How Spam Undermines Loyalty Efforts

Card Wire

January 7, 2004

It's no secret that unwanted commercial e-mail, or spam, is a nuisance. In fact, spam is so much of a nuisance that Congress just passed a law to control it, and, at this writing, President Bush was expected to sign the measure.

But spam's damage is more insidious than just an overloaded e-mail box or the unexpected viewing of a pornographic image by an unsuspecting computer user. Spam can do damage to card issuers and other businesses by diverting people away from legitimate e-mail marketing.

According to a consumer survey by Fenton, Mo.-based Maritz Loyalty Marketing, 56% of adults prefer to redeem their loyalty-program rewards via the Internet, but only 20% of loyalty-marketing communication is actually conducted via e-mail because that's how many customers are willing to provide e-mail addresses. Maritz's results are based on data from 1,205 randomly selected adult e-mail users nationwide.

'Relationship Ends'

Although the survey did not specifically ask about spam, Maritz concludes that fear of spam is the reason for the 36%-percentage-point gap between those favorable to using the 'Net for loyalty redemptions and those willing to give e-mail address to make such redemptions happen. Derek Vest, director of dialogue marketing, says that's a reasonable conclusion based on what Maritz hears from its credit card industry clients, which include seven of the top 10 issuers, and the actions taken by states and Congress to limit spam.

Loyalty-program participants "like to self-service through an Internet Web site, but when you start to talk about redemptions (which may require an e-mail address), that relationship ends," says Vest. "What you run into is that only 20% will provide e-mail addresses."

Marketers, who are attracted to e-mail by the medium's low cost and high speed, are trying to communicate that they are trustworthy, according to Vest. But the trustworthiness of legitimate marketers may be too little to overcome the distrust created by spam. According to the Federal Trade Commission, only 16.5% of spam is from legitimate advertisers peddling legal products.

Vest and other observers say the new federal legislation, dubbed the CAN-Spam Act of 2003, may help some, but it has some significant holes. The bill, which includes civil fines and possible imprisonment for the worst offenders, still won't prevent Americans from receiving unwanted e-mail from foreign servers. In fact, it won't ban spam outright; it will require marketers to be more truthful in their messages and forbid them from disguising their return addresses.

Spammers will be banned from harvesting e-mail addresses from chat rooms and other public sites on the Web. Enforcement actions can be brought by the FTC or other federal agencies, state attorneys general, and Internet service providers, but not directly by consumers.

The bill also directs the FTC to explore the possibility of an e-mail version of the government's popular do-not-call registry of telephone numbers that consumers don't want called by telemarketers.

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