More Benefits of Self-Hosted Email Marketing

This article is Part 5 of a 10-part series on Email Marketing: Self-Hosted vs Traditional Cloud-Hosted Options.

Having discussed the potential pitfalls of cloud-based hosting solutions, we are now perfectly in position to consider some of the benefits of self-hosting. It stands to reason that the disadvantages we’ve covered off so far automatically point to benefits for self-hosting, right?

It’s worth bearing in mind that all of these potential issues usually only crop up once your business is well-established, you have a significant number of subscribers, followers and clients to communicate with, and your portfolio of customers is expanding in line with your business growth and development.

We can’t stress enough that cloud-based solutions are absolutely great for the majority of SMEs, and we’ve been really happy with the service we’ve received through this type of solution.

So, Why Consider Self-Hosting?

Let’s be frank about it – the main reason any business would choose to migrate across to a self-hosted solution comes down to money. Self-hosting supports two financial benefits:

  1. You spend less by reducing the “bottom line” expense of partnering with a service provider.
  2. You stand to generate more revenue through increased sales as a result of your customised solution (this is the really huge advantage).

Once your business is established with a certain number of subscribers and volume of emails, outsourcing your hosting can rack up the dollars. Let’s say, for instance, that you have 50,000 subscribers, and you mail each of them just twice a week with a newsletter, promotion or service update. Over a twelve-month period, let’s take a look at how much you would spend using one of the main cloud-based email autoresponders:

Provider Sign-up fee Monthly cost Total over one year
MailChimp Free $380 $4,560
ActiveCampaign Free $225 $2,700
Infusionsoft $199+ $499 $5,988
OfficeAutoPilot Free $597 $7,164

These four providers offer a transparent view of your potential costs. Others, however, don’t even give you an estimate, which suggests that they are charging at least the same amount for the service – but probably significantly more!

The point is, these guys know that by the time you’ve signed up with them, built up a decent client base and managed to plaster their opt-in boxes right across your network of sites, you’ll probably be so familiar and comfortable with the service that you’ll be reluctant to change providers or jump to a self-hosted solution. You’ll also be deterred by the prospect of having to go through all of your websites to change over the opt-in boxes to your new system. While your customer base is relatively small, the service is cheap. As soon as you start to build up a great subscriber list, however, the costs can rack up pretty quickly.

Let’s compare the prices above with an example self-hosted solution:

  • A one-off self-hosted software licence of around $495
  • A monthly SMTP delivery subscription of around $199 per month.

That’s only $2883 in the first year (less in the second), giving you a potential saving of over $4000.00[1].

Simply put, as your business grows, so will your costs for hosted services. It’s up to you to decide when your business has reached the right scale to make savings by setting up your own self-hosted email system.

Increased Sales – Increased Profit

Even if you’re a small business owner, it’s still well worth considering a self-hosted solution as there are many more benefits that aren’t quite as clear cut as the financial savings. Another key attribute we’ve found is the potential revenue you can make from having a bespoke solution with enhanced functionality.

As we’ve already covered, hosted online marketing solutions provide restrictions in a number of ways. These restrictions could actually mean the difference between making a sale and losing a customer. So, for a lot of people with smaller customer lists that would find it cheaper to host via a Web-based service such as AWeber or Constant Contact, even if you have to pay more per month for a hosted solution, these features, and the increased revenue associated with them can easily justify the investment.

And when it came down to it, this was one of the main reasons we decided to move to a self-hosted email solution.

The Ability to Embed Images

When you have your own hosting solution, functionality increases, such as the ability to embed images into your marketing message. This one feature alone can lead to increased click through rates, especially when your images are shown in your message without having to click on the “display all content” option.

We know that most cloud-based providers allow you to have images in an email, but your recipient has to click the “show images” approval before they load:

Show_Images_Gmail

With a self-hosted solution you can embed the image directly into the email (just like when you send a personal email to a friend in Gmail, for example) so the pictures load instantly.

If you use an image to provide a call-to-action for your customer (such as a video screenshot or click here to subscribe/make a purchase graphic), and the image links right through to your payment page, you’re making it much easier and more appealing for your customer to go ahead and take the desired action.

