Permission-based targeted e-mail is proving to not only be a viable marketing tool, but an essential one according to many recent studies and research reports. While increasingly effective, the volumes of e-mail being sent and received is also increasing. As the readers separate the wheat from the chaff, it is imperative to craft the message so as to not be deleted before being read or swept into the dungeon of a bulk folder, never to be seen again. When hunting for the sale, do so as a sharp shooter, not Elmer Fudd with a shotgun. In part one of this article, we will discuss the problem of spam and the rise of permission-based e-mail marketing as valuable sales tool.
The Wages of Sin
With federal legislation only a matter of time and 26 states currently having laws against spam, it is wise to ensure that e-mail solicitation be permission based. Not only does a firm risk violations of the law when irate consumers complain, but the good will and company image can suffer tremendously. Acquiring e-mail addresses from a third party without having a legitimate opt-in source or prior business relationship is very risky.
Conversely, targeted permission-based e-mail is very profitable, not only in sales but in increasing customer loyalty and communication. When one observes the customer in considering an e-mail solicitation, the consumer should be viewed in the most differentiated fashion possible.
New York-based DoubleClick interests include being an e-mail application service provider (ASP) and e-mail software vendor. Its "DoubleClick 2002 Consumer E-mail Study" surveyed 1,000 consumers in September 2002, the third such study in as many years. When queried as to their preferred method of contact from favorite online merchants, 75 percent chose permission-based e-mail compared to two percent for unsolicited e-mail. With the average respondent getting 254 e-mails weekly, up from 159 in 2001, 90 percent cited unsolicited promotional e-mail as the number-one consumer concern.
Harris Interactive of Rochester, New York, is a market research and consultant firm that is best known for the Harris Poll. In a survey of 2,837 respondents taken between September 3 and 5, 2002, 59 percent of the respondents identified with "Legitimate e-mail marketing is for products or services I've specifically requested information about, spam is sent without my asking for it, even if I recognize the company that sent it." Only 16 percent do not differentiate between legitimate e-mailing and spam.
Scott Knoll, vice president and general manager of DoubleClick's Marketer Solutions division offers advice on third party lists. "In general, as long as groups of consumers are asking to receive offers from third parties it is not spam. What we suggest is to make sure the list is from a reputable source. There is really a difference in the quality of lists."
In the report "Turning E-Mail Campaigns From Trash to Cash," Kevin Scott, senior analyst for AMR Research of Boston, makes the following observation: "Since e-mails are much cheaper than direct mail, all of the sudden the 'throw it against the wall and see what sticks' strategy seems like a good idea. It's not. You run the risk of confusing and upsetting your customers, making each mailing less and less effective."
With e-mail breeding like rabbits, consumers have found ways to manage the deluge to an extent. In the DoubleClick study, 76 percent report rarely or never reading e-mail in the bulk folder. Then there is the tried and true method, using the delete key. The study also stated that 60 percent are opting to delete unsolicited e-mails without reading them, up from 45 percent in 2001.
Half of the respondents in the DoubleClick study use a filtering feature in their e-mail program that sorts e-mail into a bulk folder. Bill Nussey, CEO for Silverpop, an e-mail solutions provider headquartered in Atlanta, GA gives an overview on the filtering. "Filters are designed to pick up words and patterns in the subject line like 'free', 'Website', 'now', 'spam', 'sex' or clues other than words like too many exclamation points or bolded upper case text. Filters also catch red colors." Additionally, pressure is increasing on Internet Service Providers (ISPs). Privacy decisions in the courts and public outcry have forced the hand of ISPs to offer remedies to customers, including providing avenues for reporting spammers.
Managed e-mail service providers are also very strict regarding spam. Knoll explains the DoubleClick policy on client spamming: "It is up to the legitimate players in the industry to set really high standards and self-police. DoubleClick has begun efforts to build a coalition of legitimate e-mail senders to elevate this. We have fired some of our clients for too many complaints. Our rate for what constitutes too many complaints is ten per million mailings and we inform the customer and monitor closely after five complaints. We collect complaints from the ISPs as well as complaints directly to us."
The policy on spam is even stricter for Silverpop clients according to Nussey. "One valid complaint and they are warned, a second valid complaint and we will terminate their access."
With the increasing number of e-mails, rise in consumer sophistication, and legal deterrents, enterprises must consider their approach with care. A crude, annoying solicitation can produce a manifestation of the old stimulus/response theory in the form of a backlash, while a poorly designed campaign only results in the e-mail being dispatched to cyber never-never land unread. Neither can be construed as successful.
Don't Become Part of the Problem, Instead Become Part of the Profits
While there is a clamor and outcry about spam, there is also widespread consumer acceptance of permission-based e-mail with very positive results to prove it. Harris reports that 66 percent of adults nationwide, 137 million, are online. Of these, 46 percent have a household income of $50,000 or more. In the Harris research, only 14 percent do not request legitimate e-mail marketing; 71 percent make a purchase based upon e-mail marketing.
DoubleClick reported in November 2002 in its "DoubleClick Q3 E-mail Trend Report" some very positive data gathered from analysis of its DARTmail e-mail delivery technology involving over two billion e-mails from hundreds of its clients. The study revealed a click-through rate of 6.13 percent being led by consumer products and services at 10 percent. For every 1,000 e-mails sent there were more than two purchases averaging $133.65 per order, with the revenue per e-mail sent being $.34.
Additionally, results from the Association for Interactive Marketing's April 2002 survey "nlock the Power of Smart Marketing,"revealed the positives of permission-based targeted e-mail. The respondents reported 15 percent of their interactive sales came from e-mail-based promotions and 66 percent said that their sales from e-mail increased by 50 percent since 2001.
In the "DoubleClick 2002 Consumer E-mail Study," 59 percent of the respondents indicated making a purchase at a retail store after receiving an e-mail. The figures for purchases after receiving an e-mail were also impressive for catalog (39 percent) and via the telephone (34 percent). Also, 44 percent of the respondents reported purchasing at a later point in time, demonstrating the latent value of e-mail marketing.
It can be concluded that permission-based e-mail marketing is a valuable marketing tool if done correctly. But there are many issues and considerations to be noted in how this is to be accomplished in the war of the e-mail inboxes. In part two of our discussion, we will focus on the best practices to optimize this valuable marketing medium so as to produce profits and avoid problems.
Bruce McCracken is a business writer with specialization in outsourcing. His coverage areas are primarily in IT, eCommerce, CRM, HR, and supply chain/distribution with focus on small to mid-sized companies. He may be e-mailed at email@example.com.