One such low cost, high ROI marketing activity is email marketing. In fact, a 2008 Direct Marketing Association (DMA) study showed that, “E-mail’s ROI in 2008 was $45.06 for every dollar spent on it.”

In addition, a February 2008, retailer survey by shop.org, showing that email marketing has the second lowest Cost Per Order (CPO) of any online marketing method. The email marketing CPO of $6.85 beat paid Web search, which yielded $19.33 CPO.

Despite its low cost and high ROI, email marketing still accounts for a very small fraction of most marketing budgets or not used at all as a marketing medium. According to a 2008 Forester study, “only 48% of small and medium-size businesses (SMBs) have been using email for four years or longer. But now they’re beginning to embrace it with gusto.”

For those already doing email marketing for a relatively low cost you could increase the amount of time and energy you put into your email marketing to increase your ROI. This means striving to improve your content, offers, and make use of some features of your ESP that you may not currently be using. For example, most ESPs enable you to segment your email lists by demographic or other criteria (e.g., city). In addition, many ESPs enable you to send out triggered emails based on a number of criteria, including sending emails at set intervals from the day the user subscribes to your list (sometimes called “drip marketing”) and date-based triggers, such as a special offer email on someone’s birthday.

If you have not yet started using email marketing, this is a great time to start. You will want to evaluate Email Service Providers (ESPs), which hosts email marketing services on their servers. While you control your email marketing account and send out emails using a Web browser interface, the ESP’s servers and Internet connections do the heavy lifting.

Look for an ESP that provides delivery reports, open rates, click-through rates (CTR), bounce handling (both hard and soft bounces), an automatically placed unsubscribe link in each email, feedback loops with the major ISPs (complaint management), and Google Analytics integration.

It is important to clarify the different ways that someone can, intentionally or unintentionally, unsubscribe from your list with a good ESP. They can click on the unsubscribe link, click on the complaint button (if they are using a service like AOL) and be automatically unsubscribed through the feedback loop, or the email can hard bounce (the email address does not exist any more). It is very important for these features to all be in place because if these subscribers are not unsubscribed immediately and you send to them repeatedly you run a much higher risk of being blocked by one or more ISPs.

It is also important to choose an ESP that either gives you a private IP address or has you share an IP address with a relatively small number of other customers. The IP address, whether it is shared or private, is the caller ID of your emails. If too many ESP customers share an IP address, you can easily run into problems with being blocked by ISPs for mistakes made by other customers of the ESP. Most reputable ESPs do their best to keep out the spammers but even legitimate email marketers sometimes get their IP address blocked by an ISP and it can take some time to get the IP address unblocked.

Finally, if you are in the process of choosing an ESP, it is a good idea to choose one that does not require a contract term beyond one-month. That way, if you are not happy with the service you can cancel and switch to a more suitable ESP. Not every ESP is going to be a good match for your needs and a good value for you.

An excellent way to start evaluation process is to research a number of ESPs and narrow your choices down to a few that seem to offer a good service at a good price. Then do a free trial of each and upgrade the service you like the best to a full account.. Since you are restricting your choices to month-to-month services you are not locked into a bad choice. You can switch ESPs, move your lists, and move your HTML and text emails over to the new service. Having used one ESP will have given you some valuable experience that you can now apply to the new ESP you have chosen.

Email marketing is a bright spot in marketing that has high ROI and has excellent metrics. High ROI marketing efforts are always a good idea but are especially valuable when the economy is soft. Of course, it is best to engage in a mix of marketing activities, with email marketing as just one component of a larger strategy.

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