When you consider the advantages of embedding images in a message, it seems strange that all cloud-based solutions don’t allow this functionality. The bottom line is that images can take up a lot of bandwidth, and this is a resource you’re not billed for. If you send your allocated number of mails out every month but each one is stacked full of bulky images, your service provider will soon start to realise that you’re using up a huge amount of bandwidth which could slow things down. Another reason for restricting embedded images is that it makes it easier for firms to send spam through, as it’s harder to monitor the content.

However, for reputable businesses like yours and mine, this restriction can actually contribute to a loss of revenue by making the purchasing pathway more difficult for your customers.

A note of caution…

If you’re looking to embed images as a valuable part of your online campaign, it’s worth remembering that this function won’t automatically load the “tracker” image that your analytics rely on for generating campaign reports. Customers still need to accept images or click on a link for the mail to be classified as having been opened. Embedding images can also make your mail file size much slower to load and can cause issues with email clients. Because of this it’s always a good idea to check whether an image is really necessary, and only use them for important calls-to-action in your messages.

Sending Attachments in Your Emails

We know that sending out a load of emails with attachments has the potential of reducing the delivery rate of our messages. However, sometimes we really need to include a file. The problem is that most cloud-based services don’t allow this functionality at all. Again, this is down to a drive to reduce bandwidth of messages and an attempt to stop sneaky spam messages from getting through.

As you know, the Preneur Marketing gang here send a lot of audio messages out and I need to make sure that I have the ability to send out broadcasts if I need to (check out http://www.petewilliams.com.au/why-audio-email/ to find out where I’m coming from with this!). As a public speaker, I kind of rely on being able to share podcasts and audio and I simply can’t get that functionality without a self-hosted solution.

Having the ability to send attachments allows you to share PDF reports, ebooks and other material directly to your customers, making it easy for them to access information. Rather than having to try and persuade prospects to visit a certain website or make a download elsewhere, you can streamline the process and send your stuff through directly. There’s something really positive about having this functionality; it demonstrates that you’ve thought through what your subscriber base needs and taken time to deliver it professionally. This can be a really strong differentiator between you and your competitors, demonstrating care, value and respect for your customers.

No Restrictions on Bulk Uploads

Because of the drive to cut down on spam, many of the hosted solutions, including Aweber, have long since stopped users from doing bulk uploads of mailing lists built elsewhere. This is a huge issue for business owners who want to change their email solution without losing the list they’ve worked hard to build.

The 2003 Can-Spam Act was passed to control illicit material from being marketed and stop businesses from getting in touch with customers without having explicit permission – but what happens when a customer asks for you to stay in touch with them face-to-face or over the phone, only to find that your hosted service provider forbids it?

No Terms of Service Restrictions

Are your messages compliant?
Check out the Can-Spam criteria that all commercial emails need to adhere to: http://bit.ly/X7Dlit.
When you partner with any service provider for your email marketing you’re subject to governance from their company terms and conditions. This means that you are potentially at risk of being banned from the service at any point as a result of real or perceived violations of these terms.

This actually happened very recently to an associate of ours when they were trying to send out a marketing blast to their Infusionsoft base list. They were eventually able to get the account to reopened but they still had to make a phone call to the UK at 10pm on a Wednesday night to get it all resolved. Infusionsoft were, fortunately, very helpful but a less understanding host could have chosen to permanently suspend the account!

As an online marketer my email communication forms one of the most critical elements of my overall marketing mix and, as such, it would be pretty devastating if I suddenly found myself being booted out of a service I relied on.

MailChimp is another great example of how terms and conditions of use can be restricting at best, and can potentially even lead to a loss of revenue and a poor online reputation. MailChimp has a strong set of conditions for their terms of use and, don’t get me wrong, I agree wholeheartedly that every autoresponder solution needs to have strong governance to stop spam attacks and prevent unscrupulous entrepreneurs from using the platform to generate money through illicit campaigns, but MailChimp’s terms of service actually state the following:

“Some industries have higher-than-normal abuse complaints, which can in turn jeopardize the deliverability of our entire system. Nothing personal, but in order to maintain the highest delivery rates possible for all our customers, we can’t allow businesses that offer these types of services, products, or content:

•Escort and dating services

•Pharmaceutical products

•Work from home, make money on online, and lead generation opportunities

•Online trading, day trading tips, or stock market-related content

•Gambling services or products

•Multi-level marketing

•Affiliate marketing

•Credit repair and get out of debt opportunities

•Mortgages and loans

•Nutritional, herbal, and vitamin supplements

•Adult novelty items or references

•List brokers or list rental services.”

