Snowball Effect sets high standards for the way we go about our business. We want to be known for our superior quality and professionalism. This blog post outlines a mistake that meant we fell short of our own ambitions. In sharing our story we hope that others may learn from our experience.
It was early 2015. We'd been in operation for 6 months, and we were excited by the growth to that point. Others were clearly excited too, as we were contacted by a post-graduate equity crowdfunding researcher. She researches certain variables in offer marketing, such as how investors respond to emails about reputation, status and social proof in an investment context. This sounded relevant to us, so we progressed the discussion and agreed a scope of research. The research required an email recipient list that included people who are likely to have an interest in our deal flow, but had not yet received an email from us.
Simple right? Just purchase an email database from one of the reputable New Zealand-based providers. This may be ringing alarm bells - it certainly did to us too. However, after speaking to the recommended email database provider about its products, we became comfortable with the way that the database was compiled, the quality of the data, and the list's compliance with the Unsolicited Electronic Messages Act 2007. The list was purchased by the researcher, and the experiments were undertaken. The experiments involved Snowball Effect sending separate emails containing different "signals" to the purchased database. The open and click rates of the purchased emails were significantly lower than for our members (~15% compared to our usual 60%+), so we decided we wouldn't email the purchased database again.
So it was a bit of a shock when the Department of Internal Affairs phoned recently to advise that Snowball Effect has received a formal written warning for emailing someone without consent, in breach of the Unsolicited Electronic Messages Act 2007.
How did this happen? Turns out that one of the email addresses on the list purchased by the researcher was not gained directly from the recipient (a receptionist instead gave it out), meaning the recipient never gave consent to receive emails as we were assured they had. That recipient complained to the Department of Internal Affairs, resulting in an investigation being commenced in June this year.
The investigation concluded that the recipient never gave consent in accordance with the Act, and therefore the company who sold us the database breached the Act by providing the email address to us. This resulted in the company receiving a formal warning. Because we were the ultimate sender of the email address, we also breached the Act, and thus received the same warning.
As well as being a way to put our hands up and say we made a mistake, we hope this post serves as a reminder to other companies that are excited by any new opportunity to grow. The idea of having someone else purchase thousands of email addresses that you can legally use is understandably tempting, but companies need to be 100% confident in whether consent for each of those email addresses was gained, rather than relying on another company's asertion.