by Dana Blankenhorn
Volume IV, No. XIII
For the Week of March 27, 2000

This Week's Clue: The Coming Spam Flood

This Week's Clue: The Coming Spam Flood

SSP (Shameless Self Promotion)

Selling the Sizzle while the Steak's in the Fridge

E*Trade's Mortar Strategy

Clues From Amazon and the Infrastructure War

Clued-in, Clueless

These are hard times for anti-spam activists and those who like me just think it's bad for business.

It's a simple case of math. Once you drop the rip-offs and opportunists (most of what I get here) you're still left with a very inefficient medium, but one which is less efficient (currently) than the Web. I've called CDNow Clueless because they are very bad at cleaning their list or renewing permissions, but according to the Washington Post the strategy is working - in spades. 

That means a lot more companies will be building huge lists, and while they may put a process in place for taking people off them, that will still be the job of the recipient. I'm already hearing a lot more inquiries about using e-mail for prospecting (bad idea) from impatient product managers who care more about getting their message out and customers in than about the possible collateral damage. 

Besides, the courts have given e-mail marketers a green light. Washington State's anti-spam law was declared invalid by a state judge on Constitutional grounds. Judge Palmer Robinson (do they have judicial recall in Washington) let an Oregon spammer go, claiming the law is an unconstitutional "restraint of trade."

By that same logic it should be legal to tack all the signs you want to utility poles and tag utility boxes with graffiti, as long as it's commercial in nature. (No, come to think of it, "artistic expression" has even more Constitutional protection.) Spam is a theft of resources, free to send but expensive to receive, Judge Robinson, and even those with all-you-can-eat access still have to pay for it with their time.

Now as anyone who reads this letter knows there are good, sound, legal ways to use e-mail in marketing. E-mail is how you follow-up on customer inquiries, it's how you lead prospects down the sales funnel, and it's how you build your relationship with a customer. E-mail lets you provide value directly, conveniently and regularly. But value is in the eye of the beholder. (If you don't like this issue, please unsubscribe so I don't waste your time anymore.) 

The problem is that while we know a 100% dirty list is worthless, what about a list that's just 50% dirty, that is, half the addresses bounce or build resentment, while the other half get at least a cursory read? At what ratio between good and bad does the "spam risk" overwhelm the value of orders and goodwill? No one knows this - no one has even studied the question. My guess is that, because it has no cost, the ratio is further from zero than anti-spam activists want to admit. 

What can you do about it? If you're using e-mail in your marketing, start with the disciplines of the paper mail market, renewing your permissions and aging your lists. Get more data from your "happy recipients" like addresses and phone numbers. Learn the alternative means to reach them and the right time for reaching them. Provide real incentives for this cooperation, not just coupons but contest entries and (yes, even) cash. 

Most important, integrate your e-mail lists with all your other customer content databases. As Jay Abraham  notes these aren't customers, they're clients, people under your protection. If you want to keep them under your protection, protect them not just from spammers, but from competitors who misuse the principles of sound e-mail marketing. 

SSP (Shameless Self-Promotion)

We have moved our server  and finally have a set of e-mail addresses that make sense. From now on you can always reach me via dana@a-clue.com. You can also reach me at danablankenhorn@mindspring.com. If you know anyone who could benefit from a few good Clues, send this issue to them and let them know subscribing is FREE from our home page.

I write daily for ClickZ, and weekly at Andover.News. I write monthly for  NetMarketing, Boardwatch, and  Intellectual Capital. I've been in Advertising Age and the Chicago Tribune .Once every other month I'm in CLEC Magazine. You can always buy my book . Subscription instructions are at the bottom of each issue.

Remember that it's still journalism that keeps the Clues coming. Give me a shout at 404-373-7634.

Takes on the News

Selling the Sizzle while the Steak's in the Fridge

The America Online marketing staff is the Prof. Harold Hill of the online world. The advertisers pay to sell there, the information providers pay to be there, while the customers pay to experience it all. "And when the man dances, certainly boys what else - the piper pays him."

But do they know the new territory? They figure it's all about selling, and they're already selling "AOL Plus" years before they can provide the service to more than a handful of people. That's how they got Sears to sign a major alliance recently, according to The Standard . On the surface this is just a private label version of AOL, the same deal they gave Wal-Mart, Crate & Barrel, Macy's, J.C. Penney and others. Sears sounds like it's still riding the Clueless Train.

But Dennis Honan, in charge of Sears' online efforts, says AOL Plus is worth it. Forget that it's not launching until summer, forget that it won't be in most Time Warner Cable homes for years, forget even that (even if AT&T agrees to carry it) it still won't be available in more than half the country before 2005. Sears is paying up-front because Honan was told AOL will help him develop all sorts of broadband programming, and he's paying out the wazoo to learn how. In addition to cash, time and opportunity cost, Sears will also demonstrate the service at all its stores, acting as an affiliate marketer. (Don't they know what happens to most affiliate marketers? I guess not...)

E*Trade's Mortar Strategy

It has been nearly a year since E*Trade vowed to get a "brick" strategy, hoping for a marketing alliance with a broker that actually has offices. So far, it has failed in that effort. But that hasn't stopped the company from trying to get the job done in other ways.

E*Trade has bought Card Capture Services of Menlo Park, California, which has a network of 8,500 ATM machines . Those machines can now become Telebank "branches" (E*Trade bought the online bank last year) that could also, in theory, take E*Trade deposits and offer access to account information.

This is clued-in thinking, if you forget for a moment that most CCS machines are in gas stations and depend mainly on hosing other banks' customers for service fees. (These are not the up-market customers E*Trade favors.) CCS also manages to do $72 million in sales with just 150 people - much better than any store can do. Expect the CCS sales staff to now go after higher-margin locations like major malls and theaters, even if they have to pay-up for the privilege. (Redesigning the kiosks to make them more attractive to upscale shoppers wouldn't hurt either.)

These are very smart people. So what if Wall Street doesn't recognize their earnings as it once did - that doesn't mean they need an exit strategy , it just means some moneychangers want fast profits. They still need a branch network, however...

Clues From Amazon and the Infrastructure War

I frankly don't know whether Amazon stock is a "buy at current levels," or whether it will earn a profit "going forward." I do know Amazon represents a great model for how to think, a company you can really "go to school" on. If you pay attention to the issues they're focused on you will do well.

What they're worrying about right now is fulfillment . This should be your obsession too - how do you get orders to your customers as quickly and inexpensively as possible? Their solution last year was a network of regional warehouses. Now they're looking local, buying into one-hour delivery companies like Kozmo  in New York. (In mid-week Kozmo announced geographic expansion to other major markets, including Atlanta.)

There's a Clue here you can adapt to your market. Does your city have courier services? Work out a corporate rate with them, money that will buy them new delivery vehicles (especially trucks and vans). Your share of their sales should evolve into a share of their business, then control of their business. That's your choke point on the local market.

Clued-in, Clueless

Clued-in is Stephen King , on publication of his novella "Riding the Bullet." Write one short story and make the cover of "Time" - is this a great country or what? King estimates he'll get $450,000 for the e-Book, and the publicity is priceless.

Clueless is Stewart Alsop , for claiming that Napster and PJBox.Com have destroyed the music business. The fact is they just reinvented it. Here's a little wager - I'll take positive growth in total music receipts by 2005, and you bet me the industry doesn't make it. Loser has to sit through a demo from a company that says it is "unique" and has "no competition."

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