Dancing to the Tune of State Regulations

We all know how email marketing campaigns work. You come up with the offer, design the creative, send the mailing out to the desired recipients, and then track the results.

If only it were that easy.

When you’re selling products that must conform to various U.S. state laws and regulations, your email marketing campaigns quickly become a lot more complex. Here’s one example.

For 16 years, Geerlings & Wade Inc. has been scouting out vineyards throughout the world, selecting suitable (in the company’s words, “exquisite yet inexpensive”) wines, and offering them up to consumers through home and office delivery. Geerlings & Wade delivers to 30 states via 16 licensed warehouse facilities.

In 1998, the wine distributor launched its Web site. And, not surprisingly, it decided to integrate email marketing into its other marketing channels, including direct mail. In early 1999, Geerlings & Wade began sending out text emails. By June 2000, the company had teamed up with e-Dialog, an email marketing firm, to create HTML and AOL versions.

“We immediately saw a huge increase in response to the HTML and AOL offers,” says Eric Welter, vice president of marketing at Geerlings & Wade. “In my opinion, if you can’t taste the product, you need to see it.”

So the mailings are designed to get across the full flavor of the products for sale. For instance, a recent offer featured a pair of wines from Italy, an 89-point Chianti Rufina and an 89-point Pinot Grigio. Consumers clicked on the product listings and were transported a few pages deep into the Geerlings & Wade Web site.

The timing of the mailings is methodical. Geerlings & Wade uses a mixture of email and direct mail to optimize overall customer response. The email campaigns are designed to enhance the direct-mail messages.

But Geerlings & Wade can’t just come up with one offer and ship it to its entire U.S. customer database. That’s because each state has its own rules and regulations and each mailing must adhere to a state’s Alcoholic Beverage Control Commission. (You can see this for yourself by looking at Web pages for California and Utah.)

Plus, because Geerlings & Wade is a public company, it is also responsible to and closely scrutinized by the U.S. Securities and Exchange Commission (SEC).

For example, although Geerlings & Wade has a program that allows customers to become “members,” some states don’t allow memberships, so to consumers in those states the wine distributor may offer a discount. But Massachusetts doesn’t allow discounts on alcohol, so Geerlings & Wade may come up with an offer of free shipping for its Massachusetts customers who have membership.

Geerlings & Wade does all the necessary research on each state’s laws to figure out who is eligible to receive which offers. Then the company comes up with the appropriate content and creative for each batch of mailings. It sends the various messages to e-Dialog, which puts the mailings through a quality-assurance process, and the companies work together to make sure the offer is legal and legitimate for each state.

“Because of the legal implications, it involves more quality assurance on our end,” says Scott Healy, e-Dialog’s vice president of marketing. “When you start dealing with the potential of violating laws, it raises the stakes.”

Once the quality assurance check is done, the mailings are sent out. They are staggered to be timed with the direct-mail campaign and to evenly balance the number of calls to the call center. Geerlings & Wade might do 7 to 16 versions of the email message per campaign.

Sure, it’s a lot of work to create (and conform to) more than a dozen versions of a single offer, but the effort is paying off. In 1999, 5 percent of sales revenue came from online purchases, and that number was up to 15 percent in 2000, with Welter characterizing email as the driving force.

(And, yes, Geerlings & Wade also must verify the age of its potential buyers. But that’s a whole other story, deserving its own case study…)

Geerlings & Wade intends to further segment messages in the near future — not just according to state but also by personalizing the messages based on each customer’s individual buying preference, as it currently does in its call center.