Private Property
Customer-privacy issues and regulations aren’t just affecting consumers; they are changing the rules of business-to-business marketing. Is your company doing enough to respect your prospects’ privacy?

By Julia Chang

Checking e-mail these days requires sifting through a sea of subject lines that declare you’ve ‘won’ a free gift. Or that hawk a product you’ve never needed, nor ever plan to. Or that request personal information. But while e-mail users have begrudgingly accepted spam as a fact of life in their personal accounts, nowadays they’re likely to see these messages clogging their corporate inboxes, too.

These nuisances aren’t limited to spam. Like other consumer trends that trickle down to the business-to-business sector, unsolicited phone calls, faxes, and e-mails have arrived with a vengeance as invasions of customer privacy. Consumers are bombarded with canned messages hawking cheap Viagra.

The b-to-b equivalent are canned messages touting business products and solutions executives don’t need. These unwanted communications are becoming a scourge on marketing and lead generation.

‘Customer privacy will be one of the most important topics over the next three to five years’ in the b-to-b world, says Anthony Nelson, chief customer officer for Salesnet, a hosted customer relationship management

(CRM) software provider based in Boston . ‘We are at a tipping point in the use of digital data, and a lot of companies and the government are struggling to see how existing regulations apply.’

Legally Speaking
This year has been a tough one for direct marketers who pay attention to regulations. The Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (CAN-SPAM) went into effect in January, requiring companies to conspicuously label their commercial e-mails and provide clear methods to opt out of future ads. And although the National Do Not Call Registry remains limited to consumer phone numbers, new rules written into Do Not Fax laws apply to b-to-b companies. Starting in June 2005, companies cannot send faxes to customers without prior written approval ? which means that having a so-called ‘established business relationship’ (defined as having had a payment or an inquiry from a customer within a certain time frame) will no longer be enough to justify fax communications.

But with privacy rules still relatively new, compliance hasn’t been exactly stellar. According to a report by Denver-based e-mail security software provider MX Logic, which tracks 10,000 random unsolicited commercial e-mails a week, CAN-SPAM compliance was 4 percent in September ? the highest percentage the company has observed. The threat of fines for noncompliance does exist: In January, fax-number database provider was slapped with a $5.4 million fine for allegedly bombarding consumers and businesses with faxes ? in one instance, the company reportedly tied up hospital phone lines with automated dialing that searches for fax lines.

And in March, Internet service provider (ISP) Hypertouch filed a federal lawsuit against the owners of home-improvement Web site, claiming the site sent unsolicited e-mail to subscribers with fraudulent headers and without required contact information. The ISP is asking for up to $100 in damages for each e-mail sent.

B-to-b marketers, however, say they aren’t feeling too much regulatory pressure. According to a recent survey by Kern Direct, a direct-marketing agency based in Woodland Hills , California , 71 percent of 114 companies (two thirds of which are b-to-b) stated that the Do Not Call and CAN-SPAM laws would have no significant impact on their marketing activities. This isn’t because the industry takes the laws lightly, marketers say. Rather, it’s because marketing departments have already taken steps to avoid being labeled as privacy invaders. ‘A brand name, if it’s done right, should stand for a certain level of trust,’ says Matt Leonard, director of privacy and information policy with Harte-Hanks, a direct-marketing services provider based in San Antonio , Texas . ‘Ultimately, the proof is in how you deliver your message.’

Keep Out
Lead generation in a protective environment has created challenges for sales and marketing departments. Many marketers are still employing the ‘spray and pray’ method, says Neil Berman, founder of Neighborhood Email, an e-mail marketing software and service provider based in Indianapolis . ‘I frankly receive more unsolicited e-mail in my company inbox than solicited,’ he says. ‘I’ve got a spam problem. But I don’t filter because I’m afraid I’m going to throw the baby out with the bathwater. Spam is a plague on [direct marketers’] business.’

If your digital missives cause more ire than interest, you’re creating ‘the possibility of brand aggravation,’ Berman says, even if you have an existing customer relationship. Berman relates his own experience: After signing up for online bill payment with his local phone carrier, he says he started receiving marketing messages without permission to his AOL address.

‘That was a tactical error on their part,’ he says. To retaliate, Berman clicked the spam button in AOL. ‘We’ll see if they can get those e-mails to deliver now,’ he adds.

