't be shy about sending long messages

"Lengthy copy does sell better than short copy, but it has this added complication that you may be filtered out," Churchill says.

"Spam filters are filtering out lengthy messages." Despite the risk, the sales strength of longer messages is undeniable, despite some "gut feel" reactions to the contrary; we had just three criticisms of our campaign (more on that later); two of those asked that we not send such a long pitch.

"The notion that it's too long is how most people react," Churchill says. "However, when we do A/B tests — short copy in one mailing versus long in the other, on the same day, to similar lists — long copy tends to out-pull the short copy by a factor of two to three.

"That's a huge variable — it's a 200 to 300 percent difference. It just shows again how much people who think they know everything about marketing don't really know about direct mail. I have done 20-page sales letters, and time and time again in our tests, longer copy wins."

However, the appropriate length for your copy is also a function of familiarity and price, Churchill says.

In our case, we had the advantage that nearly everyone receiving our e-mail knew the sender; some have been reading e-mails from Bruce Hadley for years.

The success of our 1,400-word e-mail offer makes us side with Churchill in the longer-is-better debate.

Still, even Churchill admits that e-mail poses extra risks: "The problem with e-mail is that you have to get them to a point of action fairly quickly in the process, or the long copy will go unread.

"Plus, many opt-in list owners have the requirement that your message be less than 500 words. In those cases, I recommend 200 to 400 words."

There's another option, Churchill says, if you remain uncomfortable with long e-mails: Send a short message that links to a Web site that has the longer message.

Tip #15: Indent the left-hand margin

"Formatting is extremely important," Churchill says, "Coming from a direct mail background, I understand the importance of white space.

"Most e-mail programs bring the text all the way over to the equivalent of the gutter in printed terms. A/B testing has shown that if you have about five spaces along the left-hand channel, people will read further into the document.

"My theory on this is that it has to do with eye tracking and how people acquire data. By separating it out, they're more able to easily see the words and not tune out the text."

Tip #16: Keep the column narrow

Not only did our e-mail have a five-space indent on the left, there were hard line breaks to keep the message width very narrow; this was Churchill's design.

"This is why newspapers are printed in columns," he says. "I use around 50 to 55 characters, including the five indent spaces.

"Because people are reading e-mails on Palms and BlackBerries and in windows that aren't full size, if you send out and e-mail that overruns the margin, you'll get a jump line — 10 percent appear on the next line, making it very hard to read."

Tip #17: Use short paragraphs

This goes back to the edict that you create lots of white space; short paragraphs help to keep people moving.

Think back to your early life as a reader, Churchill says: "When you were in the 2nd or 3rd grade, when the teacher gave you something to read, if it had lots of white space you felt good about it; if it was dense, you were put off — it just looked too scary to read."

Tip #18: Use ellipsis (...) to pull people in

"When you put a period in a sentence, you give people permission to quit reading," Churchill says. "A period says, ‘This is the end of a complete thought.' An ellipsis is a gentle, subtle nudge that moves them on to the next line."

Tip #19: Avoid all "loud" text

"Writing in all caps and using exclamation points trigger spam filters," Churchill says.

"Plus, I'm a subscriber to F. Scott Fitzgerald's statement that using exclamation points in your writing is like laughing at your own jokes.

"I know some people who stay away from any exclamations points at all. Most spam filters count them, then calculate the ratio of exclamation points to the length of the text. It's where you use too many, or too many in rapid succession, that you'll run into trouble.

"Capital letters are just plain hard to read; it's more fatiguing to read all caps than upper and lower case. If you want to guarantee that a part of your text is not read, put it in all caps — and it's been proven over and over again in research."

Tip #20: Use parenthetical comments judiciously

"The parenthetical comment is sort of in the realm of a candid aside to the reader," Churchill says.

"I find it really is a way of creating emphasis. "When you're in the text, and using a plain font like Courier, you're looking for ways to make things stand out; parentheses can do that."

