16 Apr 2013
Do you hate marketing and marketers in general as much as I do? Lots of people I've talked to, and amongst those software developers in particular seem to exhibit a rather burning disdain towards the industry in general. And you can hardly blame them, since the dodgy and annoying marketing practices are so abundant and so widespread. Being a rather logical bunch, we have problems tolerating notion of "spinning" things, as well as the exploitation of the various behavioural biases and shortcomings of the human nature.
But it's probably not all doom and gloom, and there are some more or less ethical marketing approaches out there. "Permission Marketing", a term popularised by Seth Godin circa 1999, is a likely candidate. The idea is to help people with whatever problems they have in your field of choice without having to sell anything upfront.
The strategy is rather simple. First, a company obtains a "permission to communicate" from a person, usually in a form of email address, in the exchange of something valuable - say a promotional offer, free e-book or access to a trial subscription. Then company then starts sending emails with interesting, relevant, valuable and anticipated content to these customers. People don't usually see these as spam, since they agreed to provide their emails. It's also not a stab in the dark, meaning the targeting is way better since audience is more likely to be interested in what you have to say. By gradually building a trust with subscribers, company now can offer them something for sale, and the conversion rates are going to be much higher than in any sort of advertising scenario.
It may sure sound like "lure them in first" type of strategy, but consider the following:
In my usual habit of taking notes on everything that I read, I captured the most important points of the "Permission Marketing", feel free to skim through those. Where appropriate, I put my comments in italic.
Implications of Interruption
Interruption marketing - a traditional form of attracting prospects' attention by presenting your ads to them in various forms.
Lots of parallels with long tail - increasing number of channels to reach customers, new niches appearing. Decrease in efficiency of interruption marketing due to decrease of audience of a given media/channel.
People's attention becomes even more fleeting as they are bombarded with more and more ads that compete for their attentions. It becomes even harder to get through to somebody - you need to interest them first and then, in a very short time, get your message across.
There's a trend towards direct mail marketing and in-store promotions. Apparently getting 2% response for direct marketing is actually a great result.
And even if you are effective with your newfound approach, it soon is going to become known and other advertisers will rush in, again competing for attention of your audience.
Process of wining a prospect's trust is expensive. Sending many individualised messages over time works better than sending one, even super-impressive message.
Selling with Permission Marketing
Example of P&G that used PM to advertise their Crisco product:
Don't just try to sell to as many people you can, but focus on getting more value out of each customer as well as converting more prospects to customers.
Learn and remember your clients' preferences.
Your customer service also contributes to the Permission Marketing - instead of dealing with customers rudely, causing them to wait, be frustrated etc you should focus on impressing them with how easily and nicely you solve their problems, be it a lost delivery or some other account problems. This is more likely to bring you more business from this customer in the future.
Try to do more than they expect - their parcel was lost? Send them another one PLUS some extra stuff to compensate the inconvenience. Say, an extra CD of the same musician that they ordered.
Although Seth says you've got to interrupt to get people to "raise their hands" as a first step and while there's always people that "walk into the store" so to speak, I think he vastly undervalues the importance of organic search and referral traffic - though this is possibly due to the age of the book.
Joanne runs summer camp. She uses the following process to ret people in her sales funnel
The reward has to be obvious and simple.
Interrupted person is not likely to:
Also I believe timing is critical - if you get in touch with somebody soon after they received their FREE object of desire, more likely they are to respond to your next communication.
Build your trust through frequency. I believe this refers to the fact that you need to get in touch with prospects regularly and often enough.Building Trust
Trust <- Familiarity <- Awareness <- Advertising
People ignore, forget, misunderstand ads. Response rate for ads is very low. That's why it's important to run your ad frequently. If only 10% of people can remember your ad in the morning, running it for 30 days will increase the numbers of those who remembered it, as well as those who understood the message.
Generally, increasing the length of period in which you run your ads, you increase the effectiveness by 4.
So, in a reach/frequency trade off consider frequency to be more important.
