Permission Marketing
MKT 6222
Yaron Atad
Heng Yih Lin
Ziaur
Rahman
Chetna Sood
Kim Vance
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Table of
Contents What is Permission Marketing? The Costs of Permission Marketing How Permission Marketing is Different Trust and Privacy in Permission Marketing Implementation Permission Marketing How Successful Has Permission Marketing Been? References |
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What is Permission Marketing? Permission marketing
(PM) allows marketers to obtain consent or “permission” from customers or
prospects before sending them marketing messages. It is more effective than other forms of
marketing because consumers control what kinds of messages they will receive,
about which products and services they are interested in, and under what
conditions. The most effective media
for PM is through the Internet because “Internet users, in particular, place
more value on information (control) and are more likely to respond negatively
to messages aimed only at selling.” (Kotler,
p.663). What is unique about this form
of marketing is that it holds distinct advantages for both consumers and
marketers.
Table 1 Terminology of Permission Marketing
The phrase permission marketing was coined and
popularized in 1999 by Seth Godin, former vice
president of direct marketing for Yahoo.
PM is also referred to as opt-in
marketing. Opt-in occurs when an
individual subscribes to receive marketing messages. Because of this, opt-in carries a high
response rate and produces fewer complaints.
A confirmed opt-in allows
the marketer to send an email to the recipient to confirm that he or she has
just been added to the subscription list.
The individual then has the option to “unsubscribe (or opt-out)
immediately by replying or clicking on the link provided in the email.”
(Grossman, How Does Permission Marketing Work?
To practice PM, Godin recommends a five-step process: Step 1: Get recipients to raise their hands – Obtaining initial contact
permission from a potential customer by interrupting him or her through an
email message, banner ad, etc. This
requires the marketer to provide an incentive such as freebies (free content,
sweepstakes or games). Step 2: Teach your prospect over time – After receiving permission from
the customer, educate the customer about the value of your products and
services. Step 3: Reinforce
the incentive –
This step is critical because you may have to ask for permission again with
yet another incentive if the customer seems to have lost interest. Step 4: Increase the
level of permission
– To heighten the level of permission, the marketer provides more incentives
to motivate the customer. The
permission marketer then becomes someone who is trustworthy of providing a
service or product. Step 5: Leverage
permission into profits – The customer commits to the solution the marketer is offering. PM works only if it is
managed with care at every step. Most
consumers are unwilling to give permission because of privacy issues, but
when they do, they expect to be served with trust and respect for their
privacy. Permission is a state of mind
and thus can be interpreted differently by consumers and marketers. Marketers fail to believe that permission
does expire. On the other hand when
consumers lose interest in products and services, they view the granted
permission to be obsolete and interpret future emails to be unsolicited. Therefore, in order to “translate
permission into long-term sales, marketers must nurture that permission by
renewing and rewarding the permission.” (Usborne, In order to retain
customers, marketers must adopt certain guidelines to manage relationships
with their customers: ·
When changing the rules, inform the customers and renew their
permission. “If a customer gives you
permission to do ‘A’ and you then add in ‘B,’” you have just changed the
rules and the permission you obtained earlier expires according to Nick Usborne in the ·
Reinforce your relationship with customers by reminding them how they
were included on your list. A simple
statement in the introduction to your email can serve this purpose. (Gallogly, ·
Clearly communicate to customers what they can do to be removed from
your list and include a way for customers to reach you outside of email. Providing a link to your privacy policy
also gives customers a sense of dealing with a legitimate source. Giving customers options allow them to have
confidence that you will honor their requests. (Gallogly,
The
Costs of Permission Marketing The costs of PM can be
divided into two segments: one is a fixed
cost of the method and the other is the variable cost which comes from customers. First, a review of the fixed
costs. Godin claims that PM can be considerably
cheaper than conventional methods, though it requires more long-term
planning. Of course, the expense of sending customers e-mail is cheaper than
buying television ad time, however the initial cost is almost the same for
either method. Why? Because a company still needs to create an infrastructure
structured enough to manage the opt-in and opt-out requests and changing
customer information in the database as well as have a staff dedicated to
developing marketing plans that build long-term relationships with those
customers. A company can choose simply to lower the cost of PM if it merely
sends an email to a customer and does nothing to follow up. However, the
advantage of PM is that it targets the right customer for a particular
reason, always providing them with self-specific information which has to be
