Electronic Retailer - June 2012 - (Page 41)

GUEST VIEWPOINT BY ALAN KLEINMAN w Build and Protect Your Customer Base with Trial Offer Campaigns month after” is another acceptable advertising practice. It is best to leave out words such as “Risk-free” as well. If the advertisement includes the registered trademark of another company, the ad must include a disclaimer stating that the logo is not associated with the business and it has not endorsed the advertised product or service. The business also must have authorized consent from the trademark owner to display the logo on the ad. While the FTC does not get involved in private trademark disputes, the commission has argued that using unauthorized trademarks can deceive customers. Also, celebrity endorsements must be obtained by the marketer. Citing or quoting the content of an article or posting TV news segments is public content and not prohibited, but authorization must still be obtained to use the logo. Product claims must be truthful and not misleading. Quantitative claims made must be substantiated by research or proof. Blogs used to promote the product must be an honest and accurate description from the endorsee, or clearly indicate that they are advertisements. There cannot be a false sense of urgency such as a countdown timer or an “Offer ends soon” claim that is used to draw in the customer. Endorsements and testimonials must be accurate and honest depictions of real results and the advertiser must disclose the generally expected results. Affiliate marketing website content must be compliant as well. Conduct periodic review of affiliate websites to check advertising methods and verify that the sites are compliant. Businesses are responsible for their affiliate practices and liable for any action that might arise against the affiliates. The requirements for the original marketer that are listed in this article apply to all affiliate sites as well. Transactions coming through a payment gateway must be from websites approved by the payment processor (disclosing affiliate checkout pages). When building a customer base, businesses sometimes focus on quantity rather than quality. Businesses may turn to trial offers to entice an abundance of customers and generate revenue. However, a trial-offer campaign based on the rapid acquisition of customers is short-sighted. Many times, recurring charges made unbeknownst to the customer result in demands for refunds and/or charge disputes. More disgruntled customers translate to higher fees from the bank and processors due to the disputes and excessive risk, card association fines and potential lawsuits. The hopes of speedy growth are dashed with the pecuniary repercussions of non-compliant offers. What some businesses don’t realize is that running a compliant campaign can actually be more profitable than a non-compliant one. A compliant trial-offer campaign builds a stable customer base of loyal followers whose good relationship with the company translates into repeat business and referrals. Businesses that choose to run trial-offer campaigns should abide by the many laws, rules and recommendations outlined by the FTC to build and protect their customer base. Laws governing compliance in trial-offer campaigns and related marketing programs are: • Truth in Advertising regulations • The FTC’s Negative Option Rule, first introduced in 1973 and frequently reviewed and updated • The Restore Online Shoppers Confidence Act, signed into law in 2011, which addresses negative-option billing and advertising methods and post-transaction third-party sales • State-specific laws such as California codes regarding negative option, automatic renewal and continuity programs • Category-specific rules and guidelines, including Business Opportunities and Dietary Supplements/Nutraceuticals Since many of these laws overlap across the different areas of business and are fairly general in content, here are details on the requirements and suggestions for each impacted business area. Terms and Conditions The new policies on negative option and automatic renewal in California and the similarly worded “Restore Online Shoppers Confidence Act” require that the terms and conditions of the offer are clear and conspicuous; the customer provides express, informed consent for the original and recurring charges; and the merchant makes it easy for customers to stop these recurring charges. The clear and conspicuous portion is most often the least understood of these conditions, but it’s easier if you remember the 4Ps: • Prominence: Is the font size used to indicate terms of the recurring charge easily readable? It should be 1/25 of the screen size, or at least a point size of 12. 41 Marketing and Advertising When advertising a discounted or trial recurring billing, make sure to use wording that describes the offer accurately. In a “Try before you buy” offer, the customer should be able to easily return the product for a refund or to not get charged. The best wording for a discounted or low-cost entry is one such as a “Pay only $X shipping and handling” offer; the advertisement should not use the words “Free trial” or “Free trial plus S&H” because these words indicate that the product is free when it truly isn’t. “Pay only $Y and $Z for every June 2012 | electronicRETAILER http://www.naylornetwork.com/era-nxt/

Table of Contents for the Digital Edition of Electronic Retailer - June 2012

Calendar of Events
Your Association,Your Bottom Line
Industry Reports
FTC Forum
eMarketer Research
IMS Retail Rankings
Jordan Whitney's Top Categories
Ask the Expert
From the Executive's Desk
Thinking Outside the Box
DRTV's New Best Practices
It's Time to Think Differently About Payment Processing
Guest Viewpoint
Guest Viewpoint
U.S. Hispanic
Member Spotlight
Advertiser Spotlight
Advertiser Index
Bulletin Board
Rick Petry

Electronic Retailer - June 2012