Published December 22-29, 2021
Brands need engaged customers to drive transactions. Unless a brand is a monopoly or has great recall, push messages are the only way for a brand to get existing customers to their properties (websites and apps). Push channels include email, SMS and app notifications. Of these, email remains the best engagement channel. And yet, engagement levels for marketing emails are low: only about 10% of such emails are opened, meaning that 90% of the emails are ignored. Thus, one of the most important marketing challenges that need to be addressed is how to increase email engagement.
Email is also one of the oldest communications channels. The first email (person-to-person) was sent more than 50 years ago. For many years, the discussion has been around what after email? And yet email continues to grow in strength – even in the new age of messaging apps, email has managed to hold its own. This is because email, along with the mobile number, has become identity; the email address and mobile number are the only two open and direct channels to reach people. The likes of WhatsApp, Facebook, Instagram, Snap and others are all controlled by a tech entity which can determine (and change) the rules of engagement. Not so with email or SMS. Push notifications need an app to be installed, while the email inbox is default on every mobile phone.
For a technology that is 50 years old and supposedly ‘dying’, there has been plenty of M&A action in 2021. Intuit bought Mailchimp for $12 billion (15 times revenues), Sinch bought Pathwire for $2 billion (again, at 15 times revenues). Pathwire had emerged through a combination of Mailgun, Mailjet and Email on Acid. Earlier in the year, Sparkpost was bought by Message Bird. Most recently, Cheetah Digital and CM Group decided to emerge. Email service providers (ESPs) are also expanding into marketing automation and omnichannel offerings. In short, plenty of money is riding on a bright future for email.
Chris Marriott, in an article discussing trends shaping the ESP landscape in 2022, wrote:
The new wave of “next gen” ESPs are again seen by many email marketers as being more innovative and leading the way in new features and functionality.
There are a couple of defining features of today’s “next gen” platforms:
The architecture redefines how we think about email platforms: That includes hybrid solutions that connect an on-premises application to cloud-based delivery (there is no synching or moving data). Others offer flexible, real-time platforms that can activate unlimited amounts of customer data up-to-the-second and connect with complex business data. In short, there is a lot of new tech associated with the “next gen” platforms.
The company invests in email rather than around it: Many legacy platforms tend to limit investment in actual email features and functionality, preferring to focus on expanding the overall martech offering while “next gen” companies tend to attract investment that they put back into the platform.
Even as ESPs move up and down the stack to add offerings like CDP (customer data platform) and martech features (journeys, orchestration, omnichannel personalisation), the core email channel itself is evolving. The triad of AMP, Ems, and Microns – what I term as Email2 – will transform how customers engage with emails, and help brands in their continuing quest for deepening customer relationships.
For the most part, only two actions have been possible with marketing emails: open and click. Open rates have tended to be around 10% — meaning 9 out of 10 emails are being ignored by recipients. These recipients are actually opt-in customers: they voluntarily gave their email IDs to brands at some point of time to receive communications. And yet, somewhere down the line, that bond was broken (or weakened) with the result that a “delight” mindset ended up turning into “delete”. All the creativity pouring into email design is useless if 9 of 10 customers are not going to even open the emails.
One reason why emails are not opened is that they do not land in the primary inbox and instead are routed to the promotions folder, which is rarely checked by consumers. This decision is algorithmically made by the inbox providers like Gmail and Yahoo. Intended to counter spam, it also ends up categorising many genuine marketing emails as spam with the result that most recipients never see them. So, it becomes a cat-and-mouse game to figure out how to get past the algos and get emails into the primary inbox.
Innovations like BIMI (Brand Indicators for Message Identification), STO (Send Time Optimisation) and SLO (Subject Line Optimisation) are ways to improve delivery and visibility of emails. But these are still incremental. What marketing emails need is a complete upgrade – like what Apple’s iPhone did to mobiles. I believe that this can happen by combining three ideas that I have previously discussed individually (AMP, Ems and Microns) into a single package called Email2. AMP makes emails interactive, Ems brings useful information, and microns offer incentives (“atomic rewards”) for specific actions. Email2 can craft a completely new experience for recipients in their inbox, and thus drive attention, engagement and habit creation, all of which are upstream of transactions.
A new metric – Hooked Score – can measure the effectiveness of emails at an individual level, and thus marketers can track the improvement in engagement over time. Email2 will also need three new entities – ARCo (the entity which manages the Atomic Rewards), Progency (the product-led agency which can offer an end-to-end performance-driven solution), and LoyCo (the loyalty company, typically the ESP itself). Together, they can deliver on the 3 Rs of Martech – retention, reactivation, and referrals. Over time, the same innovations can be expanded to other push channels (SMS and push notifications) to ensure that more brand messages are seen and acted on than ignored, thus reducing “message waste”.
For brands to sell, their messages need to be seen. Email2 is the way to make that happen. By switching focus from transactions and money to attention and time, Email2 can energise engagement between brands and their existing customers, and become one of the key pillars for the coming martech era and the subscription economy.
