Want a cost-effective way to build your business by nurturing your present and future customers? Then create an HTML newsletter.

In this challenging economy, small businesses should consider the e-newsletter as a vital part of their marketing plan to distinguish themselves from the competition and allow potential customers to get to know them over a long sales cycle. E-mail marketing software providers Constant Contact in Waltham, Mass., and iContact in Durham, N.C., help customers launch permission-based e-mail campaigns through step-by-step templates and easy contact uploads.

“Newsletters create top-of-mind awareness," says Ryan P. Allis, CEO and co-founder of iContact . "It’s important to do e-mail marketing right and branding yourself with your local customer is what an effective permission-based email marketing campaign can accomplish.”

How to get subscribers

Encourage your customers to sign up for your newsletter directly from your website where they can quickly provide their information and choose exactly what kind of information they want to receive from you. Both iContact and Constant Contact provide an archiving function so potential subscribers can view previous newsletters’ content.

Potential subscribers can also sign up for your newsletter via a signup sheet provided at your retail counter, conference, workshop, or presentation. Make sure, though, that on the signup sheet, as well as on your website, you let these signups know what the newsletter will contain and the frequency of your campaigns. Says Allis, “It’s critical that you disclose what they’re signing for so you can sell them the benefits.”

Under no circumstances should you disclose your contact list to anyone, but consider broadening your contact base by a partnership with another comparable business. You can publicize their event or workshop on your newsletter and they can do the same for you.

What your newsletter should contain

First get the basics right with a clear subject line that reveals your company’s name. The line can be creative or more straight-forward, but it must set up the reader’s expectations of what’s to follow. Allis says that once a subscriber opens the newsletter then you can continue to build your list, expose them to links, send valuable content, and get people to become clients to take action. Taking action includes customer purchases, visits, and donations. “What matters is engagement with your customers, not size, “Allis says, “You need to know what percentage of your clients are clicking through.” He suggests using list segmentation for a specific promotion and integrating video and e-mail links with social media tools such as Twitter and Facebook so you can receive more viral views of your content and receive higher click-through rates.

Next, figure out what you want to say. “Write great content," advises Eric Groves, senior vice president of worldwide strategy and market development at Constant Contact. "Stop writing about you and write about what you know. Make their experience on your newsletter fun and always have something that customers are interested in. Consider attributing survey questions to your customers to get them engaged."

How the information is presented is also important. "Make your layout look professional," Groves says. "A reader’s eye can’t digest content as if they were reading a book, so include white space and graphics. We make it easy to match your colors so your branding stays consistent.”

Groves suggests using third party content from other newsletters, with their permission, of course. RSS feeds and websites can add to your content to make your newsletter more professional.

Cheap marketing tool

Rock Blanco, CEO of Prime Numbers Technology in Medfield, Mass., a year-old travel database company would be “lost without” his Constant Contact-generated newsletter. He communicates industry trends, products, and news via his newsletter, which also serves as his public relations champion. “One hundred percent of my sales and marketing effort is managed by Constant Contact,” Blanco says. By observing his click-through rate, he’s able to assess where his subscribers are spending their time. He also uses Constant Contact’s survey function to generate advance and specific customer support for his new products.

Everyone can afford to send an HTML newsletter with iContact and Constant Contact pricing their monthly fee below $20 per month for 500 contacts. Both companies also offer a free trial.

iContact and Constant Contact give their customers numerous tools via tutorials, webinars and videos to meet their marketing needs and make them successful. “We’re here to increase the lifetime value of your customer base,” says Allis.