I’m just about to sign a new contract with an email service
provider. The difference between the highest
quote we were given and the final price we’ve agreed is staggering (we’re
paying well under half).
This is for the same level of service, the same monthly
volume and really similar (if anything, slightly better) functionality. This is not a one-off – the same thing happened last time, and I’ve now been
through this several times with web analytics providers, list brokers, online
ad suppliers, etc.
Based on all of that,
here’s a quick guide to getting what you need from an email service provider,
without paying more than you have to. Here we go, 10 tips:
1. Decide What You
The standard way to decide on a platform is to speak to a
bunch of providers & let them tell you why you should use them. Then
compare what they all offer and go with the best you can afford.
The cheaper, better way to do it will take about an hour of
your time up front: Write down a checklist of exactly what you need before you speak to any service
Put your requirements down in Excel. Speak to a few
companies & note down how they match up to your list. Fill in costs for
each, and you have an easy comparison of your essential needs vs the costs. It’s
a subtle difference: “This is what it costs to get what we need” vs “This is
what it costs to get what they offer”.
2. Costs: Know what
you're buying & how the pricing works.
The basic costs of Email Service Providers are:
Setup & Training.
- CPM rate.
This is your "cost-per-thousand emails sent". 'M' stands for
'Mille', which is Latin for 'Thousand'. Usually you'll make a minimum commitment
(eg "I'm going to send 1.5 million emails a month") and they'll give
you a rate for that.
service charges & support costs.
services. EG, hourly rate for extra development on your behalf.
extras. Ask to see *all* potential costs. Get it in writing if possible.
Get all of these costs before you think about negotiating
rates down. If you push down on CPM before they've told you monthly service
costs, they may bump those up to compensate.
3. More on Costs: Ask
early & always negotiate down
Ask about costs early on (never say “we’ve got a budget of
$100k for year 1). You’ll probably be given 2 costs: A ‘rate card’ (the costs
they publish to the world) and ‘your price’ (the cost they’re willing to offer
In my experience, these 'your price' quotes can still be negotiated down
much further. The prices they’re most likely to budge are CPM and Initial Setup
costs. You can often negotiate down further right up to the day you sign.
4. Get your Volume Commitment
The more emails you'll commit to send each month, the lower
your ESP will go on price. EG, commit to 2-million emails a month and they may
offer you $1.50CPM. Commit to 10-million and they may offer you $0.75CPM.
It's important to get this right: If you commit to 2-million
and you only send 100,000, they'll charge you for 2-million anyway. If you
commit to 2-million and you send 20-million, you probably could have gotten a
better rate in the beginning.
The easy way to figure it out is to look at: How big are
your email lists? How often do you send email? How much do you want to
grow/shrink your lists? How much do you want to increase/decrease frequency?
5. Ditch the Consultancy
An in-house consultant will naturally be biased by the
limitations of their own tool & their own company. For example, they're
never going to say "hey, you're coming up to the end of your contract. I
think you've outgrown the functionality our tool offers. You should take your
My personal opinion is you’re always better off saving the
money & using an independent consultant (Tamara, for example).
6. Ditch the Training
Most ESPs insist you have some sort of training at the very
beginning. My advice is to take the absolute minimum to get you going at first.
There are 3 reasons for this:
- You just won’t know how much training you need
until you’ve used the application for a few weeks.
- If you get all the training on day 1, you’ll
have forgotten any advanced stuff by the time you’re comfortable enough to use
- If you do need extra training later on, you can
always get it for the same price (or cheaper) than on day 1.
7. Ask for a longer
This sounds like a bad idea: The longer you're tied in, the
bigger the risk. If things go wrong 3 months into a 3-year contract, you’re
stuck! But, the longer your contract, the more commission your sales rep will
get. Because of that, they’ll often offer you a cheaper deal to sign for
There is a win-win: A longer, cheaper contract with break
clauses. EG, sign up for 24 months, but agree that at each 3-month point you
can give 3 months notice to cancel the contract.
8. Ask "if we
sign by the end of the month..."
Your sales rep will have monthly targets. They'll get
commission and bonuses if they hit their target, and even more if they
over-achieve it. You can often commit to sign up by the end of the month in
return for a better deal.
It's also worth remembering that it's really tough for them
to go back on a deal. If they're willing to charge you $X to sign before Monday
& you don't sign, 9 times out of 10 the deal will still be there on
9. Ask "who do
you usually pitch against?"
Ask the question "Who do you usually come up against in
pitches?". This achieves 2 things:
- You can then speak to their closest competitors
& find out if they’re better/cheaper/both.
- Companies will often offer special pricing when
pitching against their closest rivals.
Sales people are also naturally competitive. If they pitch
against ACME corp 7 times and lose, they're more willing to be flexible with
price if they can win the 8th.
10. Speak To Other Clients
If a company's system isn't suited to you, their sales
people may not tell you. Their clients will give you a far less biased picture.
Ask the company to provide references. Ask around your network to see if anyone
else is using them. Ask the Email Marketers Club.
If another client says "we're doing the same volume as
you and paying half the price," your ESP should either be able to give you
a better cost or a really good reason why they can't.
11. Be nice!
Here’s my bonus tip: Be nice! Life’s much more pleasant &
it can benefit your budget too. The person on the other end of the phone is far
more likely to help you out if they like you. If you make their life really
difficult, on the other hand, there is no emotional reason for them to do anything for you.
Any other tips? Experiences? Disagree? Work for an email service
provider? Let us know in the comments!