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MAY 29, 2001

MARKETING

Are You Serving Spam?
Small-business owners, especially, need to make sure their e-mail marketing isn't leaving a bad taste


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Five years ago, a business advertising its product via e-mail might get a 30% response rate. Today, many businesses find it's less than 5%, say those in the marketing industry.

Overall response rates are falling as e-mail volume rises, with some projections saying it will grow to between 30 times and 40 times the current amount by 2005 -- in large part because of the unsolicited commercial messages known as "spam." "We've trained people to delete mail before they've even opened it," laments John Rizzi, CEO of E-Dialog Inc., a direct-marketing company.

The spammers are so polluting consumers' e-mailboxes, some say, that they're compromising the medium's potential as a viable marketing tool -- not to mention tying up bandwidth and other resources of Internet service providers, which raises costs for every Internet user.

FREE SPEECH?  "Clearly, some kind of control is needed," says Karen Talavera, vice-president of MarketsOnDemand, a direct-marketing company in Chicago. "Spammers are hurting legitimate businesses."

At least a dozen states have passed laws aimed at restricting unsolicited commercial e-mails, and several similar bills are pending in the House and Senate. Most current legislation addresses fraud and privacy issues, requiring that the sender identify his business by name, state a valid return e-mail address, and provide a way for the recipient to "opt out" of future mailings. It also provides for penalties to be imposed on repeat offenders.

Many in the direct-marketing industry and those who rely on it -- including financial-services companies -- say self-policing would be better than restrictive laws. While opponents of legislation aimed at restricting spam cite free-speech issues, others complain that it doesn't go far enough. Instead of requiring companies to allow recipients to opt out, the second body of opinion argues, it should be illegal to send commercial e-mail to anyone who hasn't given specific permission to the sender.

BLACK MARKS.  After heavy lobbying by both sides on Capitol Hill over the spring of 2001, the non-profit Coalition Against Unsolicited Commercial E-mail cited the potential for spam coming from the small-business community in a recent press release. "There are 24 million small businesses in the United States," says Scott Hazen Mueller, the group's chairman. "If just 1% of those businesses sent you just one e-mail advertisement a year, that's 657 e-mail advertisements in your inbox each day...the opt-out solutions proposed by the marketing industry and its allies in the financial-services and other industries are worse than no action at all. Who has time to opt out of 600 advertisements a day?"

Clearly, the volume of unsolicited e-mail is giving Internet marketing a black eye. Although it's doubtful that anyone receives 600 small-business e-mails a day, there can be no doubt that more small outfits are using such marketing techniques. Recent research by The Kelsey Group projects that more than 40% of small businesses will use e-mail marketing by 2005, vs. 11% today. Because the economics of e-mail -- no paper, printing, postage, or design costs -- make it one of the few affordable marketing mediums for many small outfits, it's in the interest of the small-business community to do all it can to separate itself, in the eyes of the consumer, from the stream of spammers.

On that front, here's what the marketing experts advise:

-- Send e-mail only to customers who have invited you to do so. The best way to get or keep a customer is to build a one-on-one relationship, says John Rizzi, president and CEO of E-Dialog Inc., a direct-marketing company. "It takes longer than buying a mailing list, but it's more effective."

-- Once you've been given permission to e-mail a customer, take a tip from Amazon.com: Only send e-mails relevant to the recipient's interests. If he has purchased books in the past, don't bombard him with e-mails about flowers, tools, or whatever else may be gathering dust in the warehouse.

-- Respect the customer's privacy. Don't share the list of e-mail addresses you have compiled to other mailers.

-- Invite your customers to forward your offer to acquaintances. This was extremely effective for a children's shoe store in Denver, says Karen Loveland, assistant professor of marketing at Metropolitan State College of Denver, who advised the owner. "The store was known for doing a good job of fitting a baby for his first pair of shoes. Current customers sent the store's e-mail offers to people they knew who were having babies," she says, adding: "That's so much more effective than a mass mailing."

-- You can't build a one-on-one relationship if you don't respond to each customer in a timely, relevant way.

In some ways, small businesses are in a better position than large outfits to personalize marketing because their customer databases are smaller. Barbara Zaccone, founder of Barbara Zaccone Associates, a Web design and e-commerce company in Cedar Grove, N.J., sends her e-mail newsletter only to those people with whom she has done business or met at a trade show. And she personally responds to every e-mail she gets in response. Such scruples have paid off. Zaccone's tracking software tells her that 70% of recipients open the newsletter -- and 20% of those click through to her Web site. Says Zaccone: "If you compare that to direct mail, where you don't know whether someone opened it or just trashed it, it's very good."

-- In the e-mail, make it clear in the subject line what the offer is and who it's from. "If I'm communicating with you, it needs to be for a specific reason," says Blaine S. Greenfield, professor of marketing at Bucks County Community College in Pennsylvania and president of marketing consultants Blaine Greenfield Associates in East Windsor, N.J. "Don't put something wild and crazy in the subject line just to get them to open the e-mail. You'll get their attention, but then they'll be annoyed."

-- Avoid attachments in your e-mail offer. Many people won't open them because of fears that they might contain a virus.

HONESTY PAYS.  The e-mail marketer who wants to make sure he isn't mistaken for a spammer might want to go further by giving customers a way to link to their profile so that they can find out what you know about them. Other steps: Telling customers how you got their e-mail address, and provide a link to a Web page where you spell out your privacy policy.

Even legislation won't rid the world of spam, says John Lawler, CEO of Email Channel, which provides e-mail archiving and management services. As a founder and former co-chairman of the Association of Interactive Media's Council for Responsible Email, he has spent many hours discussing with legislators and colleagues how to control such e-mail. His conclusion: Like pornography and cockroaches, spam will always be with us. "It's too easy to do it, and there are too many software programs that make it easy to hit and run," Lawler says. "At this point, I'm willing to say there's no solution."

If Lawler is right, all the more reason for the individual business owner to make sure the consumer doesn't see her as part of the problem.


By Theresa Forsman in New York
Edited by Robin J. Phillips
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