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According to Forrester Research's 2009 ROI of Relevance report, highly segmented email marketing programs generate 2 - 5X the performance of non-segmented programs. This may seem like a natural email marketing strategy for large enterprises with reams of customer data available to them; however, centralizing all of that data and making it actionable from a marketing perspective is no easy task. InterContinental Hotels Group recently co-presented a case study with StrongMail on how they are tackling this challenge at OMMA Global in San Francisco earlier this month. Here are some highlights from that presentation.

Only 50% of big companies currently segment their customer data for use in email marketing campaigns. This is because consolidating data is hard…many companies have disparate databases and some executives don't want to give marketing control over channels like customer service that are a critical part of the customer lifecycle. IHG was fortunate to have a management team that saw the benefits of creating a customer-centric organization and set about making it a reality.

IHG has 180 million guests per year and 40 million priority club members. To initiate the email customer lifecycle, IHG captures 70% - 80% of their email opt-ins on-property in their hotels. Prior to each stay, IHG sends a pre-stay email to initiate the guest experience, which are transactionally driven by data to sell upgrades, car rentals and other relevant offers prior to each trip. Then IHG follows each trip up with a post-stay email encouraging the customer to set their email preferences.

This is all pretty standard fare for the travel and hospitality industry, but what's unique about IHG is how they measure success. IHG measures email effectiveness by engagement. What matters most is how engaging the email content was – not how much revenue a specific email marketing campaign generated. Instead, they measure revenue by customer and let each channel optimize towards maximum performance. This holistic approach prevents IHG's various marketing channels from competing against each other for revenue and enables email to be the backbone of the customer lifecycle and experience.

Using this framework as a backbone, IHG employs a mix of specified preferences and behavioral targeting to generate dynamic content for custom promotional emails that are based on the types of offers that the recipient has said he or she would like to receive. To prevent cross-channel conflict, IHG dedicates content slots in every transactional or event-triggered email to their local hotels, enabling both corporate and the property to leverage a single customer touch point to promote their respective offers. Most importantly, IHG's email marketing team carves out time in their busy schedule to focus on segmentation strategies so that they can constantly improve on their already successful programs.

So is all of this work worth it? If you judge by action, most marketers don't appear to think so. Less than 30% of marketers take the time to personalize email marketing campaigns because email's return on investment remains sky-high without a targeting strategy. However, if you decide to put in the time, the payoff can be significant. According to Forrester Research, monthly email revenue can lift from $159K (no targeting) to $540K (web analytics) to $664K (segment/target) to $840K (social targeting).

That's some food for thought. If you're thinking about implementing a targeting strategy, we offer this piece of advice: don't try and boil the ocean. Start with the explicit information that you have in your database and then begin to layer in behavioral data after you've mastered phase one. The evidence is clear. No matter how basic the targeting, the rewards will be worth the investment.

As I'm working with clients on their online marketing programs, one question that I've been getting a lot lately is, "What's the difference between social programs and socialized email?"

The question is not too surprising, as social media and email marketing can be tightly intertwined. If you're interested in my response, I encourage you to read my recent BtoB "Ask the Expert" column.

As the popular saying goes, there is no such thing as a free lunch. Someone is going to pay for all of this social computing... and whether privacy advocates like it or not, that payment is going to be made using people's data. However, the immense amount of rich data that's available on the social web would be squandered if it was simply used for targeted advertising.

Let's face it. People don't like advertising. They try and avoid it at all costs. They fast forward through commercials on their DVR and use pop-up blockers in their web browsers. The reason Facebook ads aren't living up to their potential is because people haven't opted-in to receive those messages... they don't want to see them!

So when Facebook shoves an ad in front of someone's face that says "35 Year Old Women in San Francisco Needed," they are trying to shoehorn relevant attributes about the visitor into an irrelevant ad. (Not to mention you are going to risk offending the woman by using her age in the ad. No woman wants to be reminded about how old she is, thank you very much.)

What’s even more disturbing are some of the more intrusive applications being created using Facebook Connect. No one wants to see what they thought was a private picture of their family staring back at them from a third party promotional application... whether it be for a video game or the Olympics. It's creepy.

Social Media is More Like Email Than You Realize
Conversely, by approaching social media as an opt-in channel, you are respecting the individuals that you're trying to target and are only communicating with those who are interested in hearing from you. This conforms with the spirit of social media and aligns with email marketing best practices. As any email marketer will tell you, opt-in marketing is significantly more effective than blasting a mass message to a rented list of names that someone claims has similar interests as what you're trying to market.

The social media marketing tools that emerge as effective will respect this and enable marketers to engage with brand influencers in a meaningful and effective way. This effort will be fueled by personal referrals and genuine recommendations that ring true because the people recommending your product or service genuinely care about it. The future of social media marketing has more to learn from email than advertising. It's about respect. Not violating my privacy and creeping me out.