The Real Costs of “Free” Email Services For Small Businesses

Uncovering The Negative Impacts On Brand Perception, Productivity, and Performance


In today’s hyper-connected world, email is a vital platform for small businesses to build relationships with customers and prospects, support internal employee communication, and optimize overall productivity.

Email remains the linchpin of all communication channels. In fact, findings from Forrester Research reveal that 87% of all company communications are via email1. Businesses also are amping up performance and productivity via mobile tools and technologies, including smartphones and tablet devices, while team members are on the go.

The benefits of mobile email are especially strong for small businesses that are striving to build their employee and customer bases, and require instant connectivity, anytime and anywhere.

Initially, free email platforms seem like the ideal solution for a small business establishing itself in the marketplace: They’re free, easy to register, and have basic, easy-to-operate functionality. However, as organizations expand, they often realize there are substantial costs and risks associated with free services, especially within the three key areas of a successful enterprise:

  • Perception, or how prospects and current customers view a company and its overall brand;
  • Productivity and employees’ overall ability to achieve day-to-day tasks, as well as long-term projects; and
  • Performance on both short-term and long-term goals within an organization.

Although the immediate benefits of signing up for these platforms are attractive at first glance, limited features and security can be costly to the overall performance of a small business.

With the average email user sending and receiving more than 40,000 messages per year, according to The Radicati Group2, an efficient email platform is a vital asset and a mission-critical function to business success. Not only is the communication channel required for improving productivity among company team members, email also is now the primary channel that sales teams utilize to reach customers and prospects.

To effectively build perception and reputation among peers and customers, best-in-class organizations are looking beyond the short-term attraction of free email services, and are leveraging hosted email services, which provide an array of business-savvy features, such as calendar and contact sharing, mobile email capabilities, and cloud-based storage.

This white paper spotlights the costs and tradeoffs small businesses must consider when selecting an email platform for their companies, as well as the necessary tools and technologies to optimize perception, productivity and performance among employees.

Building Your Business: Perception Is Key


Organizations are constantly fighting for customer eyes and dollars. This is especially true via email, where inboxes are flooded with company communications, potential business deals, and memos.

Findings from technology market research firm the Radicati Group, in the report, Email Statistics Report, 2011-2015, indicated that email account holders send and receive approximately 110 emails a day. This estimate is expected to reach 125 daily messages by the end of this year.

“[Small businesses] have to view email as an essential tool to building and maintaining relationships with customers, as well as continuing relationships with vendors and partners,” said Kirk Averett, the Director of Product for Cloud Office at Rackspace. “Email’s flexibility allows organizations to keep those relationships working. Although there are other tools, email is the most powerful and commonly used tool out there.”

Utilizing a company-specific domain name allows an organization to be recognized quickly and remain top-of- mind among prospects and clients. For example, if Joe Smith is the CEO of smartphone application developer ViaMobile, he will tout a email address, rather than By connecting the dots between brand name and email address, small businesses will build awareness, recognition, and most importantly, trust, protecting a company’s overall image as an organization that is professional and eager to do business.

Since businesses are now connecting and engaging with their customers and prospects primarily via the web, an email address often is the primary reflection of a brand. The lack of a dedicated domain name negatively reflects an organization, as well as employees’ professionalism. In fact, 75% of people form judgments about others based on their email address, according to 1&1 Mail and Media.3 These findings are even more problematic for small businesses that are constantly vying for customer and prospect attention in the competitive business world.

Small and growing businesses also run the risk of seeming less professional or may be taken less seriously if their email doesn’t have a dedicated domain name. Organizations also may not be able to access business-imperative information, such as research studies and webinars, since many outlets prohibit content downloading with a general domain name.

Overall, a consumer-level domain name raises a figurative red flag, and encourages prospects to delete communications, avoid opening messages, and even report messages as spam. This lack of trust can greatly hinder a small business’ growth, relationship-building, and overall reputation.

Solving The Spam Puzzle


Regardless of organization or position in a company, employees and executives are faced with the challenge of sifting through email messages and removing spam and unwanted contacts. In fact, spam management is a leading hurdle in team members’ overall productivity and performance, and in turn, a business’ overall success.

