By Contributing Editor, Mark Brownlow

With direct email response rates suffering from the side-effects of spa*m and email fatigue, many marketers are switching their promotional resources to e-newsletters, the "even newer" killer app.

Michael Katz, "Founder and Chief Penguin" at Blue Penguin Development, Inc.consults with businesses using or starting customer e-newsletter programs. So we asked him for some advice on e-newsletter success.


==> E-Newsletters are not a Cheap Alternative to Direct Mail

Newsletters are the new websites. Just as people started throwing up websites because it was "the thing to do," so companies are putting out e-newsletters for the same reason.

Even those that get beyond the "because we should" line of reasoning still tend to see them as a cheap alternative to existing direct mail and print newsletter efforts.

That largely misses the point.

According to Katz, one-shot direct response marketing is about timing, getting in front of the customer when they happen to need your product; a game of chance.

On the other hand, "...an e-newsletter means you're in front of people on an ongoing basis, so you're top of mind when the product or service need arises."

An e-newsletter is not about getting people to buy or respond today, but about making them more likely to do so at some point in the future.

This means delivering useful information to your target customers on a regular basis, and without using typical action-oriented marketing copy.


==> E-Newsletters Build Customer Relationships

E-newsletters are about building or strengthening customer relationships: Engaging your customer on a regular basis, and in a relatively sales-free way.

This can lead to a host of benefits, including repeat business, referrals, lower customer turnover, barriers to competition, two-way dialogues and a position as a thought leader within your market.

That may seem obvious, but Katz says few people put theory into practice.

"The idea that the best place to look for more money is among the people who've already given you money is a real insight for many people. We all know it at some level, but if you look at the way people spend their time supposedly growing their business, it's very focused on finding and talking to strangers."

E-newsletters come into their own to distinguish marketing commodities, such as recruitment services. When customers are not in a position to distinguish much between competing products or services, it is the relationship that is going to clinch the sale.

Katz says: "It becomes an issue of who do you know. You want to be at the top of that list when they wake up and say, "Gee, I need a VP of Marketing; who do I know who's a headhunter?" Your e-newsletter allows you to keep top of mind, provided you publish information they want, so they'll be willing to listen to you."


==> Be Patient and Think Long-Term

Katz likens an e-newsletter to a program of exercise, "If you came to me and said, it's my high school reunion on Saturday, can you help me look better, and I was an exercise coach, I'd say, 'No.' It's the same idea with e-newsletters - you can't build the relationship overnight."

Of course, your competitor can not build a relationship overnight either. Which is good news for those embarking on an e-newsletter project.

"It doesn't take long for someone to undercut your price, or outspend you on advertising, but they can't touch your relationship with your customer quite so quickly."


==> Challenges for Traditional Marketers

All this, of course, presents some particular challenges for traditional marketers used to a more direct approach. There are some novel concepts to take on board.

* Avoid self-promotion and marketing jargon

If you are used to writing for acquisition, action and attention, then throw away your textbooks. That approach is totally inappropriate for e-newsletters. You already have that attention, there is no clutter to break through and you are not necessarily looking for an immediate response. No sales copy.

As Katz puts it, "If I've said I'm willing to get your newsletter, then I'm already at step 3 of the relationship. I'm already listening - just talk to me."

You have got to have some kind of promotion, right? Suppose you just launched a new product and want to get the word out to your customer base? Katz suggests promoting your business, but avoiding self-promotion.

Huh?

He explains: "What would you do at lunch with a customer? Would you talk inmarketing speak? No. Would you try to 'sell'? No. But you might mention a seminar on financial planning you're holding. When you talk to someone at lunch (or in an e-newsletter), you're selling your business because they're learning what you do."

Katz recommends a clear separation of church and state to ensure the core of your newsletter remains sales-free. That means no advertisements either.

Since most people find it hard to introduce promotional elements in an unobtrusive, subtle way, he advises putting the useful content on its own, with no hint of promotion within it. Then the promotional stuff can be put in another place in the newsletter.

Do not write it as an advertisement. Remember, you are having lunch with the customer; not trying to sell them a new shirt.

