Constant Contact CEO Gail Goodman: Marketing in a Down Economy

Many ecommerce merchants rely on email marketing to communicate with their customers. Constant Contact is, perhaps, the largest self-service email marketing firm. We recently spoke with Constant Contact’s CEO, Gail Goodman, about the slow economy, email marketing, and how merchants should respond.

PeC: With the economy slowing down, how should merchants look at email marketing now?

Gail Goodman: What we’re recommending is that the number one thing businesses can do to make sure they come through this economic downturn is hang on to their customers, and if you haven’t started building your customer list both online and offline, this is a great time to start because communicating with your customers is much less expensive than trying to drive new business. So, hold on to your customers, treat them like they’re precious, and don’t over-communicate.

PeC: And the risk of over-communicating is what?

Goodman: Well, first of all, people will unsubscribe. They will leave your list. You’ll start to lose the value of the list over time, but also they’ll just plain tune you out. Remember that while you’re having a tough economic time, so are your customers.

PeC: Is there a benchmark email open rate or benchmark click-through rate for ecommerce-related emails?

Goodman: Constant Contact doesn’t publish one, so I will quote some other people’s statistics. According to a 2007 Internet Retailer study, if you’re a web merchant with a 25 percent open rate, you’re doing well. We’ve seen open rates in the high teens to mid-20s these days, with click-through rates around the 10 percent level. That doesn’t mean that only 25 percent of your folks are reading; it means only 25 percent are reading this particular email.

PeC: Constant Contact’s stock is now publicly traded. What is it like to run a public company?

Goodman: Constant Contact has been growing quite rapidly, more than 70 percent year over year. It’s more challenging to run a high-gross company than necessarily a public one.

The great thing about being public is the resources brought to Constant Contact. We’ve raised over $100 million in cash, and now as we look at a challenging economic time, [we are in] great shape to weather anything that might come our way. The bigger challenge for me has been making sure that all of the team at Constant Contact, the ever-growing team, shares the same passion for customer success that made us so successful at the beginning.

So, I spend more of my time working with the team here at Constant Contact — focused on how to help our customers be successful and making sure that everybody shares that passion as we grow the team so quickly.

PeC: How many of your customers come from traditional media? That is, how many of your customers used to send out a printed newsletter or used other traditional means, and they found your service more effective and cheaper?

Goodman: I can’t quantify it, but my gut instinct is that most of them were doing some form of customer communication before they started using email marketing. Many were using postcard mailings announcing a special sale or an open house. Where they might have done a quarterly postcard, they’re now doing a monthly email newsletter or email campaign.

PeC: Anything else as it applies to email marketing or ecommerce?

Goodman: As we head into this holiday season, start early thinking about your promotional plan for the season. Focus on engaging your audience, not just discounting. People are very nervous. Retailers I talk to are very nervous and turning to traditional discounting and shipping promotions. I think it’s too early to start that. I think there will be plenty of time for that later. Start with great gift ideas and incentives that drive the total order size up. Don’t jump to the giveaway too quickly.