maintained and updated. In this way, PM has more hidden expenses such as
handling customers’ responses…etc. where as television advertising can be
looked at more as a one-time expense in development and air time. Some may question then
why choose PM at all. Mainly because this method is a great investment as it
elicits a high level of response from customers while targeting a niche that
will most likely bring more profit per marketing dollar spent while still
costing less overall than other forms of traditional marketing. According to an IMT
study called “Permission Email”: The Future of Direct Marketing”, email
marketing (the main media used in PM) is far less costly than direct mail. As an example, take a
look at a bank that sends its customers regular direct mail informational and
promotional pieces at a cost of between 40 cents and $1 per piece. Contrasted
to PM, this is quite high as sending an email with the same information is
not free, but miniscule considering the bank could conceivably send an email
from a corporate office to an infinite number of its customers who have
requested to receive that type of information at one time for the cost of
developing the email and maintaining the database, which would be well under
even the low mark of direct mail cost. The bank spent less money overall and
also more efficiently as it did not waste money sending information to
customers who would perceive it as junk mail. Next, a look at the
variable costs of PM. The variable cost of PM is tied closely to the number
of customers a company has. In addition to general requests by customers to
opt-in and opt-out, a company needs to take into consideration other less obvious
problems with keeping the data “cleaned up” that will increase cost per
customer. For instance, one can never be 100 percent sure that customers
provide the correct personal information. Perhaps they provide you with
incomplete information because of a perceived security risk or maybe they
feel that handing over certain information is an invasion of privacy.
Whatever the reason, the company will incur extra expense to correct the
action of the customer. How Is Permission Marketing
Different? PM is different than
traditional forms of marketing because not only is it conducted at a very
individualized level, but the method is built on a foundation of customers
receiving promotional messages of their interest and with their approval.
Consumers control the entire process, making it clear to marketers that they
will most likely read the message knowing that if the consumer was no longer
interested, they can remove themselves from the recipient list. According to
FindMoreBuyers.com, Inc., a virtual marketing firm headquartered in PM is more effective
than non-permission based emails or bulk emails - commonly known as spam. Spam is sent to large numbers of
customers, clogging up their email box much like the paper junk mail clogs
their There are many
advantages to using PM in place of traditional marketing. The ones listed
below are reprinted from the website Yesmail.com: ·
Delivers
Receptive Audiences - Your offer
reaches an audience that has already expressed an interest in the topic of
your message. ·
Low Cost - Compared to other forms of direct
marketing, email marketing is significantly less expensive. ·
Fast and
Efficient - Traditional direct marketing programs,
such as direct mail, can take months to create and implement. Then, you wait another few
months to analyze the results in order to determine success. Permission email
marketing campaigns can be executed in days with results trackable
in real-time – giving you immediate feedback while your campaign is in
progress. ·
Easy to
Test, Track and Evaluate - Email is an ideal testing medium, offering a range of trackable events. Email enables marketers to test
different list sources, combinations of interest categories, various creative
approaches, and even elements of timing. ·
High
Response - Typically, permission email
campaigns result in better response rates than traditional direct marketing
or other types of online advertising. ·
Iterative
Learning - The powerful combination of
extensive tracking, real-time analysis of results, and flexible testing
allows you to gain insight into your email marketing campaigns very quickly.
With permission email marketing you can rapidly test and refine your
campaigns to identify the best marketing mix of audience, offer and creative. The site goes on to say
that “permission email has been identified as the next generation of Internet
marketing…. (and) has experienced phenomenal industry growth (leading)
Jupiter Communications to predict that commercial email marketing will become
a $7.3 billion business by 2005.” Trust and Privacy In Permission
Marketing “The idea of building
trust and relationships with customers has been around for thousands of
years. The only bump in the road has been the mass marketing frenzy of the
last century. Even during the last quarter of that century, direct marketers
practiced permission marketing through direct mail. Only then did permission
marketing fine-tune the art of turning cold prospects into warm prospects,
warm prospects into customers, and customers into advocates.” (Usborne, Building trust in an
online atmosphere can be more difficult as there is nothing tangible for a
customer to use to draw conclusions about a company’s perceived level of
trust. A recent survey conducted about the Web found that only 29 percent of
users trust the accuracy of information on sites selling products and
services and only 33 percent trust sites giving advice about those items.
