Permission marketing

Permission marketing is a significant concept that underpins online CRM throughout management of the customer lifecycle. 'Permission marketing' is a term coined by Seth Godin. It is best characterised with just three (or four) words:

Permission marketing is...

anticipated, relevant and personal [and timely].

Godin (1999) notes that while research used to show we were bombarded by 500 marketing messages a day, with the advent of the web and digital TV this has now increased to over 3000 a day! From the marketing organisation's viewpoint, this leads to a dilution in the effectiveness of the messages - how can the communications of any one company stand out? From the customer's viewpoint, time is seemingly in ever-shorter supply, customers are losing patience and expect reward for their attention, time and information. Godin refers to the traditional approach as 'interruption marketing'. Permission marketing is about seeking the customer's permission before engaging them in a relationship and providing something in exchange. The classic exchange is based on information or entertainment - a B2B site can offer a free report in exchange for a customer sharing their e-mail address which will be used to maintain a dialogue; a B2C site can offer a screensaver in exchange.

From a practical e-commerce perspective, we can think of a customer agreeing to engage in a relationship when they check a box on a web form to indicate that they agree

Permission marketing

Customers agree (opt-in) to be involved in an organisation's marketing activities, usually as a result of an incentive.

Interruption marketing

Marketing communications that disrupt customers' activities.

Opt-in

A customer proactively agrees to receive further information.

Opt-out

A customer declines the offer to receive further information.

to receive further communications from a company (see Figure 3.3 for further examples). This approach is referred to as 'opt-in'. This is preferable to opt-out, the situation where a customer has to consciously agree not to receive further information.

The importance of incentivisation in permission marketing has also been emphasised by Seth Godin who likens the process of acquisition and retention to dating someone. Likening customer relationship building to social behaviour is not new, as O'Malley and Tynan (2001) note; the analogy of marriage has been used since the 1980s at least. They also report on consumer research that indicates that while marriage may be analogous to business relationships, it is less appropriate for B2C relationships. Moller and Halinen (2000) have also suggested that due to the complexity of the exchange, longer-term relationships are more readily formed for interorganisational exchanges. So, the description of the approaches that follow are perhaps more appropriate for B2B applications. Godin (1999) suggests that dating the customer involves:

1 offering the prospect an incentive to volunteer;

2 using the attention offered by the prospect, offering a curriculum over time, teaching the consumer about your product or service;

3 reinforcing the incentive to guarantee that the prospect maintains the permission;

4 offering additional incentives to get even more permission from the consumer;

5 over time, using the permission to change consumer behaviour towards profits.

Notice the importance of incentives at each stage. The use of incentives at the start of the relationship and throughout it are key to successful relationships. As we shall see in a later section, e-mail is very important in permission marketing to maintain the dialogue between company and customer.

Writing for What's New in Marketing e-newsletter, Chaffey (2004) has extended Godin's principles to e-CRM with his 'e-permission marketing principles':

• Principle 1. 'Consider selective opt-in to communications.' In other words, offer choice in communications preferences to the customer to ensure more relevant communications. Some customers may not want a weekly e-newsletter, rather they may only want to hear about new product releases. Remember opt-in is a legal requirement in many countries. Four key communications preferences options, selected by tick box are:

- Content - news, products, offers, events

- Frequency - weekly, monthly, quarterly, or alerts

- Channel - e-mail, direct mail, phone or SMS

Make sure though that through providing choice you do not overstretch your resources, or on the other hand limit your capabilities to market to customers (for example if customers only opt in to an annual communication such as a catalogue update) you still need to find a way to control the frequency and type of communications.

• Principle 2. Create a 'common customer profile'. A structured approach to customer data capture is needed otherwise some data will be missed, as is the case with the utility company that collected 80,000 e-mail addresses, but forgot to ask for the postcode for geo-targeting! This can be achieved through a common customer profile - a definition of all the database fields that are relevant to the marketer in order to understand and target the customer with a relevant offering. The customer profile can have different levels to set targets for data quality (Level 1 is contact details and key profile fields only, Level 2 includes preferences and Level 3 includes full purchase and response behaviour).

Contact or touch strategy

Definition of the sequence and type of outbound communications required at different points in the customer lifecycle.

Principle 3. Offer a range of opt-in incentives. Many web sites now have 'free-win-save' incentives to encourage opt-in, but often it is one incentive fits all visitors. Different incentives for different audiences will generate a higher volume of permission, particularly for business-to-business web sites. We can also gauge the characteristics of the respondent by the type of incentives or communications they have requested, without the need to ask them.

Principle 4. 'Don't make opt-out too easy.' Often marketers make it too easy to unsubscribe. Although offering some form of opt-out is now a legal requirement in many countries due to privacy laws, a single click to unsubscribe is making it too easy. Instead, wise e-permission marketers such as Amazon use the concept of 'My Profile' or a 'selective opt-out'. Instead of unsubscribe, they offer a link to a 'communications preferences' web form to update a profile, which includes the options to reduce communications which may be the option taken rather than unsubscribing completely. Principle 5. 'Watch, don't ask.' The need to ask interruptive questions can be reduced through the use of monitoring clicks to better understand customer needs and to trigger follow-up communications. Some examples:

- Monitoring clickthrough to different types of content or offer.

- Monitoring the engagement of individual customers with e-mail communications.

- Follow-up reminder to those who don't open the e-mail first time.

Principle 6. Create an outbound contact strategy. Online permission marketers need a plan for the number, frequency and type of online and offline communications and offers. This is a contact or touch strategy which is particularly important for large organisations with several marketers responsible for e-mail communications. The contact strategy should indicate the following. (1) Frequency (e.g. minimum once per quarter and maximum once per month). (2) Interval (e.g. there must be a gap of at least one week or one month between communications). (3) Content and offers (we may want to limit or achieve a certain number of prize draws or information-led offers). (4) Links between online communications and offline communications. (5) A control strategy (a mechanism to make sure these guidelines are adhered to, for example using a single 'focal point' for checking all communications before creation dispatch).

Examples of contact strategies for Euroffice and Tesco.com were discussed in Chapter 4.

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