In fact, small business employees spend approximately 29 minutes per day dealing with spam, according to the 2011 Report on UC and Cloud-based Services for SMBs, conducted by Webtorials. Regardless of the obvious detriments of spending quality business time sorting through messages, spam management is a constant struggle among small businesses that don’t have the solutions or resources to address these issues efficiently.

Small businesses also must determine the potential impact of not having dedicated domain names for employees. By touting a free email address, team members can be mistaken for spam and, in turn, add to prospect and client frustrations.

Large Internet Service Providers (ISPs) and some web-based email services are utilizing email authentication as an added strategy to fight spam invasion. These stronger spam filters make it more difficult for companies to get emails delivered and opened if they don’t have a business-specific domain name.

Executives must acknowledge the business-wide benefits of leveraging dedicated domain names. By touting a business-branded domain name, organizations can make their communication goals clear, thus, increasing the likelihood that messages will be opened and — most importantly — read.

Case In Point: West Arete Computing Improves Spam Management With Rackspace


A personalized email address allows businesses to reduce their own spam intake, and in turn, improve efficiencies and overall time management. By implementing an email hosting solution, companies can utilize anti-virus scanners, which are typically integrated into a host’s SMTP gateways.

West Arete Computing, a custom software development firm, relied on email to receive critical systems alerts. Although the company had an on-staff systems administrator to run email on-premises, spam was becoming a more time-consuming task to tackle.
“Keeping up with email and spam was a big problem,” said Scott Woods, President and Founder of West Arete Computing. “In order to focus on software development, we didn’t want to spend time on that.” After trying out multiple solutions, and conducting in-depth research on possible platforms, the company selected Rackspace.

“None did as good a job as Rackspace for experience and spam detection,” Woods said. “I looked around online forums to see what people I knew and trusted were saying. The consistent theme was Rackspace has good service and a good email product.”
Hosted email solutions consistently apply the latest anti-spam updates to shield staff from hindering productivity and draining valuable company time. For example, Rackspace leverages a three-pronged approach to help ensure deliverables are spam free: a Gateway Scan, a Cloudmark Scan, and a Message Sniffer Scan. This strategy allows the company to block an average of 45 million spam messages a day.

Productivity In The Work Place: Do You Have The Right Tools?


The majority of businesses (87%) tap into email as a collaboration tool to share announcements, content and vital information, according to Forrester Research. As a result, the “short and to the point” communication once synonymous with email is being transformed to include lengthy messages and larger attachments, leading to longer wait times for email retrieval and message uploads.

When standard POP email servers are overwhelmed and systems go down, productivity for a small business is depleted. However, this is a constant problem among small and mid-sized businesses. In fact, company email systems experience a mean of 53 minutes of unplanned downtime within a month’s time, according to a recent Osterman Research4. Hosted email solutions, however, typically guarantee 99.9% uptime, leading to improved productivity and more efficient connectivity.

If and when email operations are up, it takes the right tools to ensure success. Collaborative features, such as the ability to share contacts, calendars, to-do lists and files, as well as efficient archiving capabilities, are imperative to keep executives and employees on the same page regarding schedules, company developments, and content creation.

Companies that don’t provide seamless access to information and resources across technology platforms can take a serious hit on not only productivity, but profitability, as well. Research from IDC reveals that inconsistent access tools, ineffective searches for updates and content can cost a company $3,300 per employee, per year. Meaning, a small business with 400 employees can experience a $1.32 million productivity loss in one year alone.

The ability to share calendars, contacts and tasks is a must in the highly connected business world. Employees and executives are constantly traveling and more on-the-go than ever. As a result, instant access to email accounts, mailboxes, important events, and other information is a necessity, rather than a luxury.

“Basic capabilities such as scheduling an appointment, receiving a reminder, tracking work, scheduling and coordinating work, and saving history of your tasks is what makes email special and will keep it special for a long time,” Averett said. “A lot of the new social tools add special value, but email is still the heart of written communications. It’s the most widespread in terms of number of users, and has the ability to connect with friends, relatives, strangers, customers, vendors and more; has been tested and is fully mature; and operates at an extremely high scale. You can’t underestimate the importance of that ability to reach anyone at anytime.”

