DMA Panel: Companies Not Communicating Well With Consumers

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ORLANDO, FL -- Retailers at a panel discussion on CRM at the Direct Marketing Association's annual show yesterday agreed that spam jeopardizes the future of e-mail marketing.


Myriad do-not-spam laws from various states mean that retailers will have to improve their marketing mix and the way they reach prospects, said Michele Demaree, director of privacy at Best Buy Companies Inc.


"In fact, New Jersey is the first state thinking of [creating] a do-not-mail list," Demaree said.


Internet service providers are blocking e-mail to try to reduce spam. For example, a recent e-mail campaign from May Department Stores offering a free coupon for an event was blacklisted because of the sheer quantity. Only when consumers called the ISP and complained in large numbers was May reinstated by the ISP.


Brad Beebe, vice president of marketing at May, said he expects more government intervention in e-mail marketing.


"There's definitely going to be more legislation and, unfortunately, more litigation," he said.


Co-panelist Ricardo Zane, senior vice president and general manager of direct agency iLeo, fears things could worsen if retailers and marketers do not properly handle e-mail marketing.


"If we don't do this right," Zane said, "we'll have a do-not-e-mail list, and soon consumers will say do not communicate with me in the store."


That means permission would become necessary for all forms of customer communication, including wireless.


"Done well, e-mail marketing works," Zane said. ILeo client Gateway uses e-mail to pitch peripherals to customers. Though he did not delve deeper into strategy or results, Zane said e-mail was a major component of Gateway's customer retention strategy.


"The idea of rating an e-mail on the lines of movies, using adults or something relevant in the subject header, again may work only for


large retailers."


Though that self-regulation may not work universally, no amount of legislation will solve spamming from offshore centers, Zane said.


Microsoft is working on a project for retailers to award 20 cents to consumers for each e-mail that is opened. But Zane said he doesn't favor that idea.


"You don't create an incremental customer," he said. "It ultimately mines your loyal customers more effectively."


Offering money to open e-mails will generate response for the first e-mail-borne incentive. But then you want them to come back to the site or store without another incentive.


Efficient segmentation of the customer base helps. Hudson's Bay Co., an iLeo client in Canada, has developed 10 different personas for customers in its database. Tracking shows they react differently in stores.


Hudson's Bay is testing integrated point of sale messaging in three stores that already are showing an incremental lift in sales after accommodating the relevant personas.


The U.S. national no-call list is another worry for retailers. The legal morass is hindering the registry's application. But also unclear is what speech will finally come under its purview.


"Judges may sort it out," May's Beebe said. "Politicians and banks and phone companies may have to comply, too."


The federal legislation allows calls for political and charity reasons as well as from companies with whom customers have existing relationships.


Best Buy's Demaree blamed the media for hyping that registering with the list will eliminate all telemarketing calls.


"[Also], a lot of people do enjoy getting those calls," she said. "The media does not mention this."


Even with the list, many gray areas exist. Upselling during an inbound call may become tricky. Is that the same as telemarketing, because it certainly pushes a product or service over the phone?


And different states have disparate interpretations of the length of a relationship that determines when a company can call a customer. Companies should ensure they have a system in place to handle this issue, Demaree said.


For marketers looking to make telemarketing calls, she suggested bouncing the house list against the federal and state no-call lists.


ILeo's Zane thinks a larger issue is afoot with the no-call registry. Of course, he said, resonance bettered response to calls. But something was fundamentally wrong with the way companies communicated with customers to breed such dissatisfaction.


"It's a wake-up call … we should be putting our efforts into understanding why there's a reason for the list," he said.
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