Yet, that same study also found that 80 percent of users say it's very
important to be able to trust information found on a website. (Paul Soltoff,
Indeed, building trust
is one of the most important issues for a successful permission marketing
campaign. Trust is needed primarily to make the first contact with the
customer and then to maintain a good relationship with the customer over
time. Trust with consumers in PM is built through frequency of communication
and is something companies must earn again and again in order to maintain
loyal with customer base. Companies practicing PM have to turn attention into
permission, permission into learning and learning into trust. In addition, companies
need to be careful not to make mistakes, since earning trust can take several
weeks or months, losing it on the other hand can take a matter of seconds.
For example, one of the common mistakes of permission marketers is giving
other businesses access to their PM customer database. Although this seems
like an obvious marketing “no-no” many businesses fail to see that trust is
broken by such practices. Privacy is an issue
closely associated with the concept of trust in PM. Major privacy issues for customers
are - the way the company will track his or her information, the usage of
cookies, sharing, selling or renting the customer’s personal information, the
opportunity to opt-out and the obligation of the company to make notification
of any privacy policy changes. Customers can find answers to most questions
about the above-listed issues in a company’s privacy policy which is
generally presented before a customer gives his or her consent to engage in a
PM campaign.
Companies that use PM need
to take under consideration which and how many details will be collected from
customers regarding his or her personal information. This sensitive issue can
cause the consumer to be wary in engaging in the PM process or perhaps even
withdraw from the process once engaged. Consequently, companies can improve
the odds a customer will opt-in if they have a pared down registration
process that avoids too many required personal details in order to be added
to the list. Companies might consider requiring only a consumer’s email
address and allow him or her to provide all other personal information as an
option. In doing this, the user will feel more at ease as he or she can still
remain somewhat anonymous. Implementation
of Permission Marketing
The main goal of PM is
to increase the number and lifetime of loyal customers, thereby increasing a
company’s effective expenditure of marketing dollars. This can be achieved
only if a PM campaign is implemented correctly. The following explores
different aspects that must be addressed in order to accomplish this. Designing Effective Email Messages
For PM to be effective, each email
has to be valuable to its target audience. Things to consider when designing
a PM email are (see Table 2):
Table 2 Scheduling and Delivering the Email
It’s been said timing is everything and when it comes to the success of
a PM campaign this is very accurate. Determining when to send a message is
the first critical decision a company should make in the PM implementation
process. Choose a time and day
based on the target audience, and the type of information provided. Right after
lunchtime is considered a good time to send emails across the board. Next, inform company employees ahead of time
by sending an internal alert that will tell what information you are going to send to the
subscribers so the concerned departments are ready for any resulting user
actions. Finally,
when delivering the email, use a technical email-interface system (like DART mail by DoubleClick Corporation) to effectively segment the
customer database, personalize each message and track the results. Following
delivery, all activity should be
closely monitored including replies,
bounce backs, opt-outs, etc. How Successful Has Permission
Marketing Been? Several studies on the
effectiveness of PM have been conducting lauding its success. According to
University of Texas at Dallas professor, B.P.S. Murthi, PM has been extremely successful since marketers
began implementing it in an email media. This marketing method has proven two
to three times more effective than conventional direct email and 10 times
more effective than banner ads.
Other non-academic
sources, such as Findmorebuyers.com – a marketing company specializing
in developing targeted direct marketing lists – have also conducted studies on the efficacy of
PM. This company found in its research on direct marketing response rate that
PM, specifically permission email, was the most effective with consumers.
(Figure 3).
In line with the Findmorebuyers.com research was the results of
a survey conducted by email campaign provider FloNetwork
Inc. that found an incredible “94 percent of consumers opt-in for
permission-based e-mail.” The message should be clear for marketers: PM
works. FloNetwork’s Director of Marketing, Beth Ghiloni,
summed it up best when she states that "this (research) tells online
merchants that you should get permission first, and if you do, you're much
more likely to have a buyer there than through any other type of direct
response. It's the audience that really wants to receive your message."
(Oser, |
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“Permission is Dead – Long Live Permission,” |