* Encourage a two-way flow of information

Katz sees an e-newsletter as an ideal way to encourage customer feedback. [Ed note: See test results below]

Before email, feedback generally only turned up when a customer was very angry or very pleased. Why else would they take the time to pick up the phone? Responding to a newsletter lets customers fire off feedback quickly and easily.

"You immediately get all this low-level corrective stuff. In the case of a restaurant chain, it's things like, 'There aren't enough chairs in the lobby.'"

It is the kind of valuable information about the customer experience you might never get otherwise.

Says Katz, "This 2-way dialogue - provided you're willing to promote it and actively engage in it - is incredibly valuable. Everything I've ever gotten out of a focus group for $20,000 a shot is now available for 'f^ree.'"

This dialogue is also, of course, important for relationship building. The more you can get people to interact with you, the more you're solidifying that relationship.


* Do not worry about measurement

Katz has some bad news for email marketers used to a variety of dollar-based success metrics.

"There is no up front business case for building relationships with an e-newsletter. You can't measure it and you can't guarantee it. It's really very powerful but it does require something of a leap of faith."

This should not stop you from tracking various useful e-newsletter metrics, such as delivery rates, clickthroughs (where relevant) and growth in subscriber numbers.

Even if you can not get a dollar figure to measure the results of your e-newsletter relationship efforts, surely there is some way of gauging success?

Katz has some reassurance: "You get a ton of anecdotal stuff. So you get people saying, 'Hi, I read your newsletter,' or you can trace client purchases back to a six month newsletter experience when they finally called you."


==> It is All in the Planning

OK, but how do you go about producing a winning newsletter? After all, it is not as if there is a shortage of competition from other publishers and marketers. Katz says it is all in the planning.

There are four key questions to answer:

1. Why am I doing this?

2. Who am I writing to?

3. What am I writing about?

4. What voice will I use?

Once you have cracked these concepts, everything else follows naturally. "The answers to these questions determine the answers to every other question. It's a series of decisions that run one after another." Colors, length, language, format are all easy to answer when you have done your planning homework.

In fact, Katz finds that this planning process often brings as much benefit as the newsletter itself.

"Once you start to go through the process, a real benefit comes from having clarity about who you are, who your customer is, what your voice is, etc."

In other words, publishing an e-newsletter forces you to think about your business and develop your knowledge and opinions, so you are better able to communicate with your target audience about that business.


==> Target The Right Audience

For Katz, the "who am I writing to?" question is the big one.

While the mantra used to be "size is everything," that view is changing. These days, it is the quality of your subscribers that counts, not the quantity.

"We spend a lot of time really pinpointing the target audience. A typical firm has many constituencies -- different types of clients. Who's the quintessential person you're writing to?"

Narrowing the audience is important because this determines what you write about, and how you write it.

Katz advises you narrow the target as far as you can within the margins of what makes business sense; obviously you do not want to end up with a potential audience of 4 people.

"The more narrow you are, the more chance you have of developing a loyal following among the people who are likely to buy your service.

And you've got to make sure the target audience represents people who will buy from you."


==> Get the Right Voice

Knowing your audience and what you want from them helps you decide the voice you are going to use.

"Business people feel that voice is part of all that 'fluffy stuff,' but it's very important. Are you peer-to-peer, are you the guru, or are you looking for feedback? It's really important to get the voice right."

This goes back to the inappropriateness of traditional marketing approaches. Third-person corporate messages just do not work in newsletters. Conversational, genuine tones are better.


==> Produce the Right Content

Whatever the audience, objective and voice, the ultimate test of any newsletter is its content. It is what makes the difference between a good newsletter and a great one.

The relationship-building process rests on being able to offer something of value, without the usual sales and marketing catches. The content has to be useful, interesting, and relevant to the audience, or you are on a fast track to the delete button.

Katz suggests you think of it as a book. "The difference between Harry Potter and a piece of junk is not the design or the distribution. It's simply a better book."

LINKS:
Blue Penguin Development -
http://www.bluepenguindevelopment.com/