Indeed, the ease with which ISPs and corporate servers are blocking unwanted e-mail means that marketers have to be more than diligent when it comes to antispam practices. Major providers such as AOL, EarthLink, Microsoft, and Yahoo! are spending millions to block junk e-mail, which does affect b-to-b, as many prospectsespecially in small business often give consumer accounts as their primary contact information.

Additionally, 90 percent of companies use some method of filtering to keep un wanted e-mail out, according to a recent study by Return Path/Forrester Research.

‘For years, marketers were excited about having a six- or seven-figure list [of e-mail addresses]. They were excited about how fast they could get the mail out,’ says Steven Brown, vice president of marketing for Lyris Technologies, an e-mail marketing software provider based in Berkeley , California . ‘On the receiving end, the application service providers were proud about how much mail they delivered. But now they talk about how much mail they’ve blocked.’

Salesnet’s Nelson says his company will limit the number of e-mails a CRM client can send at once to ensure that it isn’t creating the potential for spam. He recently denied a request from a b-to-b user who wanted to send mass e-mail. ‘A guy wanted us to automate an e-mail communication to fifty-thousand people, and he tried to tell me they were existing customers and he knew them all by first name,’ Nelson says. ‘He wanted to blanket market a certain industry vertical, but he’s not going to do it. In order to create some kind of safeguard we have to limit the number of e-mails anyone can send out.’

Getting In
The bare minimum for marketing responsibly in the era of customer privacy means purging your prospecting universe of numbers from Do Not Call or Fax lists, and crafting e-mails that follow opt-out guidelines and avoid misrepresentation. This shouldn’t be hard for legitimate marketers, Brown says. ‘You can still alienate people and cause problems with your business while complying with CAN-SPAM. There’s the letter of the law, and the spirit of the law, and we would encourage people to stay with the spirit once they have the letter down.’

This means customer communications have to be a two-way street. Opt-in lists are an industry standard, and companies are going through the pain of doing exhaustive opt-ins to confirm customer permission ? even in the newest form of unregulated communications such as text messaging, also known as short message system (SMS). ‘We make sure every single person [who receives SMS] is a confirmed opt-in,’ says Jared Reitzin, CEO of mobileStorm, a company based in Van Nuys , California , that executes voice, fax, wireless text, and e-mail messaging for companies. SMS customers receive an initial message with a code to their phone. They must punch that code into an online registration site to receive further text messages. ‘If they go through the whole process, they are confirming that it’s their number and they want your messages,’ Reitzin says. Otherwise, your text messages could become ‘spit’ (spam over Internet telephony), which promises to be the next privacy battleground ? an especially hot one, as most users pay per SMS they receive.

Similar messaging companies note that in a multifaceted marketing campaign, companies should keep a consolidated permissions database. ‘If I click an e-mail that tells you I don’t want to hear about this product, then I had better not hear about it through automated phone calls or SMS either,’ says Steve Spencer, president and chief technology officer for Twelve Horses, a provider of e-mail, fax, Web, and text-messaging software based in Reno, Nevada. ‘All of our communications have an opt-out method.’

The rise of consultative over transactional selling also means that prospects expect more from communications, as they don’t have time to deal with a deluge of untargeted messages. ‘I get calls all the time from people trying to sell me stuff, five or ten a day,’ says Eric Holmen, vice president of professional services for SmartReply, a voice-messaging technology company based in Irvine , California . ‘The rep is just trying to do a good job, but all those companies are really failing ? I return one out of every two hundred of those calls.’

In response, many marketers are tracking customer interest to see who is responsive and when they might be ready to buy. Lyris’ software, for example, enables marketers to track which URLs in e-mails prospects click on, as well as measure the number of pages prospects visit and the time frame in which they visit them, to gauge where they are in decision making.

‘You can know, for example, that people who look at your price page are more interested in buying than people who look at the main product page and leave,’ Brown says. ‘We have the ability to collect implicit preferences or demographics.’

Value must be inherent in the messages if they are to maintain a customer’s interest. Kern Direct will send on behalf of its enterprise software clients white papers that customers can read in exchange for answering four to five questions about themselves and their software needs, data that can be downloaded to a CRM system. ‘But we also understand that there is a definite buy cycle to big-ticket enterprise software,’ says James Pennington, Kern Direct’s vice president of strategic marketing. To that end, the company will align communications with the stage the prospect is in. In the interest stage, for instance, prospects typically request industry reports. But when they are in the evaluation stage, they want more case studies or white papers on individual market segments, or they’ll attend Webinars. ‘We’ll e-mail or mail information that appeals deeper into the buy cycle, until they are sales ready and it’s time for a real live person to meet with them,’ Pennington says.