OK. So affiliate marketing is off-limits to MailChimp users. This is potentially disastrous for a huge number of honourable online business owners who gain a large percentage of their revenue through this niche. While I get that MailChimp is just trying to protect email recipients and stay compliant with legislation, it is worrying to think that I might be struck off from using a service I depend upon just because I’m an affiliate marketer.

MailChimp is pretty frank about why they’ve included this in their list of prohibited activities – in fact they’ve produced a great response to voiced concerns about the inclusion of affiliate marketing on the list (http://bit.ly/Xo6Lfl). Despite this it’s still unsettling to know that as a respectable business one of my key marketing and revenue channels could be subject to a breach of compliance ruling. While this isn’t enough of a deterrent by itself to make me jump to a self-hosted arrangement, it does put things into more perspective when you realise that every single email you send under a hosted solution is subject to the governance of the service provider you choose.

Allowing Repeat Opt-Ins

When you run a number of websites for your products and services you can end up with a whole load of different opt-in boxes and forms across numerous landing pages. Managing them all effectively can be a real pain. The main problem with is that we can often get the same person filling out multiple different forms because they want to access the full range of bonuses, offers or promotions.

The ideal scenario is to have each of the forms subscribe people to the SAME list, so the subscribers can be managed from a central database. It’s important to note that we don’t want to compile different lists or autoresponder sequences; we want a single autoresponder sequence for all of our subscribers, no matter what route they take to opt in.

If we added the same sequence to each list, every time the same person opted in to different offers they’d be getting the same autoresponder messages again and again. Can you imagine how quickly people would unsubscribe, if they were bombarded with repeat emails? While some hosted solutions do allow this level of subscriber management out of the box, others still only allow it through API integration, and yet others don’t have this capability at all. This can cause a real risk of your email messages getting to the point where they swamp someone’s inbox, making them think twice about your professionalism as a company, and wondering whether they ought to simply block you and unsubscribe.

Deliverability Issues

We’ve already looked into some of the drawbacks of hosted email marketing, and you’ve probably noticed that deliverability features pretty highly on the list of what we want from our ideal solution. A great white paper from ReturnPath.net outlines some of the issues that hosted solutions have. Check out what they found:

  • 20% of legitimate emails never reach the inbox and 77% of delivery problems are based on sender reputation.
  • Some ISPs now give little or no weight to content (these include AOL, Roadrunner, Bell South, Gmail, ATT, NetZero). Others give content some weight but only a few give it a weight of 25% or higher (including Adelphia, Cox, Hotmail, MSN)
  • Without monitoring, by the time you see the loss of sales, your sender reputation is already severely damaged.

The problem is that, in the battle to trap and block spammers, ISPs are deploying more and more blanket techniques to identify and act on potential spam. This is great, but also means that it only takes a couple of your clients to mark your mails as spam, instead of choosing the unsubscribe option, to lead to your reputation being damaged and your emails not getting through.

The more popular and successful your business becomes the more emails you send out, right? But the more emails you send out, the higher your chance of being blacklisted by ISPs as they apply the same blanket approach to your business as they would to spammers. Seriously, if you are managing a large subscriber list, it’s well worth considering the impact that a damaged reputation could cause for the potential success of your future marketing strategy.

A very angry guest blogger at PPC.bz reinforces the issues you can get with hosted solutions, focusing on his experiences using AWeber. Despite being a sensible marketer, managing his lists carefully and sending out just one message a day to his subscribers, he concluded the following about AWeber’s capabilities and performance:

1) Deliverability is terrible.
2) Scheduled broadcasts are delayed.
3) Randomly, a substantial proportion of an email deployment will bounce.
4) The API (and libraries) are pure torture to use, but are still better than…
5) The awful Web interface.

Business owners wanting to control their email marketing really have to think about the point at which their hosted solution becomes more damaging than useful to them. At Preneur Group we think it’s a question of size and scope. When you get to a point where your subscriber list is large enough, it’s time to re-evaluate your solution to make sure you can carry on bringing absolute value, integrity and professionalism to your clients.