At the same time, you need to use stronger words within those parenthetical comments. Remember, the reader is in scan mode; your challenge is to get them to pay attention. For example, most of the time we used exclamation points, they were inside parentheses.

Tip #21: Postscripts work; use them

"PS's are almost irresistible," Churchill says. "In fact, the way a lot of people will read your message is to first scan all the way down to the PS.

"So, the PS should succinctly summarize what the offer is, to the extent that they're driven back into the text, or to the order line."

Tip #22: Use numbers that end in seven

We already admitted that our pre-campaign goal was 100 new members; so why did our e-mail state that only the first 97 people would get the bonus package?

"Numbers that end in seven pull best," Churchill says, "then five, three, and nine, in that order. Odd is always better than even."

Don't assume, however, that this was some kind of mind game we were playing with readers. We really did want to limit the bonus packages, for the simple reason that it chewed up too much margin — both SoftwareCEO's and Churchill's, in that part of the bonus included his hands-on time critiquing member's e-mail campaigns.

"There was a limit to the volume of service that I wanted provide at that low a rate, so that's the number I came up with," he says.

"We overran the 97, and we want to make those people happy, but we have to pull that bonus pack off the table."

Tip #23: Don't push too hard with your order info

In the SoftwareCEO e-mails, we didn't supply the links to subscribe or renew until the very end — and then only twice.

"Some marketers think you should close them frequently, but to a more sophisticated audience that‘s too flashy, too salesy," Churchill says.

"In a situation like SoftwareCEO's, subscribers had to make a series of decisions to arrive at an order. It's almost like what in selling is called a ‘take-away close'; if you're constantly hammering on someone to buy something, that's met with irritation.

"But if you're expository and thorough about what they will get through what you're offering, you're allowing them to make the decision."

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The drop

Tip #24: Strive for mid-week, mid-day

"The best days of the week are Tuesday, Wednesday, and Thursday," Churchill says.

"Morning seems to work best, but that can vary with different groups of people.

"A common mistake is mailing late at night, before midnight, so that the date displayed when the recipient picks up your e-mail yesterday — it makes you look like part of yesterday's news.

"Consumers, in my experience and testing, seem to be less schedule-dependent. Business people respond better to morning e-mails."

But, let's clarify: "Morning e-mail" means you send it out at the start of the business day, not 1:00 a.m. You may not be able to control this, especially if you're sending to opt-in names, but it's better to arrive during the day than be part of the spam stack received during the night.

Tip #25: Deadline deals can create exceptions to the mid-week, mid-day rule

Our last drop did very, very well, even though it went out at 7:30pm Pacific Time on a Thursday evening.

In fact, we got several orders between 8:00pm and midnight. "When you have a time limit on something, a late mailing like that can bring a sense of urgency," Churchill says.

"As much as people hate spam, SoftwareCEO's experience shows that ‘switched on' business people usually check their e-mail before they go to bed, so that they can be on top of any development first thing in the morning."

We'd like to claim this was all part of our brilliant strategy, but it was dumb luck. We intended to send it out Thursday morning, and got buried under the usual small-business crises — so the e-mail was put off.

Therefore, we'll file this tip in the "at your own risk" category.

It could be that our Thursday evening drop combined with the impending weekend encouraged lots of procrastinators to take action. But it's also possible that we missed some people who took Friday off, and when they got back to their e-mail on Monday ignored our offer because they figured they'd missed the deadline.

Tip #26: Don't try to compete with holidays and major events

"You want to avoid e-mailing on the days before and after holiday weekends," Churchill says.

"Also avoid mailing around the time of intense news stories — certainly things like 9/11, JFK Jr.'s plane crash, and the start of the war in Iraq.

People are understandably consumed by the story and not as likely to focus on e-mail."

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The mistakes

Tip #27: Send your offer first to your loyal customers

We were anxious to test our message with the "unconverted" — our newsletter subscribers — so we mailed to them first.

