Behind the Scenes in the Booming E-mail Service Provider Industry: Why Are Some Clients Complaining?

Business is booming for e-mail service providers (ESPs). In fact 87% of 1,927 marketing professionals recently surveyed by my company,MarketingSherpa, said they send some or all of their e-mail campaigns and newsletters to ESPs instead of via inhouse systems.

When we asked marketers how happy they were with their current e-mail vendors, however, the news wasn’t always so fabulous. A few sample quotes:

“I’ve been there. I know what’s behind the curtain. It’s ugly.”–Former major ESP vice president who switched to a related industry in 2005

“This industry has got to grow up!”–Top exec at an independent e-mail deliverability firm

“Choosing between ESPs is about choosing the lesser of two evils. No matter who you go with, there’s going to be some pain. That said, it’s still better than broadcasting inhouse.”–Internet director at a trade publishing company

ESPs’ desires vs. clients’ desires: a disconcerting disconnect
Often we’ve discovered that what clients yearn for–and switch firms because they’re not finding–is not what the ESPs themselves think clients really want.

When we talk to CEOs and heads of marketing at ESPs, nearly 100% wax lyrical about extremely advanced e-mail marketing –the stuff most clients would call bells and whistles.

They gush about microsegmentation, dynamic content, integration, analytics, sequenced automation, and the current Holy Grail, relevancy. Here are a few sample real-life quotes from earnest, hard-working, and intelligent ESP leaders:

“We get very nervous when people come and the first thing out of their mouth is ‘I want to be able to send a million e-mails a month.’ We try to get people thinking about their goals in terms of customer relationships–more focused around integration, analytics, dynamic content.”

“I don’t sell e-mail marketing; I sell programs. Lead nurturing programs, lifecycle marketing programs…programs to meet your objectives.”

“Rules-based marketing is critical: Give me folks who are 30-35 years old who are male and who clicked on my last campaign and bought something.”

As their clients and industry analysts will tell them, this is all lovely. But first the industry has to get the basics down. When we spoke with clients of all shapes, industries, and sizes about how they really wanted their current ESP to improve, not a single one mentioned dynamic content or relevancy.

Why? One ESP exec’s theory: “Ninety percent of marketers are still doing batch-and-blast. The reason is, it’s too hard for them to do anything else. The lowest common denominator needs to be able to do this sophisticated marketing.”

In reality that’s only partially right. Yes, 90% are doing batch-and-blast, and many do look forward to having more-sophisticated e-mail marketing capabilities someday. But first they want to be sure that the ESPs themselves have the basics nailed down tight.

There’s an incredible level of frustration on the side of many clients these days. Common complaints include:

* UIs (user interfaces) are clunky or even buggy.

* List management, segmentation, and testing is awkward and time-consuming.

* Campaigns are not always sent out on schedule due to lack of server space during peak send times.

* Customer service and/or tech support is not there live when you need it.

* Integrating with other systems (Web analytics, CRM, external campaign management tools, Web-based e-mail preferences tools) is tougher than promised, especially as the ESP’s software goes through upgrades, requiring integration adjustments on a frequent basis.

* There’s no standardized terminology or metrics practices. For example, many systems report on “delivered messages” without accounting for e-mails that have been filtered. Also, the math behind the clickthrough rate (CTR) varies widely: Are CTRs a percent of opens? Of e-mails sent? Of e-mails “delivered”? What about unique vs. nonunique CTRs from unique vs. nonunique users?

What do marketers really want?
Here are some quotes from our interviews with marketers about their frustrations with their e-mail service provider:

“If our lists are not held by the ESP, they need to make it easier to upload lists/changes, connect between databases reliably, make sure lists are cleaned swiftly, make sure the preferences/change account settings/opt-in page on our site communicates with their vendor’s database reliably. Does it now? Not always.”

“They need more appropriate infrastructure because the timing of our e-mail is important to us in terms of effectiveness. If we can get them delivered at a certain time in the morning, we know they’d perform better than if they’re delayed and they go out in the afternoon. If you schedule it for a particular time it should be delivered within a half-hour of that time.”

“We wanted to be able to copy campaigns as a time-saver and have the ability to preview e-mails as we’re building them.”

Several multinational marketers have shared this typical annoyance:

“Our ESP doesn’t accept umlauts and all the foreign-language dipthongs. Therefore it has to use American spellings. For the Germans that’s the worst thing you could do. That tells the German audience that you are bush league. It’s awful. The other thing is, it doesn’t handle international currencies. So none of the euro or yen symbols show up. It shows up as garbage. So our ESP on occasion has embarrassed the hell out of us. They way we get around that is create and save the e-mail as a template. In that case it works. But for our ESP, saving it as a template instead of as a straight HTML file is not as flexible.”

And from the interactive agencies, we hear another common complaint:

“I don’t want somebody offering me creative or content or everything under the sun, because we do creative and content. When I shop for an ESP it has to be a really strong focus on getting that e-mail to the recipient. Minimal bounces, minimal spam blockage. Whitelisted. Can-Spam compliancy. Good tracking tools. If they were focused on selling 20 different services I don’t think the flexibility would be there, and they’d be trying to sell us a bunch of stuff we don’t need.”

In summary: E-mail vendors need to improve basic services
The good news is, ESPs have some incredible ideas to revolutionize e-mail marketing.

Messaging will someday be far more relevant and valued by each individual recipient. Plus, systems will integrate multiple media metrics (Web conversions, offline coupon redemption, you name it.) And marketers will be able to manage all their permissioned content campaigns–including RSS, podcasts, SMS(text messaging), and wireless ads–from single platforms.

I have seen the future in their eyes, and it is a glorious thing.

But first they have to stop tripping over their shoelaces on the way to the corner store to get some milk for Mom.

Note: These functional weaknesses do not mean you should keep your e-mail program inhouse. If ESPs that are wholly dedicated to e-mail have a hard time managing it perfectly, your inhouse team probably can’t do any better and may well do a lot worse.

Today’s ESPs are doing the best that can be done and making impressive strides in getting better. The industry as a whole is a fairly new one and undergoing growing pains.

I expect great strides in the next 24 months.

© MarketingSherpa Inc., 2006

Anne Holland is president of MarketingSherpa, a research firm publishing case studies and buyer’s guides for its 173,000 marketing and advertising executive subscribers. For information on MarketingSherpa’s newest Buyer’s Guide to Email Service Providers: 85 ESPs reviewed, go to: http://ESPBuyersGuide.MarketingSherpa.com.