E-marketing cuts costs but not results: beat the rising costs of direct-mail with new e-marketing solutions - marketing moves

Art Business News, Dec, 2002 by Murray Raphel

Donald Kelley, owner of Kelley Galleries, started advertising in newspapers and then switched to direct mail, as many galleries do. His creative ads and direct-mail promotions have brought throngs of new customers through the doors of his three galleries in Minnesota and Wisconsin. For example, each month he attracts new customers by displaying different artists in his windows and holding drawings for $50 toward the purchase of the month's featured artists. He also introduces his galleries to people new to the area by inviting them in for a free framed print. These appreciative new customers often return to buy.

But as Kelley's direct-mail list started to swell to more than 13,000 names, so did his direct-mail expenditures. With rising printing and postage costs, Kelley wanted a more cost-effective way to reach his customers. He took a chance on e-mail marketing and discovered success. He claims an impressive response rate to his e-mail promotions, and he's cut his marketing budget by two-thirds. "More than 50 percent buy something," he said.

Capturing the Names

Many of the rules of good direct-mail marketing apply to e-mail, such as starting with a good list of names. You probably already have a customer list, but if you don't have their e-mail addresses, you'll need to find them.

Kelley started building his list by simply asking for e-mail addresses. "I didn't want to make phone calls. It was not only expensive to contact everyone but also obnoxious. People don't like those telephone marketing calls for information," he said.

Instead, Kelley used part of his direct mail budget to hire a consultant to build his Web site and spearhead his electronic marketing effort. He sent a direct-mail message to about 4,000 customers who had made purchases in his galleries during the year and asked them to visit his Web site (www.kelleygalleries.com) and give him their e-mail addresses. About 400 people--only 10 percent--responded. Not a bad start, but he needed more. So Kelley and his staff mailed or phoned customers they knew personally asking for their e-mail addresses.

"The customers were worried about receiving a lot of junk mail until our staff explained we would send them special e-mail-only offers," he said. Kelley eventually collected 600 e-mail addresses and decided to start his e-campaign.

Good Promotions

For his first promotion, Kelley commissioned an artist to paint an original image of a cardinal bird and purchased the exclusive copyrights. He then printed a limited edition of 595 in a reduced 8 1/2- by 12-inch size. His cost was $5 for each print, but he valued them at $80 to $100 retail.

"I spent $2,975 for this first e-mail, which was our main Christmas promotion," said Kelley. "Customers came in for their free print, but then they needed a frame for it. I offered the frame for a special price of $99. This meant we had to only sell to 30 customers and we'd have our $2,975 cost back." As for those who didn't buy the framing, Kelley said most of them needed to buy gifts for the holidays and bought something else in his gallery.

After this initial promotion, calls began coming in from other customers who had heard about his "free Christmas gift" from their friends. How come Kelley didn't tell them about this free print promotion, they asked. He said all they had to do was give him their e-mail address and they'd be the first to know about future promotions.

This positive response prompted Kelley to set up a regular schedule of e-mail messages to his fast-growing list. His goal was to collect 150 new e-mail names every month and send out a new message to his readers every two weeks.

Incentives Bring in the Business

Kelley seems to have an endless stream of ideas for e-mail marketing promotions. For instance, when a visitor signs up on his Web site with their e-mail address, he or she receives a questionnaire to fill out and return. As a reward, the visitor receives $25 off their next framing order of $100 or less or $50 off any framing order over $100.

Kelley also offers a $10 gift certificate for those on his e-mail list who send him a friend's e-mail address. Kelley sends the $10 certificate as a gift from the customer that gave him the name.

Kelley also has given away free gifts to those who join his e-mail list. His most recent present was a glass quill pen that cost him about $7 each. Now these new addressees have a gift that makes them want to read future correspondence.

In one recent promotion, Kelley asked his list to print the page from his Web site showing art from artist Rick Kelley, who was making an appearance at one of his galleries. His message said, "Bring this message to our Still-water Gallery on June 14 or 15. If you are one of the first 25 who bring this page, you will receive a free print by Rick Kelley."

The results were overwhelming. "People dropped the message in our front door's mailing slot at night and early morning when we were closed," said Kelley.

The responses from the e-mails are far, far greater than his direct-mail programs and cost him far, far less. "I was spending $30,000 to $50,000 every year on direct mail. E-mail cut this cost by two-thirds." One of Kelley's e-promotions attracted buyers from 70 percent of his e-mail list.