AMP and Ems
I have written separately about each of these 3 innovations that comprise Email2.
AMP was introduced by Google a few years ago to make emails interactive. Think of web pages in the late 1990s, and you will get the idea! Actions can be taken within emails without having to click through to a web page or an app. From a previous essay: “AMP gives email marketers the opportunity to transform the user experience. Emails can do so much more – forms, image galleries, product cards, games, dynamic data, and of course, quizzes.” AMP only works on Gmail and Yahoo Mail, and that too in their native apps or the browser. A Gmail account viewed on an Apple device through its native mail app will not support AMP. In India, Android and Gmail dominate – which means AMP emails should get wide acceptability. The challenge in AMP is the cost of design and coding; the solution is to create templates which can be used by marketers with limited friction.
Ems are informative emails. They are short (mobile screen length) and thus can be read in 15-30 seconds. They are part of a series and tell a story. Ems thus can become a utility in our lives – coming into the inbox at the same time, like emails from media sites. Most emails today are hard sells – buy this, see that. Ems, on the other hand, focus on attention and habit creation rather than the immediacy of pushing for a transaction. Ems can be the way brands build hotlines to their customers. They can be a great asset for reinforcing branding for existing customers. Ems create “email moments”.
My previous writings on Ems:
- Microns: Making B2C Emails Better [Ems]
- Microns: Theory and Economics [Ems]
- Microns and Brands: Made for Each Other [Ems]
(The idea I now call Ems was called Microns in my early writings. Microns now is a term I use for emails with rewards.)
Microns are emails (and can be any push message later) which have a micro-incentive for a micro-moment (an action to be performed by the recipient). These actions could be opening the email, clicking on a link, filling out a form in the email, answering a quiz, or just providing feedback. The subject line of the email uniquely identifies such an email, and the points earned are updated in the email footer. In my writings, I termed this concept of incentives as “Atomic Rewards” and called the points as “Mu” (µ). Microns are the carriers of Atomic Rewards. They are emails which gamify engagement.
Here are some of my past writings:
- Microns and Loyalty: Gamifying and Rewarding Attention
- Imagining Mus: An Attention-Action Currency
- Attention Messaging: Bridging Adtech, CPaaS and Martech
- Stop Loss: The Power of Attention Messaging
- Atomic Rewards: The Solution to Attention Recession
Here is what I wrote in the last essay: “Atomic Rewards work across brands because no single brand engagement will offer enough incentives to become an independent program. These rewards are not linked with transactions. They come in the form of points (Mu) and are thus non-financial. The points aggregated across multiple brand engagements can be redeemed at the Mu Shop … Atomic Rewards help with the habit loop. The µ symbol in the Subject of an email or adjacent to a QR code is the cue. The craving is the quantum of Mu that can be earned and what the additional Mu does – maintain a streak, bring one closer to the free item in the shop or the next level rise, and so on. The response is the action in the form of an open or click – the attention and engagement desired by the brand. The reward is the earning of Mu and a step towards a desired goal. Over time, µ becomes associated with a reward, and that is what can drive behaviour change.”
The big idea behind Atomic Rewards: to get customers to pay attention pay them for their attention. (Else one will pay Google and Facebook 100X more for them if they churn.)
To summarise: AMP enables interactive emails. Ems are informative emails. Microns are incentivised emails. When bundled into a single composite email (Email2, the next-gen email), this triad can help increase opens and clicks, and thus drive greater engagement by bringing excitement back into emails. There are other benefits of a successful Email2 program: higher retention and lower churn in the long term, and more inboxing and greater reach in the short term.
Consider today’s emails and the power of Email2 will become apparent. Most emails are long and have too many choices (which can also be confusing to some). The emails are not interactive in-place, thus necessitating a click to a web page or an app. The emails are not gamified, reducing the incentive for us to even open them. Email2 solves all of these problems. Email2 is a 10X better solution in the sense that its focus is to take email open rates from 10% to 100%. Marketers take great effort to create the emails and decide whom to send them to; it is thus a tragedy if these emails go to waste and lie unopened and unseen.
Email2 will bring creativity back into email – brevity, smart copywriting, simplicity of design, and story-telling. It is about persuasion and nudging, rather than hard-selling. It is about getting attention first and brand building, rather than jumping straight into pushing for a purchase. Microns use the Subject line to create the excitement of earning rewards and thus grab attention in an Inbox of otherwise same-to-same Subject lines. Ems limit the display area to a mobile screen thus driving the need for a single, sharp message. AMP offers the opportunity to bring in interactivity – a touch or a swipe which draws the recipient in.
Email2 thus opens up a new world because it is a new format – made for the micro-attention recipient who is viewing it on the mobile. Tiktok showed that even 6 seconds is good enough to engage with videos. Email2 is about creating those brief moments to inform, reward and enchant, and in doing so, imprint the brand for a few seconds daily in the minds of the customers. “Hooked” customers is the way to drive repeat transactions, and Email2 is the pathway to creating Hooked customers.
