Playing by the Rules

CALIFORNIA LAW recently defined three types of acceptable e-mail use. Companies can send e-mail to:
1. Consumers provided that the marketer identifies the message as commercial e-mail by beginning the subject line with “ADV.”
2. Consumers who have given permission via an opt-in.
3. Consumers with whom they have a prior business relationship.

While these rules aren’t overly restrictive, similar legislation is coming down the pike nationally, and companies that choose to prospect or communicate with existing customers should be prepared to comply, now. Which of these three methods should they use? It depends on the goal of the campaign, but mostly success relies on the effectiveness of the execution. Let’s look at these three types of acceptable e-mail and how marketers can use them.

Mark E-mail Messages ADV

Marketers who send messages to non-opt-in, permission-based rented lists may not run afoul of regulations if they clearly label their messages “ADV,” but they may still get in hot water with consumers who perceive these unsolicited messages as spam.

Bill Herp, founder and president of Lexington, MA-based E-Dialog, a direct-response e-mail developer, insists that this spam stigma is becoming less problematic. According to Herp, “The problem with spam is not that it is unsolicited, but that it clutters your in-box with random information that has no relevance to your needs and interests.”

Herp’s company designs precision-targeting e-mail marketing campaigns that shrug at the whole opt-in/opt-out debate. After all, the concept of precision targeting was developed in the off-line world, and many marketers, like Herp, believe that it can be adapted whole-cloth for the online world without requiring additional levels of permission.

The secret, Herp says, is maintaining an open dialogue and using the two-way nature of e-mail to converse with consumers, instead of pushing information at them in the traditional one-way stream of direct mail.

“The thing is that just like all other direct-response channels, once people who are responsible get involved in the business process, the significance of opt-in versus opt-out will wane,” says Herp. “The work we’ve done with lists that are not specifically opt-in speaks to that. You can be responsible, not because they’ve given permission, but because they will like your offer.”

Not everyone agrees. Says Rosalind Resnick, president of NetCreations, a New York-based opt-in-only list management firm, “Mailers who mailed to other lists have found that response rates aren’t as good. There are more negative lists. It’s not that we want to be P.C. [politically correct], but if you mail to people and they complain, it’s not in the marketer’s favor.”

Get Permission to Market

Marketers with aversions to controversy may want to pursue permission marketing methods. According to a study released in October 1999 by IMT Strategies, a New York-based sales and marketing research and advisory firm, more than half of all e-mail users feel positively about permission e-mail marketing. Nearly three-quarters of users respond to permission e-mail with some frequency, said the survey.

The definition of what constitutes permission or opt-in e-mail is still vague. An opt-in list usually involves subscribers affirmatively registering for e-mail messages, whether on a Web registration form or on the phone. An opt-out list usually involves a list owner sending a message asking customers who do not wish to receive commercial e-mail messages to respond. A double opt-in list follows up a Web registration by sending an e-mail to the registration address confirming the opt in by requiring that the subscribers respond to confirm that they wish to stay on the list.

Many opt-out lists have response mechanisms, but just because a customer hasn’t responded to an opt-out message by unsubscribing doesn’t mean he or she wants to receive messages. It could just mean that he or she is completely unresponsive by e-mail. Double opt-in is generally best because it filters the names, providing e-mail addresses that are likely to be the most responsive.

Unfortunately, these opt-in lists may be quite expensive. Some opt-in lists that offer recipients bonus points or cash to open mail may deliver prospects whose motivations have little to do with buying your product.

In practice, permission e-mail marketing means marketers must build or rent opt-in lists. Rented opt-in lists may be other companies’ house files in which the customers have agreed to receive third-party e-mail offers, or they may be opt-in networks, such as NetCreations’ PostmasterDirect, Yesmail.com or ChooseYourMail.com.

To make opt-in lists work:

1. Ask questions of the list’s source. Get a feel for what it offers and why people have chosen to be on it.

2. Understand the pricing system. Tony Priore, vice president of marketing for Yesmail.com advises, “Price is generally based on demand and the quality of the information you get. Ask if the price is á la carte or if services are bundled in. Some companies charge for transmission or other services, so you need a complete picture before you compare price.”

3. Find out how the list was built. Is it opt-in, opt-out or double opt-in?

4. Join the list to see what it’s like. What is the volume of mail? What kind of messages do you get? What are they saying to consumers? How easy is it to opt-out?

5. Find out who has used the list successfully—not just who has tested it. Most successful e-mail marketers today are using e-mail to communicate with existing customers, not prospects, says Keith Wardell, founder and president of Shop2U.com. In other words, they are relying on the prior business relationship model to make e-mail pay.

Prior Business Relationship

In fact, the most solid of the three acceptable uses of e-mail may be to contact consumers with whom the mailer has a prior business relationship—a standard that has already been legally established for fax marketing.

So what does “prior business relationship” mean? A prior business relationship exists between a company and any customer who has registered, inquired or purchased, online or off, with permission or without.

By its very nature, “prior business relationship marketing” means follow-up communications to existing customers and prospects.

While this is a successful model, it limits any marketer with an impetus to acquire new customers. But the off-line world concept of endorsed or affinity mailings may be adapted to the “prior business relationship” framework for successful acquisition efforts. In other words, two complementary companies, such as Spiegel and American Express, mail co-branded messages to one another’s carefully selected, screened house file.

“What we see is that this is the only way to prospect legitimately through e-mail with the law now in California and laws in the next year expected that will probably follow that law,” says Wardell.

Forming a strategic alliance with another company is more labor intensive and time-consuming than simply renting a list of names, but with the increasing restrictions on marketing, if you want to market using e-mail, you’ve got to be more aggressive in terms of how you come up with names.

In e-mail marketing, you can cut complaints, boost response and comply with the law if you:
1. Clearly mark your message as an advertisement.
2. Clearly identify your own company as the sender.
3. Send your message only to targeted lists of consumers who match your customer profile.
4. Provide a simple way for consumers to opt out of receiving further messages.
5.Suppress the list against your own do-not-mail list, The Direct Marketing Association’sE-mail Preference Service (e-MPS) and any other applicable global opt-out lists.
6. Are willing to respond to customer concerns and engage in an open dialogue.