Every small and medium-sized business should be using email marketing; it’s easy, inexpensive, and extremely effective at boosting sales and nurture client relationships.

According the Direct Marketing Association, email marketing generated an ROI of $43.62 for every dollar spent on it in 2009 – outperforming all other direct marketing channels. And a 2009 Forbes Media study found that email marketing is the second-most effective tool for generating conversion, just behind search engine optimization. Email marketing works well because it’s inexpensive, it builds loyalty and trust with your customers, and can support much targeted messages for certain segments of your email list.

However, there are several rules of “email etiquette” you should follow when launching an email marketing program. Your customers will view the wrong kind emails as spam, while they’ll be happy to receive the right kind.

The right kind of email engages your customers in a relevant dialogue, delivering special offers at just the right times. To make email marketing work, it’s important to remember that most people receive hundreds of promotional emails per month, many with headlines promising “Huge Discounts” or “25% Off Today”, so you need to put some thought into building an email marketing program that will get people’s attention without annoying them. The key to getting your customers to open your emails, instead of just hitting delete, is to start by asking them to “opt-in” to receive your promotional emails.

Build an Opt-In List

As a small business, you can build an opt-in email list by asking every customer to provide his or her email address. If you run a store or local business, ask every customer that comes through your doors to leave their email address, perhaps in exchange for a 10% off coupon or some other incentive. Put up a sign by the cash register explaining this promotion, or ask guests to sign a visitor book on the counter. Online, whenever someone visits, invite them to sign up for “special offers” by leaving their email address. When people complete purchases, always ask them for their email address, and provide a box they can un-check if they do NOT want to receive promotional offers. In every case, make it clear they can opt-out at any time after signing up.

You can also purchase email lists, a popular tactic with B2B businesses seeking to connect with new leads. These lists won’t be as ‘personal’ as one your in-house list, but they can be useful when you don’t have a critical mass of emails in the beginning. Two services that enable small businesses to buy opt-in email lists are Jigsaw, InfoUSA, and DemandBase.

Now that you have your lists in place, it’s time to start sending out marketing emails. Here are five simple steps on the road to more sales.

• What do you want to say? Start by figuring out the goal of your email campaign. Do you want to present a special offer, such as a discount or coupon? Or, is this more of an informational newsletter describing recent updates and events at your business?
• Who should receive the email? You can easily segment your lists into groups – current customers, potentially new customers, dormant customers who have not purchased in a long time – and then craft different emails for each group. Any amount of segmentation and targeting you do will boost open rates by as much as 4X – because relevant offers are much more likely to spur people to open emails than generalized ones.
• Craft your emails. Getting people to open your emails starts with a compelling headline. A time-limited, specific call to action usually works best, such as “20% off This Week Only” or “Friends-and-Family Discount This Week”. Also, make sure your company name appears in the “from” field. If you succeed in getting recipients to open your email, make sure the text is clear and to-the-point (no more than three sentences), and includes clickable links that lead them to your website. Prominently list the details of your offer, as well as a phone number, email address, or other way to contact your company. You can include a small, relevant image – but don’t go crazy with pictures, as some recipients won’t be able to view them. A great way to add pizzazz to your emails is to include a link to a marketing video, inviting people to watch a short, entertaining video about your business.
• Send your emails. If your list is small enough, you can send out your own emails. Just set up all the emails to go out one-by-one in your draft folder and then hit send all at once. However, it often pays to work with an email service provider for small businesses, such as Constant Contact, iContact, or Vertical Response, which will send out all your emails for you, and then track the results and provide a report on click-through and conversion generated by the campaign. One thing to remember – don’t blitz your email lists, or your emails will lose relevance. Sending out emails twice a month makes sense in the beginning, and certainly no more than once a week.
• Track the results. Make sure to track how many people opened your emails, and of those, how many then clicked through to your site, viewed your marketing video, downloaded a coupon, or called your 800-number. The best way to get this level of information on your campaign effectiveness is to work with an email marketing service provider, which, aside from click-through and conversion metrics, often provide A/B testing services to find out which specific email headlines and/or offers work the best to drive conversion. If you are sending out the emails yourself, a more rudimentary form of tracking is simply count the number of coupon redemptions or site visits that result from the campaign.

Email is a powerful marketing tool, if you don’t abuse it. Offer your customers relevant offers, interesting information, important updates on your business, and other compelling content via email – and they won’t immediately reach for the delete button.