The Hooked Score is a good way to measure the extent of engagement. While it can apply to all actions done by a customer, we will keep the focus on email. We will keep the time period as the previous 30 days. There are two actions that can be measured with email: opens and clicks. A click is more valuable than an email. So, we can define Hooked Score as total opens + (total clicks * 3). Thus, if an email recipient does 5 opens and 1 click in the previous 30 days, the Hooked Score will be 5 + (1 * 3) = 8. For inactive customers, the Hooked Score will be 0.
Opens and clicks may not be the ideal metric to measure engagement, but they are a good start. They are easy to measure. (There can be a problem for customers using Apple devices because Apple caches emails and thus the Open may be inaccurate. For now, in India, this is a small percentage of users, so we can still use it. Over time, clicks and in-mail engagement for AMP emails will need to be the metrics to be measured.)
This gives marketers a good starting point to track and improve email engagement. First, measure Hooked Score for all email subscribers. Also calculate aggregate, average, and median scores. This can also be done for the past 6 months to get a trendline of change. As a side project, Hooked Scores can also be correlated with CLV (customer lifetime value) for each customer. Second, a goal can now be set for the email engagement team. Let us say the target is to double the aggregate Hooked Score over a year, which means it needs to grow 6% monthly. The email engagement team can then make its own tasks: they could focus on reactivation of the inactive base (those with Hooked Score of 0) or do a branding series with existing customers to drive greater engagement. As another side project, the team can track changes in Hooked Score with NRR (Net Revenue Retention).
While sending more marketing mails is one approach to increasing Hooked Scores, a better way is via Email2. The combination of AMP, Ems and Microns as a composite to create emails which are interactive, informative and incentivised should lead to a much bigger and lasting impact because this prioritises the upstream (attention, engagement and habits) rather than a short-term push for transactions. By competing and winning the battle for time (mental availability), brands put themselves in position to win the battle for money (repeated transactions).
Execution of the Email2 initiative can be done via the brand’s internal teams or the Progency. Making it happen will need some rebudgeting – brands will need to set aside one rupee per customer per month. This should pay for itself with higher retention, lower churn, and thus lower spends on reacquisition via Google and Facebook.
Making It Happen
There are 3 entities that will be needed to bring Email2 to life at scale and with sustainable success:
- ARCo, the Atomic Rewards Company, which is the entity which manages the rewards
- Progency, the product-led agency which offer an end-to-end performance-driven solutions
- LoyCo, the Loyalty company, which could typically be the ESP itself
ARCo manages the pan-brand points which drives the gamification in Email2. It needs to be across brands because no single brand engagement can create enough engagement and points to make it attractive for customers. ARCo thus creates the attention token (let’s call it Mu – µ), sells it to brands for a price (let’s say 10 paise per µ), and then runs a Mu Shop for customers to redeem their earned µ. ARCo will also need to maintain the Mu Ledger – showing each customer how they earned and spent their µ.
ARCo should borrow ideas from the loyalty programs run by airlines. As The Economist wrote recently in an article explaining how the loyalty programs have become more valuable than some of the airlines themselves: “Airlines once hoped simply to foster loyalty by offering customers freebies. Passengers collected miles as they travelled and were awarded a free flight once they racked up enough of them. But schemes today are far more sophisticated. Airlines profit by selling miles to credit-card firms at a price that exceeds the cost of providing reward flights and dishing out other perks, such as hotel stays. They also gain when miles expire unused or are cashed in for something of poor value … Credit-card issuers in turn use miles to lure customers with bonuses. Airline-affiliated cards tend to rake in much more in transactions a year than other cards. Many miles are therefore earned not in the air, but through card spending on the ground.”
The key for ARCo is to ensure that the value perceived by customers in items available in the Mu Shop is significantly greater than the cost. For airlines, this can be a 100X difference: points worth Rs 10,000 for a ticket may cost the airline just Rs 100 in the form of a meal.
Progency can help marketing teams of brands drive the Email2 program as a parallel track to all their regular activities. [I have written earlier about the Progency idea.] With the Hooked Score as the metric, the progency can be paid based on its performance in increasing the Hooked Score. As I mentioned earlier, two possible starting programs for the progency can be retention for branding and reactivation.
Email2 also needs a LoyCo, a loyalty company, who can bring it all together. The ESP is the ideal entity to house the LoyCo. An ESP could offer free Mu to attract senders – exactly the way airlines offer miles to attract frequent travellers. The advantage for the ESP will be the loyalty of sending brands in an otherwise commoditised market.
While ARCo will probably need to be independent, next-gen ESPs could combine the LoyCo and Progency to offer a one-stop solution to brands to grow their email engagement. The innovations we have discussed to energise engagement in the form of Email2 (AMP, Ems and Microns) offer a disruptive opportunity for new ESPs to shake up the old order.