Organizations are opting to implement hosting platforms to provide employees and executives with instant access to emails, calendars and contacts via mobile devices, including smartphones and tablets, which are becoming ubiquitous in the business world. The limited features of some POP and IMAP email systems allow no room for this form of flexibility and instant communication, which is now required for today’s small businesses, especially as more organizations use mobile email, tablets, laptops, and other wireless tools as an integral part of their communication.

The Mobile Imperative: Increased Connectivity Makes Seamless Collaboration A Necessity


Smartphone subscription and usage is growing at an unprecedented pace, making mobile email a practical and even necessary resource for on-the-go workers. In fact, an April 2011 study sponsored by Google showed that 82% of smartphone users check and send email with their devices5. This hyper-connected behavior even extends into after-work hours, according to Osterman Research. In its third annual research survey, Osterman revealed that a vast majority of workers (83%) check email using a smartphone or mobile device before and after a standard workday6.

“A lot of small business owners are their own best salesperson, so when they’re out traveling, meeting with clients and prospects, they can still be connected to all their other customers without being confined to a desk,” Averett said. “That form of flexibility matters more and more since we’re in a very dynamic business market. People need the freedom to move about and travel, and even have that flexibility in time. Long gone are the days when work was nine-to-five, and I think [small businesses] appreciate that. So being able to roll out of bed in the morning, answer a few emails and then get ready for the day, being flexible, and spreading work out, is imperative to small businesses”

Optimal email hosting platforms allow data to be synced automatically or when requested by users via BlackBerry, iPhone and Android, as well as from any laptop, desktop, or tablet device. Push service and real-time sync is provided for all account features, including basic mail and folders, contacts, calendars and tasks. Leading small businesses are taking note of the companywide benefits of implementation, including streamlined communication and task management, as well as instant access to calendar invitations across devices.

Case In Point: PROACT Improves Connectivity With Hosted Email


PROACT Search, an educational recruiting firm, initially utilized a standard POP email system, which provided no additional support for mobile devices. “This POP email was not conducive to running a mid-sized company,” said Thomas Vranas, President of PROACT Search, a Rackspace client. “Things I’d taken for granted in the corporate world, like calendars, sharing and invitations, are necessities.” With 80% to 90% of his company’s business done via email, stagnant communications and delayed replies were not an option, Vranas added. After adopting Rackspace, employees are now able to check email from hotel computers, laptops and mobile phones, so they’re always connected, even while on the road.

Support 24x7x365: A Must-Have For Small Business Performance


In the business world, productivity and performance go hand-in-hand. Daily operations are dominated by strict deadlines, new deals and partnerships, and customer care, all of which require immediate attention. Free email services create a greater chance of system downtime and, in turn, lackluster performance.

“About half of our email volume comes from system status information,” said Woods. “Email is the primary notification vehicle for system alerts — without it, systems could go down and we’d never know.”

Overall, email platforms such as Gmail and Yahoo! require excess maintenance, which small business owners and their IT teams simply don’t have the time for. Moreover, by partnering with a domain name provider such as GoDaddy, organizations are faced with sub-par knowledge of email functionality and resources.

Companies that employ hosted email platforms, however, optimize time management and financial resources. In fact, more than 60% of organizations are transitioning to hosted solutions due to lower total cost of ownership, seamless deployments and overall easier management than network-based providers, according to Forrester Research.

KarmaCRM, a provider of SaaS customer relationship management tools, is a startup company that taps into Rackspace hosting services to free up the company IT team. “It’s far too easy to fall into the trap of doing everything in-house and waste your IT talent managing email servers instead of growing your business,” explained John-Paul Narowski, Founder of KarmaCRM. “Our business is CRM, not IT, and everything we can do to help keep that in the forefront helps us remain lightweight and competitive.”

Hosted email solutions provide continual support on a 24x7x365 basis, allowing business owners and employees to focus on core operations, rather than back-end issues. Service providers, such as Rackspace, provide organizations with a staff of experts to address network issues in a timely manner, as well as in-depth set-up support. Transition representatives also are provided to allow companies to easily migrate from free email services to new, hosted platforms, efficiently.

“We are not a tech company — we don’t have a lot of technical expertise,” said Vranas of PROACT Search. “The Transition Team [from Rackspace] was super helpful in getting us setup, speaking in plain English, and not talking down to us.”