However, given the fact that we had a limit on the number of available bonus packs, we probably should have given our existing Site Members first crack at it.

Our November 10 drop to our current members, with a "Sorry, my fault..." subject line, did well, but we'd prefer to have anticipated the potential that they might feel slighted.

No one complained, but a couple of recent signups did ask if they could get the bonus items — and we of course said yes.

In our business and yours, the Holy Grail is recurring revenues. Therefore, next time we'll mail to members first, making sure that they understand they are the most valuable subset of our mail list.

Tip #28: Make sure your sign-up instructions are crystal clear

We had a few people respond to our offer with e-mails that said, in effect, "OK, I'm sold — how do I sign up?" It was only a handful, but it made us wonder, because we put direct hyperlinks in all e-mails — at least twice, and in some cases three times.

"The order info was clear, but some people may have been sold early and didn't want to read all the way through," Churchill says.

"Far more many people, however, don't understand, so they want all the details of what they're being offered. "There will always be a certain percent of the population that has a different reading or scanning or buying style; you'll never satisfy them all.

"As long as you achieve the goals that you set out to, this kind of response may be telling you there's an opportunity to send out a different campaign to a different audience.

"It would be worth testing on a smaller portion of your list, or ping-ponging your persuasion style — for example, alternating long and short letters."

Tip #29: Send immediate thanks and confirmation

Our registration system, which is powered by provided by membership management host 123Signup, sends all new and renewed members an e-mail confirmation of their credit card payment, immediately after the transaction clears.

However, the system e-mail made no mention of the bonus package in this campaign — which caused a fair number of people to ask when and how they'd receive the extra items we'd promised.

We blew it. We should have anticipated this, and we should have, at a minimum, set up an autoresponder to thank people again for their support, and to give them the shipping details about the bonus packages.

We finally did send out an e-mail explanation, but we should done so immediately, not a week after signup.

The moral: Don't be stingy with your communication; people like to know what's going on, especially when they've just sent money through cyberspace.

Tip #30: Don't underestimate Murphy's power over your database

Because this was our first time out, and because we were using our own database, accessed via 123Signup, we made a few goofs.

For example: Our second drop went to people who'd joined after the first drop; nearly every one of them wrote back in confusion, asking whether we got their order.

Another example: Our third drop managed to exclude all those who'd enrolled, but, through a quirk in the 123Signup mailer, it failed to exclude those who'd renewed.

More confused e-mails from faithful subscribers — the last people we want to alienate.

"These kinds of mistakes are common and you need to be acutely aware of the potential danger now the new anti-spam laws are in effect," Churchill says.

"Usually we use our clients' lists plus permission lists, and put those together at a third-party mail house. Or, in some cases the brokers will take the house list and blast the whole thing.

"But from here on out, you're going to have to be able to prove where and how you got permission you to send something. Basically, every resident in the state of California is now deputized to sue for up to $1,000 every time they think you've sent them a piece of spam.

"And, in any mailing there will always be a certain percentage of people who forget that they signed up for your newsletter or list."

Somewhat miraculously, we had no complaints about our mailing, and only a handful of unsubscribe requests.

This was our biggest worry before the campaign. We never share our list with anyone, but we already hit it once a week with our Tuesday newsletter, which contains its own dose of ads.

So, when Churchill suggested we might need to do six e-mail drops to achieve our goal of 100 new members, we were petrified about the potential dropout rate. Fortunately, we beat our goal by 40 percent with half as many mailings as planned.

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A veteran of three startups, SoftwareCEO Inc. founder Bruce Hadley spent 20 years in software marketing, sales, and operations. One of those companies went public, and the other two were sold to much larger software firms. Before founding SoftwareCEO, an online resource for software executives and entrepreneurs, he was editor of one of the industry's leading news and research publications.

Copyright 2003 - 2004, SoftwareCEO Inc. Reprinted with permission.