In Excess

ANYONE WHO’S HEARD the collective groan of co-workers logging on to their e-mail the first morning after a long weekend knows that electronic messages are proliferating.

If there isn’t a glut of e-mail in consumer’s inboxes yet, there soon will be. The number of such messages from marketers is expected to increase fortyfold by 2005, reports Internet marketing analysts Jupiter Communications, New York.

Marketers wonder if the inevitable dip in consumer response that will result from this glut has begun already. Some admit response has been flat during the second quarter of 2000.

“Globally, there is a fear and expectation that what happened to banners will happen to e-mail,” declares Steve Parker, senior vice president of marketing at MyPoints, San Francisco, a company whose Web site offers rewards points for making online purchases. MyPoints has an 8-million-name database. “When banners first came out the response was extraordinary. Three years ago, I was getting 2-1/2% response. Now, it’s about a half-percent response.”

Marketers also worry that rentable lists with quality names are being overused. “I think our industry may go the way of the catalog business,” cautions Rosalind Resnick, chairman and CEO of permission-based e-mail provider NetCreations, New York. “If we can continue to use opt-in lists and highly targeted lists, then we’ll continue to have a viable industry, but by overmailing, we may wear out our industry.”

These pressures have caused online sellers to invest in their own customer base to maintain their share of consumer interest.

“Only those companies that build relationships with their customers are going to survive the full inbox because their customers are going to respect the mail they send,” observes Geoff Smith, director of relationship management at e-mail marketing services provider ClickAction, Palo Alto, CA.

Marketers and list professionals insist that relevant offers to consumers who opt in to receive them are a sure bet even in clogged mailboxes. But the term “relevant” is evolving. E-Dialog, for example, a Lexington, MA, e-mail campaign firm, delivers what CEO John Rizzi calls “precision marketing.” E-Dialog says response rates vary widely, from 3% to 4% to as high as 30% to 40%.

For a campaign this spring, Boston start-up eGrad2000.com wanted to build a house file of college graduates. Half a million e-mails went out to graduating seniors across the nation in May asking them to sign up for the Countdown to Graduation campaign. The incentive: a free trip to Europe for the student and nine friends.

Each of seven e-mails had a theme: money matters, graduation statistics, travel, moving, jobs, networking and celebrating. The first message contained the student’s name, school and graduation date. Each succeeding e-mail became more personalized as E-Dialog tracked the student’s visits to advertisers’ sites and travels around the eGrad2000 site, as well as additional details students added to their registration profiles.

For instance, a woman who said she’d been hired by Goldman, Sachs & Co. in New York did not receive the e-mail about finding a first job. Instead, she received one about how to be successful on her first job, along with a suggestion to join the network of students from her Boston college moving to the Big Apple.

Some 1,500 versions of e-mails were transmitted. Plus, a low-key suggestion to pass the e-mail on to friends spread the campaign from 60 schools to 600. The campaign ended with about 200,000 names in eGrad2000’s database, and an opt-out rate of less than 1%. “The goal of that personalization is to make each message (and the accompanying ads) continually relevant to the graduate,” says Thorp Foster, president of relationship marketing at eGrad2000, who is sending more targeted post-graduate offers to the database.

Sometimes, though, the relevancy of a message is best determined not by what customers ask for now, but what they did in the past. Kathryn Grant, Sharperimage.com’s senior manager of Internet strategy, recently tested whether people who had previously purchased the Ionic Breeze air purifier would be interested in the upgraded Ionic Breeze Quadra. The e-mail stated that because of the previous purchase, the customer might want to know about the new version.

Grant wasn’t sure what to expect, and given recent concerns about online privacy, she wondered if some customers might be unhappy to learn the San Francisco marketer kept such close tabs on them.

But there was a 50% lift in response among customers who were recognized as Ionic Breeze buyers compared with those whose past purchases were not mentioned.

“I think that’s possibly because it’s the closest you can come to greeting someone in a store and saying, `I know you like this item and we just came up with a new one,'” Grant observes.

Hitting on exactly what a customer would like to hear about means following what they respond to – and what they reject. “Anybody doing e-mail marketing has to pay attention to opt-outs,” advises Eric Zilling, president of Internet marketing company Impower in Princeton, NJ.

San Francisco-based Charles Schwab & Co. Inc. found that out when it sent some customers an e-mail they didn’t request.

The brokerage house offers a dozen e-mail products to its 3.5 million online customers who opt in to receive messages. Schwab’s retention and customer-development tools include an individualized end-of-the-day stock report called My Closing Summary.

Figuring this stock report is a high-value product customers would appreciate even if they didn’t ask for it, Schwab tested the report by sending it to a group of people who subscribe to other e-mail products.

The opt-out rate was low, but “we realized that even though people did not unsubscribe, their overall [use of the products and services offered in the e-mail] was lower than those who didn’t subscribe,” says Giddeon Sasson, president of the electronic services division. “The risk of them developing an unfavorable opinion of e-mails from Schwab was too high for us to keep sending the e-mail.”

At Redenvelope.com Inc., one of the best ways to retain the customer is to maintain the brand. Since the purveyor of premium gifts is not yet personalizing beyond using customers’ names, e-mails are crafted to define the brand. For this reason, the majority of the San Francisco company’s e-mails are sent in hypertext markup language. Although marketers agree that HTML generally pulls two to three times better than text-based e-mails, probably because pictures speak louder than words. Redenvelope.com relies on it for a different reason. “It’s a much better representation of the brand,” remarks Lesa Musatto, vice president of marketing and business development.

She points to the catalog Web site with its clean lines, striking photography and few items per page to illustrate her point. “As customers look at the e-mail, then link to the online catalog, it feels like a seamless integration.”

She also typically limits offers to one per e-mail. The July Fourth promo, for instance, featured an apple crisp kit as a hostess gift, and was succinct like all Redenvelope e-mails. “We use copy only to support the visual images,” Musatto comments.

“The best Internet models run on two legs,” observes John Herr, vice president of sales and marketing at Buy.com, Alisa Viejo, CA. One leg is brand marketing and the other is direct marketing. “If you have one without the other, good luck.”

Herr follows his own advice in targeting e-mails to the company’s 2.5 million customers. People register on Buy.com – a site featuring 1 million high-tech products for sale – to receive offers on products in which they are interested. The Web site enhances each file with buying behavior as it becomes available along with demographic data from an outside consumer database. The company uses these dozens of data points to target e-mail offers.

For a six-week promotion using e-mail and other channels to entice new members this summer, the site employed branding and direct marketing techniques. The company staged a contest with a grand prize of a BMW X5, as featured in the James Bond film, “The World Is Not Enough.” The Bond theme was an elegant brand-builder for the seller of high-tech products, Herr points out. Half a million people registered during the contest, which ran from May 15 to June 30. By offering free shipping to whomever purchased something while registering, the company achieved a conversion rate of between 5% and 10%.

“When you bring the best of traditional marketing together with opportunities from new mediums, that’s when you get the best response,” remarks Herr, “that’s when you get the best response.”