The guys at SMTP.com lay it out pretty clearly for us:

“It’s getting harder and harder to get emails delivered. ISPs (Internet Service Providers) keep fine tuning their email filters to block increasingly sophisticated spammers and hackers. Unfortunately that means many well-meaning marketers get their email blocked as well. Managing your IP reputation is key to getting emails delivered. But it requires regular maintenance, which means you may find yourself spending more time getting your email delivered than creating compelling content that gets your email read.”

Check out the stats on global email deliverability that Return Path collected*:

StateOfEmailMarketing

Source: Return Path 2H 2011 study – Retail emails worldwide

This shows that, globally, a shocking one out of every five emails lands either in a spam or junk folder (7%) or simply goes missing, blocked by ISP-level filtering (12%). So, in fact, only 81% of all permission-based email makes it to the world’s inboxes. I mean, seriously? You spend hours crafting a great sales or support message, a news update or new product launch for your client base, all of whom have opted in to receive your messages and are interested and receptive, and one out of five of these messages never even arrives.

Taking Control

I admit that issues around control are pretty much based on rumours of bounces not being handled properly and I haven’t seen any reliable statistics to support it yet. But it’s not unreasonable to suspect that if cloud-hosted email services are messing up delivery rates and aren’t monitoring and maintaining your online reputation, it’s likely that the bounce process gets screwed up from time to time as well.

A bounce is an email message that is returned because it could not be delivered for a number of reasons; the mailbox of the recipient might be full, the email address might no longer be valid or temporarily disabled, the email address might be misspelled, and so on.

You need to have a good handle on this so you can manage your subscriber list carefully. If you’re not getting the right data to show you exactly how to keep your list current you won’t be able to act when emails get bounced. Obviously this adds to your reputation issues and it’s critical that you have enough control over these statistics to identify bounces and act on them. I’ve got a few colleagues and friends testing this theory with super-large lists and I’m pretty sure that the results won’t be positive.

Core Functionality

One of the features I really want to be able to use through my email marketing to clients is the ability to send “Triggers”.

Trigger-based messages are sent to your prospects as a consequence of a change in their activity, behaviour or profile. This means that you can automate your email campaign to respond to changes in customer behaviour, sending out a really targeted message at the time when they need it most. This potentially yields a great ROI because your system acts promptly to set off a customer-facilitated exchange to encourage prospects to make purchases based on their exact placement within your product or service lifecycle.

At the moment, it’s only the high-end cloud-based solutions like Infusionsoft and OfficeAutoPilot that offer this level of functionality, leaving the rest of us trying to find effective ways of setting up exchanges based on manual email submissions and a whole lot of guesswork about our customers. If, however, you’re a dedicated AWeber user and want to stick with that solution, check out AW Pro Tools, a third-party service that, among other things, lets you create “Automation Robots” that automatically detect when a subscriber has received all of the autoresponders in a specific list. You can then instruct your robot to move the subscribers to a new list and manage them from there.

I know it may sound a little like we’re bashing cloud-hosted solutions here but this really isn’t the intention of this section. The problem is simply that, the more successful your business becomes, the more reasons you have to consider self-hosted email marketing. It’s all about weighing up what point you’re at with your customer base and subscribers, and deciding upon your “tipping point”.

Let’s move on to comparing the options for self-hosted email marketing and find out what’s on offer, what the advantages are, and whether there’s a solution out there that’s going to really tick the boxes for your specific business needs.

about-pete
Pete Williams is an entrepreneur, author, and marketer from Melbourne, Australia.

Before being honored “Australia’s Richard Branson” in media publications all over the continent, Pete was just 21 years old when he sold Australia’s version of Yankee Stadium, The Melbourne Cricket Ground For Under $500! Don’t believe it? You will! Check out the story in the FAQ section (it really is our most asked question).

Since then, he’s done some cool stuff like write the international smash hit ‘How to Turn Your Million-Dollar Idea Into a Reality’ (+ the upcoming ‘It’s Not About the Product‘) and he’s created a bunch of companies including Infiniti Telecommunications, On Hold Advertising, Simply Headsets and Preneur Group.

Lots of other people think he’s pretty good too! He’s been announced as the Global Runner-Up in the JCI Creative Young Entrepreneur Awards for 2009, the Southern Region Finalist in the Ernst & Young 2010 Entrepreneur of the Year, and a member of SmartCompany’s Top 30 Under 30.

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