What direct response marketing tactic will get you the best return on investment (ROI)? The answer is easy — e-mail! There are literally dozens of independent industry reports that cite e-mail as the most efficient direct response tactic you can employ.

“E-mail's ROI index is 70% higher than any other direct-response marketing vehicle” — Direct Marketing Association, 2006

55% of survey respondents expect ROI from e-mail to be higher than any other channel” — Datran Media, 2008

E-mail marketing is traditional direct mail on steroids — it is fast, effective and inexpensive. Unlike traditional direct mail, there are no printing and postage costs. E-mail costs are literally pennies per address. You can develop an e-mail campaign and get it out the door in virtually the same day. This makes it ideal when you want to take advantage of market opportunities, move product quickly or even test a campaign before implementing it across print and broadcast channels. With e-mail, you know in a matter of a few days how effective your campaign is vs. waiting weeks to evaluate a print mail campaign.

The first step is to begin gathering e-mail addresses. Offer incentives to existing customers and prospects that make it worthwhile for them to provide you with their contact information. Consider a sweepstakes, coupons or other special offers. Catalog order forms should include a line for the customer's e-mail address. Put a sign-up box on every page of your Web site for special offers or new product information. Ask for e-mails in your store. Give your sales reps incentives for collecting this information. Advertise online with other Web sites and via electronic newsletters to drive traffic to your registration page. Make it clear that you will not sell your customers' contact information and be sure to post a privacy policy on your Web site.

Do not, however, buy a list of e-mail addresses. While inexpensive, these lists are notoriously bad and can cause your e-mail to be blacklisted. Rent from reliable sources such as trade associations and professional publications that keep their lists current. As you communicate with your customers via e-mail, start segmenting your list. Create “buckets” of customers with common profiles. You can segment on product purchased, average spend, non-responders vs. responders, etc. Once you've identified these segments, customize your messages to optimize response from each group.

Step two is to select an e-mail service provider (ESP). Do not use Outlook to send out mass e-mails. Outlook can expose your list and has no method for managing opt-in or opt-out. With today's Web-based applications, you do not need to buy or load an e-mail marketing program on your own computer. With a Web-based application, you access the service via an Extranet portal and pay a monthly fee based on the number of e-mails you send out. There are ESPs for every budget, including free services for small lists. Many include tools for easy campaign creation. Templates and wizards walk you through e-mail setup so no technical skills are needed. For a list of ESPs, visit the E-mail Service Providers Coalition Web site (http://www.espcoalition.org/members.php).

The third step is to craft a successful e-mail communications. Remember, e-mail is similar to direct mail. It is direct response and should drive the recipient to take action – even if that action is to simply click through to your Web site. Your message should be designed to overcome objections; include repeated calls to action; and create a sense of urgency.

The Can-Spam Act is designed to target the most egregious spammers. However, it is important for all businesses to understand the Act and work within its rules. You can review the Federal government's requirements for commercial e-mailers here: http://ftc.gov/bcp.conline/pubs/buspus/camspam.shtm. To briefly summarize, the law has a few key requirements:

It bans false or misleading header information. This means your “from,” “to” and routing information such as e-mail address must be accurate and easy to understand.

It prohibits deceptive subject lines.

It requires that you give the recipient an easy way to opt out of future e-mail communications and honor their request within 10 business days.

Your message must include a valid mailing address for your company and identify the e-mail as an advertisement.

Note that the Act does not apply to transactional or relationship messages such as purchase confirmations. Following the law is relatively straightforward. In reality, most ISPs and anti-Spam technologies set the bar much higher than the law requires. The real challenge is to make sure your customers and prospects don't view your e-mail as Spam. To avoid complaints and list fatigue, you must determine the right frequency of your message. Carefully track your open and unsubscribe rates then compare this against online sales to determine the best frequency for your e-mail communications.

When done intelligently, e-mail can help you grow your customer database, build repeat business and increase customer loyalty and satisfaction. Make sure it is part of your marketing arsenal.