Conversely, organizations that subscribe to free email services are simply left to consult message boards and help forums, where they will, hopefully, find a solution to any technical issues and answers to any follow-up questions.

“As a general rule, a paid email provider has a greater obligation and financial motivation to take care of your information and mail,” Averett said. “However, the most critical piece is support, which is non-existent in free email platforms. If one of your critical communication tools doesn’t have any back-up behind it, in terms of a human being that can help you find a missing message or track something down, that’s a big problem for businesses.”

Communication & Client Protection: The Free Email Game-Changer

Information and conversation protection is key to maintaining business integrity and sustaining relationships. Free email platforms often flood inboxes with advertisements and can easily access emails and information, leading to increased likelihood that customer and partner data will be compromised. This is a factor that many organizations ignore, due to the appeal of obtaining a service for free, according to Averett.

“The average [small business] today uses the email that was included when they purchased a domain name, or a free domain that came with an Internet provider, or possibly a Yahoo! or Gmail,” Averett explained.

“To keep company and customer confidentiality top- of-mind, organizations must implement solutions that focus on email and are willing to provide features for security during message storage and transmission. Hosting companies integrate extensive security measures to help you protect data from physical threats, and other circumstances, including overheating, power outages, and fires. However, the continual protection of hosted systems is a key benefit of hosted solutions.

Conclusion: Building Business Relationships & Opportunities With Hosted Email Solutions

As businesses continue to veer toward digital channels to build and maintain relationships, as well as increase business, it is becoming more imperative for small business to follow suit, and most importantly, be armed with optimal resources.

Although smartphones and social tools are becoming ubiquitous in the business world, email still remains the solid foundation of all corporate communications, making a reliable email platform a vital asset to business productivity, profitability, and performance.

Gartner’s Magic Quadrant for Managed Hosting, 2012, revealed key characteristics for an efficient service. The report read: “The most heavily weighted criteria for a hoster’s ability to execute are service offering and service excellence, as reflected in the customer experience with sales, support, and operations.”

Optimal email hosting solutions allow organizations across sizes and segments to streamline operations and to help ensure optimal email deliverability, uptime, and security. Providers also offer collaboration for employees and business owners to be constantly connected and are able to share status updates, events, and communications; ensuring streamlined and successful business operations.

With a reliable and sustainable email platform on hand, small businesses are armed with the tools, resources, and support to optimize brand perception, and drive productivity as well as performance, for continued business growth and success.

The Hosted Service Advantage

To truly succeed in a highly competitive and connected marketplace, small businesses need sturdy and reliable email platforms. Hosted email service providers cover the gamut to deliver optimal email performance. By implementing a hosted email service, small businesses will receive the following benefits:

  • Support. Most businesses operate across multiple time zones and at all times, making a support team that is on call 24x7x365  a critical asset to help ensure email performance is consistently on point.
  • Uptime. With email acting as the linchpin of all business communications and relationships, it is vital that small businesses have optimal uptime and deliverability. Since service and connectivity is key to keeping business operations afloat, most hosted email service providers provide more than 99% uptime.
  • Backup and data recovery. Leading hosted email solutions provide email backup in case servers crash or stop responding. Recovery systems also are available to restore any email messages that get lost in translation.
  • Connectivity. Small business owners and employees are constantly on the go, formulating relationships, and attending important meetings and events to create new sales opportunities. Hosted email solutions provide enterprises with instant connectivity to BlackBerry, iPhone, and Android devices, as well as any Internet-connected laptop, desktop or tablet, to help ensure optimal performance and productivity to on-the-go team members.
  • Collaboration. Hosted platforms offer small businesses optimal resources to help team members receive and share information. Collaboration tools include project tracking, content management, and the sharing of calendars, and to-do lists.

1 Forrester Research. The State of Workforce Technology Adoption: US Benchmark 2009-2015.
2 The Radicati Group, Inc. Email Statistics report, 2011
3 1&1 Mail & Media, Inc. Email and Communication Research. 2011
4 Osterman Research. Why Email Must Operate 24/7 and How to Make This Happen. 2009
5 Google. The Mobile Movement Study. April 2011 
6 Osterman Research. Osterman Research Third Annual Survey. November 2011


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