Permission-based e-mail marketing’s combination of lower cost and greater effectiveness has made believers out of many.

Indeed, direct e-mail is a fraction of the cost of direct mail. (According to a report issued last year by Forrester Research in Cambridge, Mass., sending out a catalogue mailing can cost $1 a customer, while a personalized e-mail is 5 cents.) And it is frequently credited with generating response rates from 10 to 25 per cent.

And the key to making e-mail so effective is getting personal. Relevancy, enthusiasts say, is driving response and strengthening loyalty and retention among consumers. But by all accounts, direct e-mail marketers have a long way to go. It’s easy to ask for permission, but not so simple to properly follow up on the commitment made to continue to communicate with consumers via e-mail.

‘It is attractive from all sorts of efficiency and effectiveness perspectives, but it’s like any other form of one-to-one communication, it needs to be relevant to the recipient, and tied to the relationship that he or she has with the brand or company sending it,’ says Juhani Eistrat, president of Vickers & Benson Direct + Interactive (VBDI).

‘In a way there’s a parallel with where direct marketing was when direct mail was the greatest thing since sliced bread – ‘Wow we’ve got a list, let’s mail them something.’ It’s almost the same principle, only with e-mail. At the moment people are perhaps not using it in the most effective manner.’

Not only can it be extremely targeted, adds Eistrat, permission-based e-mail is also measurable – marketers can track whether or not it gets opened, whether the recipient refers a friend, whether they respond. It also allows marketers to set up an automatic fulfillment and marketing follow-up curriculum.

‘The large majority of people haven’t necessarily thought all that through and realized they could build up the information incrementally and ultimately become more and more relevant as they move the relationship along,’ he says. ‘There are a lot of opt-in newsletter-type efforts, which are really electronic versions of newsletters – and not necessarily using all the different wonderful things that can be done with the medium.’

Over the last year, a growing number of high-quality permission-based e-mail lists have also become available to Canadian marketers looking to deliver outbound e-mail marketing campaigns. And while that may be a viable option – particularly when you need to target a specific demographic or geographic area – the best list is almost always one that is harvested in-house, says Adam Posman, media director in the Toronto office of Montreal-based BAM Solutions, adding that rented lists are often overused by companies, resulting in plummeting response rates.

‘The response rates from your own mailings are going to be a lot better than any one that you do with an e-mail brokerage house and an opt-in list – you can understand how you add a lot of credibility to the mailing if the person’s actually registered directly with you,’ he says. Tripeze.com, for example, he says, mails registered Canadians on its list a weekly – sometimes more often – travel specials alert.

‘The people have associated themselves with the site and they understand why they are getting this mail.’

And an in-house list is far easier to personalize and update, adds Posman, with things like timely delivery. ‘Is Sunday night the best time to send out an e-mail? Probably not. People get into their offices Monday morning and their inbox is flooded. How much attention do you think that piece of mail is going to get?’ Similarly, blitzing users five days a week is also likely to do more harm than good, he says.

‘The whole challenge with e-mail,’ he says, ‘is managing it responsibly – honoring your users. These people don’t owe you anything. The fact that they’re on your list is valuable to you. It’s up to you to take advantage of that and keep them happy.’

Getting permission is a great first step, it’s the follow-up communication that’s lacking, argues Roman Bodnarchuk, president of Toronto-based N5R.com.

‘Traditional marketers have never done this before – they’re used to booking radio and TV, but they’ve never given any thought to what this relationship stuff means and how it works. It’s a whole new paradigm for people. It’s not as simple as adding a question to a survey; it’s a complete overhaul of your strategy.’

One company that Bodnarchuk works with, Sunoco, uses e-mail messages to let customers know when the price of gas is going to go up in their neighborhood. Who receives the communication is based on things like where the customer lives and where the closest Sunoco gas station is to them.

‘We couldn’t have done it before – you’re not going to do a direct mail to let people know that gas prices are going up 10 cents tonight. But with e-mail we can do it. And just imagine what that does to the brand loyalty of Sunoco. It’s all about thinking in new ways, and saying ‘What can we do now that we could never have done before?’ ‘

Costco is a case in point, he says. The big box retailer is unlike other direct marketers like The Brick or Future Shop in that when it runs a special or promo, the special might not be available at every store.

This inevitably creates a direct marketing nightmare, says Bodnarchuk. How do you get the message out if Toronto’s Yorkdale store is the only store with a truckload of DVD players on sale?

‘Through an e-mail database,’ he says, ‘we can segment people in that postal code, and say ‘Hey, guess what? You’ve told us you’re interested in consumer electronics, and here’s what we’ve got this week….’ That’s powerful.’

Another possibility, he adds, is the ability to send a birthday or Mother’s Day or Father’s Day card. When consumers register with a given marketer, they often offer up such particulars as their birthdays or that they have two children.

‘This is about building a relationship and we can automate a lot of these things. But companies don’t send [paper] birthday cards or Happy Thanksgiving cards because of the costs. All of a sudden this new distribution channel allows whole new opportunities to interact with your customer.’

Calgary-based Critical Mass is currently helping Mercedes Benz create an online newsletter program in the U.S., to be launched shortly, says Critical’s SVP Dan Evans. The Internet agency has done several ‘vehicle-focused’ outbound e-mail efforts for Mercedes.

‘We resisted putting an online newsletter in place because we wanted to make sure that when we did it, we could be as personalized as possible – that we weren’t just talking about personalized communications and then sending everyone the same thing,’ he says.

The duo opted to set up the system in a way that content could be customized based on people’s geographic areas (for the purpose of event announcements and the like), and the particular type(s) of vehicle that they are interested in. Consumers sign up for the vehicle-focused newsletter on the Web site, which is also defined by car type and interest area.

‘We always have the ‘Do you want everything?’ opt-in list, but the more important thing is to try and narrowly define, as much as possible, what type of information that person is interested in – what their sweet spot is,’ says Evans.

Evans predicts that the e-marketing survivors will be taking a lot more sophisticated approach.

‘You’re going to see companies starting to deliver on the true promise of the Internet and e-mail marketing,’ he says. ‘[E-mail marketing] isn’t just about personalizing a message with your name, or being able to identify that a particular event is roughly in your geographic area, it’s about becoming highly customized – ‘We know you purchased this product, at this time. Here’s a similar offer at a discounted rate.’

‘It’s been talked about for a long time – this is not new – but most companies have yet to deliver on that.’