Even in telemarketing, in which reps have little chance to show value, technology is helping companies create targeted messages in an abbreviated time frame. Holmen’s company, SmartReply, automates prerecorded messages meant to be left as voice mails. These messages are scripted to include key words and concepts pressing to client needs. ‘The messages are very intentionally written; we’ve got trigger words and phrases but make the script sound natural,’ Holmen says. For instance, for one of its b-to-b clients, a legal publishing firm, it leaves voice mails between 2 and 3 a.m. for law-firm prospects; messages stress that lawyers need to stay up-to-date on statute changes. Although there are few legal implications for b-to-b telemarketing, Holmen says SmartReply adheres to ethical practices to avoid being perceived as a nuisance; for instance, it will not perform a campaign more than once every two weeks. Holmen claims he receives only an average of one opt-out request per 10,000 b-to-b calls.

‘We are not as concerned about the law as we are about best practices,’ he says. ‘A best practice says you do not call someone’s voice mail every night of the week and leave a message. We want our messages to expand the efforts of a quality sales team, [rather than] just being perceived as telemarketing.’


The Letter of the law
Not sure if you’re breaking a customer-privacy law? Here’s a quick rundown of the legislation affecting b-to-b:

Do Not Fax: Do Not Fax is part of the Telephone Consumer Protection Act. Businesses cannot fax an unsolicited advertisement unless they have an established business relationship (EBR) with the recipient, which means receiving a financial transaction within the last 18 months, or a business inquiry in the last three months (although the EBR exemption varies by state). Starting June 30, 2005, you must receive written customer permission to send a fax. All faxes must contain identifying information (date and time sent, phone number, and name of company) in a margin of each page or on a cover page. Fines can reach up to $11,000 per violation.

CAN-SPAM: Each commercial e-mail must have clear and non-misleading data in the ‘from’ and ‘to’ fields, a clear subject line, an accurate and identifiable domain name and e-mail address, a clear opt-out function, and a valid postal address. Companies must also enable the opt-out function for at least 30 days after sending an e-mail, and must honor opt-outs in 10 business days. Any e-mail with the intent to sell a product or service even if to an existing customer falls under these rules. Fines also can reach up to $11,000 per violation.

For more information visit the Direct Marketing Association (, the U.S. Federal Communications Commission (, or the Federal Trade Commission ( online.

The Spirit of the Law OF THE LAW
Responsible marketing goes beyond following privacy rules. Click the best practices below to learn more about crafting legitimate campaigns that also drive sales:

Read up on the law, and check how any marketing technology you use will help you comply. StrongMail Systems, an e-mail application server software provider in Redwood Shores , California , holds seminars for marketing and legal departments to inform them about the law and what StrongMail does to simplify compliance – for instance, automating signatures that include the required identifying information. ‘CAN-SPAM has left many people confused,’ says Rod Butters, vice president of marketing and strategy. ‘It’s not just about brand perception; e-mail that isn’t compliant doesn’t get delivered.’

”A lot of what’s driving the privacy laws is that people are feeling overwhelmed” by communication, says Carol Meyers, vice president of marketing for Unica Corporation, a provider of enterprise marketing management software based in Waltham, Massachusetts. ”Companies are moving to something we would call ‘right-time marketing.’ That means getting smart about the buying process and knowing when customers do and don’t want to get information.” Many companies also now track how many times a prospect is contacted to make sure not to bother them with too many calls or e-mails, and they are consolidating permission across different modes of contact, whether it’s voice, text messaging, or e-mail.

This not only means using recency and frequency technology to determine who has expressed interest and to what extent, it also means refreshing CRM data. ”Too many companies say, ‘Well, I’m CAN-SPAM compliant, I’ve been gathering opt-in data for ten years,”’ says Steve Spencer, president and chief technology officer for Twelve Horses, a messaging technology company based in Reno, Nevada. ”People are assuming stale data is okay to use.

That’s a great example of how you should use opt-in confirmation to make sure a customer wants to hear from you.”