Click here to send marketing e-mail: permission-based e-mail potentially could transform bank marketing. While it faces a few conspicuous challenges, the concept encourages more interaction between bank and customer--foretelling the rise of a potent new customer-retention tool.

• Author: Bernstel, Janet Bigham
• Position: Cover Story

There's an old saying that a business can succeed only by being one of three things: cheaper, faster or better. Not so with e-mail marketing. Not only is it faster and cheaper, it's also interactive and trackable, which clearly makes it a better customer retention tool than many other marketing methods.

"At mere pennies per message, e-mail enables organizations to communicate with their customers at the frequency necessary to establish deeper relationships," says Peter McCormick, vice president of marketing for ExactTarget, an Indianapolis e-mail marketing software provider, "and encourages two-way communication."

There's also the higher response rates encouraged by the ability to personalize, a shortened production cycle (it takes minutes, not months to produce communications) and results that are available online instantly. All this is a marketer's dream.

Unfortunately, the breathtaking ease of e-mail marketing has created its own evils. Thanks to trashy rental lists and some unprincipled marketers, unsolicited mail has swamped inboxes. Spam now accounts for 50 percent of all e-mail messages sent over the Internet. And according to the FBI, criminal e-mails that "phish" by trying to lure customers to fraudulent websites or "brand spoof" in hopes of tricking customers into giving out personal information, are the latest Internet scams.

The result of this unwanted or fraudulent deluge is a serious setback in deliverability, as outraged consumers and anxious Internet service providers (ISPs) turn to spam filtering techniques. Jupiter Research's Marketing Operations report, titled "The State of E-Mail Marketing," states that 71 percent of respondents said spam filters were erroneously blocking their messages, and 59 percent said they have experienced decreased click-through rates as a result of blocked messages.

Despite the distribution problems caused by fear of fraud and the loathing of spam, recent statistics show that e-mail "open" and "click-through" rates remain strong. Nearly nine out of ten respondents to a recent DoubleClick survey labeled spam as the number one problem with their e-mail experience, yet over 90 percent reported receiving some kind of permission-based e-mail. At the root of successful e-mail marketing lies customer opt-in.

Increase click-through

Cutting through the e-mail clutter is one of the great challenges for financial services institutions. Fortunately, there is an inherent trust associated with a banking relationship, and messages from financial institutions enjoy double-digit "open" and "click-through" rates. (See table on page 28, "Customers Tend to Read Their Bank E-Mail.")

"The performance on service messaging in particular is through the roof, with four times the 'click-through' rates of an average marketing message," explains Michael Della Penna, chief marketing officer of New York-based Bigfoot Interactive. "Marketers are paying attention to that."

But in order to not be viewed as spam, a bank's message has to be relevant.

"The trust banks are trying to engage the customer in a communication so they understand what the customer needs and can deliver against that need," explains Al Diguido, CEO of Bigfoot Interactive. "They make sum the customer knows when they receive a message from their bank, either through the subject line or from the address, that this is the information they requested."

The Provident Bank of New Jersey has enjoyed "open" rates of well over 60 percent among current customers. The secret, bank managers say, is to first make sure your customers want to hear from you, and always add value to the message.

E-mail append

To increase the number of customers that The Provident Bank can reach via e-mail, their...