COLUMBIA, S.C. – E-mail marketing to members is a growing art and science, and credit unions by nature seem to be crafting individual approaches. But they tend to agree on one thing: Don't serve up spam. "We avoid spamming. We're an online credit union and we try to push that channel as much as we can in every way we can, but we don't get heavy-handed," says Carlton Howard, vice president of e-business services at Coastal FCU in Raleigh, N.C. The $1 billion CU, which Howard says was one of the first in the Tarheel State to offer telephone, then PC Direct and then Internet banking, has long been using the information it has on members to do things like making product recommendations based on their ages. It also has been using e-mail as a means of communicating with members on service issues. "I know you can create a sense of `wow' with rapid e-mail response to member questions, and now we're taking it a step further," Howard says. Coastal is in the process of creating an e-mail service center. "Once it's up and running," Howard says, "our service reps will use their downtime to do follow-up on questions and also non-invasive recommendations about things that our information shows the members may be interested in." In other words, relevant information. An effective e-mail strategy, the experts say, is one that members find useful or interesting. And they don't want their CU wasting their time. Too many e-mailers already do. A new Forrester Research report says that 70% of consumers feel that they receive too many e-mail offers and promotions, reporting an average of 110 messages per week. The same report, however, finds that permission-based e-mail can indeed be effective. Two-thirds of consumers say they open e-mail they have opted in to receive from retailers, manufacturers, media companies and financial services providers. And many of the standard marketing tricks don't necessarily work. For instance, the word "free", the recipient's name or a clever subject line entice only about one in five consumers to open up, the Forrester report says. The spam plague threatens to eviscerate e-mail effectiveness," says Forrester Research analyst Jim Nail. "But messages that offer true value don't get trashed." That doesn't mean members shouldn't receive offers at all. "Spam is in the eyes of the beholder," says Sam Tuohey, vice president of IS at Stanford FCU in Palo Alto, Calif. "We want to have a very good reason for every e-mail we send out. And to make sure we do that, we've developed a very cool pitch engine." Tuohey says the $440 million CU uses its "colossal database" for general topics such as whether a member uses home banking and may be interested in an e-mail on new features, or even the unusual emergency situation. "We had a problem about a year and a half ago. Because of the anthrax scare and 9/11, one of our branches in an industrial park with one of our major SEGs learned that the park was not allowing anyone on the campus unless they had a reason to be there. So for a limited amount of time we did a targeted e-mailing to the people we knew worked in that area, about 500 or 600 of them, and gave them alternatives, including maps and locations of ATMs," Tuohey says. However, such robust functionality "requires an unusual relationship between IS and marketing, which fortunately we have," concedes Tuohey, who was his CU's marketing chief before migrating to IS. subhead: GOING GLOBAL Service Credit Union in Portsmouth, N.H., meanwhile, finds the e-mail channel an ideal antidote to the far-flung nature of its marketing base. "We have 23 branches, including 14 in Germany, and active members with checking accounts in all 50 states and 10 countries," says Ray Springsteen, vice president of marketing at $750 million, 80,000-member Service CU, the Granite State's largest credit union. "We have about 16,000 e-mail address, all of them opt-in, and we've been pretty aggressive about collecting them because it's an excellent way to keep in contact with our members, through e-mail marketing and through our Web site," Springsteen says. He says Service CU markets electronically on three levels: * Daily e-mails with mortgage and Euro rates, with about 700 members signed up for those. "Those rates change every day and it's something our members are interested in," Springsteen says. * Targeted e-mails based on member demographics. "For instance, we just instituted shared branching, so we used address information to inform targeted members where the 900 new branches they can use are located," Springsteen says. * A monthly newsletter. It supplements the quarterly print publication and "is less marketing and a bit more education. It's also an opt-in," Springsteen says. The ability to target information and keep it highly relevant is key to e-mail marketing success, agrees Scott Patterson, e-commerce manager at Callahan & Associates, and he makes no bones about the channel's potential. "I think e-mail is the next generation of where people are going to be focusing in terms of Internet strategy," he says, noting that about 70% of credit union respondents to a recent Callahan online survey collect e-mail addresses, a 19% increase from just a year earlier. Forty-five percent of them say they currently use the information for marketing. Patterson observes, "E-mail has been around longer than Web sites, but being able to utilize it as effectively as it can be is a big challenge." Keeping it cost effective is the easy part. Making it member-effective is not so simple. "The biggest concern is that you don't want your messages to be perceived as spam," Patterson says. "The relationship with members is something that CU's feel very strongly about, and sending e-mails that members see that way can damage relationships every bit as quickly as effective e-mail marketing can help a credit union succeed." The Callahan e-commerce manager considers targeted alerts – such as notices that a CD is about to mature or a desired interest rate is available on a car loan – to be particularly effective and valuable. But the technical challenges in mining and deploying such information can be considerable. E-mail marketing specialists and CRM solutions are available, of course, but Patterson thinks the traditional technology partner of most credit unions may need to step up to the plate. "From my perspective, in looking at this stuff all the time, it seems to me like this should be an area where the data processors should be concentrating more," the Callahan e-commerce manager says. "A lot of this information should be more operational and available for e-mail marketing, and should be coming from the DP side," he says. "I think ultimately that's going to happen. It's only a matter of time." -

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