Hitmetrix - User behavior analytics & recording

How Much Permission Is Enough?

Do I need your permission to get you to read this article?

While the question is facetious, it begs another question: How far will we take permission marketing, which requires companies to gain explicit consent from customers and prospects to directly communicate with them? And what happens if consumers are so rushed and aggravated with the bombardment of communications from so many channels that every consumer decides to opt out? Direct marketers would be shopping for jobs.

The answer to how permission marketing will pan out is the same as whether life exists on other galaxies: We don’t know because we can’t see that far out. But at least in the marketing world, we’re going to find out in our lifetimes – and the journey will be exciting, challenging and difficult.

While permission marketing has just started, the issue has already moved from permission-based marketing, popularized by Seth Godin of Yahoo Inc., to what we call invitation-based customer communications.

The difference is more than semantic. To reduce the risk that consumers will choose to cut off direct ties, companies should design direct communications strategies by first asking: “How can we get customers to invite us to communicate with them?” rather than: “How can we get customers to give us permission?”

Such a frame of mind will help a company resist the temptation to sell customers on first e-mail contact, concentrating instead on gaining customer trust and delivering valuable service. A customer who requests information is generally better than a customer who grants permission to receive it.

One way to gain invitations is to provide customers with value where they least expect it. We can be more clever than stuffing billing statement envelopes with advertisements. For example, an electric utility might enclose line graphs with its statements that chart a customer’s power usage over the last 12 months, compared with the prior 12-month period, noting average monthly temperatures to explain possible differences in consumption. The utility company builds positive customer will and loyalty and potentially gains additional customers through word of mouth.

Another way to gain invitations is to ask customers what they want. The credit card offers I receive daily never ask what I want; they dictate that I get frequent flyer miles, rebates on automobiles I don’t need or lower phone rates. The first credit card company to offer me discounts on my auto service gets their card in my wallet.

Yet there are limits to when you can query a consumer and how much you can ask before crossing the intrusive threshold. Therefore, we must apply technology to build and house customer and prospect information, capturing transaction history along with customer behavior from every customer touchpoint. We must coordinate customer interactions across channels, determine the best course of action to take in real time and capture that consumer’s reaction to continuously build knowledge about customers and prospects.

Real-time decisioning engines and cross-channel synchronization will enable companies to hold two-way communications that will drive their enterprise customer relationship management strategies closer to intelligent person-to-person communications.

A word of caution: CRM strategies that capture and assess too narrow a customer view can lead to disaster, misreading a customer and providing him with the wrong information and message. Companies cannot effectively assess in a vacuum the browsing and shopping behavior of a customer on a Web site. That behavior must be weighed with other customer information to increase the chances of getting a customer to ask to participate in communications.

Perhaps we have all heard by now the story of the online shopper who purchased children’s books as a one-time gift for a niece? He now gets personalized suggestions on children’s books, although he is an avid history buff, long retired from “See Spot Run.”

Customer communications strategies must not only be relevant and valuable, they must be subtle, avoiding blatant promotional pitches, no matter how strong the offer. Because e-mail is so inexpensive compared to other direct mechanisms, it allows companies to communicate frequently, which breeds familiarity and trust over time. Customer reaction to communications will enable companies to adjust the pace of their messaging, while not exceeding what Godin calls interruption marketing.

Godin outlines 10 questions a company needs to consider when initiating or evaluating a permission marketing program. The last one I find most intriguing and important: What is the expected lifetime value of one permission?

That answer can only be assessed by having metrics in place that capture cross-channel interactions and determine those customers and prospects with high customer value and potential value. We must assess whether customers purchase products and services that exceed our cost of marketing to them.

The “e” in eCRM has multiple definitions. It can mean enterprise, electronic and economic. Whether you call it permission or invitation marketing, your customer communications strategy must be built on an architecture that lets you gauge the economic impact of your initiatives, that continuously tests and refines messages and offers to optimize customer value as well as customer “buy in.”

Companies that coordinate communications across customer touch points, and employ economically viable channels such as personalized e-messaging, gain “opt-in” customers and competitive advantage.

James Ray is vice president of strategic consulting services at Exchange Applications Inc., Boston. His e-mail address is [email protected]

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