With consumer spending depressed, retailers are searching high and low for ways to become more efficient and maintain their operations with smaller budgets. Fortunately, there is some good news when it comes to marketing: The direct-marketing channel with the highest ROI also happens to be the least expensive.

E-mail marketing campaigns have become a bedrock of support for many of today’s retailers. Efficient, inexpensive and highly accountable and trackable, they are an effective tool for delivering customers even when times are tough.

Outdoor gear retailer Campmor has built much of its business around e-mail marketing operations. With a list of more than 600,000 subscribers and help from StrongMail’s e-mail marketing and tracking solutions, it is able to reach the right customers with the right products and promotions at the right time.

Founded in 1978, Campmor is a mail order camping business that stocks everything from backpacks and tents to kayaks and cycling gear. With the exception of its sole retail outlet in Paramus, N.J., Campmor has grown its business with a direct mail/catalog model. More recently, it has used simple text messages to point customers to new products or sales.

“We just started collecting names and would send text blurbs of products of the day and week,” says Campmor chief technology officer Erich Eyler. “It really worked for us and our web operations just continued to grow.”

Highlighting special purchases, new products, special events and sales, the company’s TrailMail blast goes out to shoppers up to three times per week. As use of TrailMail grew, Eyler sought out new ways to advance the capabilities of the e-mail list. That’s how he came across Redwood City, Calif.-based StrongMail, a high-volume e-mail marketing service provider whose clients include Travelocity, Dow Jones, Charles Schwab, Kenmore, Netflix and FTD.

With a highly scalable, reliable and manageable system, StrongMail makes it possible for retailers with lists of hundreds of thousands or even millions to easily and efficiently distribute their e-mails.

Ryan Deutsch, StrongMail’s senior director of marketing strategy, says e-mail has the highest ROI of any direct marketing channel when comparing dollars spent to revenue generated. A 2008 study conducted by the Direct Marketing Association found that e-mail marketing returned $45.06 for every dollar spent, compared with $16.86 for direct response newspaper advertising, $15.60 for non-catalog direct mail and $8.61 for telemarketing.

The strong ROI can be largely attributed to the fact that e-mail marketing has extremely low costs and is highly trackable: Retailers can distribute e-mails to millions of users and track undeliverable e-mails, open ratios and click-through percentages. And for those that segment their lists by preferences, geography and shopping patterns, it allows for even more detailed analysis that gives the retailer an up-to-date picture of what the market wants.

“We look at how many people open it. We look at how many people click through on it [to particular products or areas of a website] and then we can see how many people actually purchased something,” Eyler says.

StrongMail also offers A/B testing whereby a retailer can test separate subject lines within a single campaign, then distribute the one that achieves the best open rate. Campmor might send a test message to 10,000 random subscribers, half with one subject line, half with another: The winning subject line will then be used for the balance of the e-mails on the list. StrongMail users can try up to 20 splits in a single campaign.

The flexibility of e-mail marketing also means that Campmor can make changes to a campaign at the very last minute and promote products or sales based on inventory and costs.

“It really depends on supply — what we have in stock, what is selling, what is not,” Eyler says. “We might have an item that isn’t selling well through our regular channels, lower the price and send it through an e-mail blast to people who might be interested in that product.”

Campaign best practices
There are several best practices Deutsch recommends for retailers seeking to improve the effectiveness of their e-mail campaigns. While sending up to three e-mails per week has worked for Campmor, he says that retailers can generally perform better by corresponding less frequently.

According to Deutsch, studies with larger retailers have shown that increasing e-mail frequency can actually decrease conversions. When consumers receive too many e-mails from an organization, they are likely to start writing the messages off as spam or “unsubscribing” from the list altogether, he says.

StrongMail has found that, in general, sending e-mail twice a month is more effective than four or six times per month.

Another tip: keep the messages relevant to the subscriber base, and avoid bombarding customers with sales-driven promotions and flyers. Effective e-mail marketers use these preference centers and selections to put their customers in control. Flower delivery company FTD, for example, lets customers select the holidays for which they would like to receive e-mails and reminders.

And retailers should send only to consumers that voluntarily “opt-in” on the list through a website or some other solicitation because they “are more likely to stay subscribed,” he says. “If your messages aren’t relevant, they could churn and burn your subscriber base.”

Editorial wrapping
Other common practices for retailers with successful e-mail campaigns are an “F”-shaped design wherein content is read across the top, down the left-hand navigation bar and then across the middle. Customer reviews also are very popular, and Deutsch says a number of retailers are featuring products rated most highly by their customers in their e-mails.

Finally, rather than sending out a barrage of advertisements, Deutsch says the newest method is called “editorial wrapping” — building more readable content around products and promotions. Editorially-wrapped e-mails usually give the reader tips, advice or information to complement the products that the retailer sells.

According to Eyler, Campmor has had great success with transactional e-mails — sending follow-up e-mails with the order to point the customer to complementary products or accessories. Open and conversion rates can be considerably higher on transactional e-mails because the retailer is reaching out to a customer who has already demonstrated an interest in the products and a willingness to purchase.