In almost every industry the most trusted brand is the most profitable one. Frequency -> awareness -> familiarity -> trust. Example - famous brands, such as Crisco, Vaseline, Tabasco
You cannot just reach success in marketing in one fell swoop, you need to engage in interactive process, an approach that takes time and persistence and continual adjustment.
People prefer personalised approach over the "off the shelf", "one message fits all" one. Keep your comms frequent, focused and personalised.
Levels of Permission1. Intravenous (purchase-on-permission model)
Akin to permission given to doctor to administer any drugs to you in intensive care unit. Doctor decides what to administer and patient agrees to that as well as for being billed for the administration of the drugs.
Marketer can achieve this permission level so he can decide what to buy for a customer; it's huge privilege but it's also a dangerous one - if customer doesn't like marketer's decision or he abuses the trust, the permission will be recalled in a second.
Example: Book of the Month Club - sent their subscribers pre-selected books every month. There was fewer choices than today and most customers accepted the books that were sent to them.
Also any magazine subscriptions; Or any subscriptions where you agree to receive something that's been made without knowing what exactly it's going to be first.
People opt in for subscriptions because it can be:
2. Purchase on approval
Authorisation is required before customer is actually billed. This is more common than intravenous.
One of the ways of doing this is to send an opt-out email for each suggested purchase (say a new album that's just came out and according to matching logic should be of interest to certain customer), and if opt-out didn't happen, just send them the item and bill for it. This is called "negative option".
Often used by various continuity programs, often misused.
First thing that comes to mind is Fitness First in Australia - they do this quite a lot, I think. They just rely on customers not noticing these payments and keep paying for services that they don't use.
Consumers want more than just good price - they want combination of good price, service, safety and comfort. If you can provide better mix than your competition, you'll be able to maintain a good level of permission. Don't take the permission for granted or, worse, abuse it - you will loose customers and get a bad rep.
3. Points Permission
Customers accumulate points that they can trade for "free" gifts/cashbacks.
Woolies/Coles with their rewards program, as well as various credit card issuers are excellent examples of this "points" scheme. Supermarkets motivate you to stay loyal and buy at their shops, as well as credit card companies wanting you to use their card instead of any other card you may have (say your savings/checking account at your bank).
Admittedly they've been changing and tweaking their programs over time, making the reward more immediate, more "instant" - now instead of waiting for rather long time to get your "free" whatever, you can "claim" the discounts straight away by gluing the discount coupons on the goods you buy before checkout.
Instant customer's gratification, frequent interaction with brand/products - what else would you want as a company?
Coffee/bread cards that let you get a free coffee/bun/whatever after you buy N of those things is the same - owners want you to be loyal and they are happy to reward your loyalty and frequency.Opportunity Seekers
P.M. as an approach is criticised that it tends to attract "Opportunity Seekers" - population that looks, but doesn't buy;
OS are described as always on the lookout for the cheapest option; frequent sweepstakes participants; easily falling for scams/ponzi schemes/untruthful ads (bait & switch?).
Seth argues that offering something of selfish interest does not necessarily leads to getting lots of OS participating - example is frequent flyer points, that even wealthy people accumulate and hunt for. People will optimise their spending to get more points, will try to game the system. It gives them the sense of mastery, which is another important engagement characteristic.
There's actually quite a few elements of gamification in the whole points system. It enhances the everyday context of the things you do anyway. It lets you achieve goals - hence the sense of progress (look, sweetheart, we've just earned enough points to fly to Europe!). It gives you rewards, although mostly - tangible ones, but it doesn't seem that the danger of killing intrinsic motivation is present in here - people are already in it for purely extrinsic reasons. There's however a real danger of users "gaming" the system to maximise their returns - which often happens in context with primary emphasis on the extrinsic value.Types of points programs: liability & chance
In liability programs customers know what they are getting in return. This can create a huge liability on the company's part - and they seem to be quite aware of that. Airline companies try to limit the number of seats available for purchase through frequent filer points. This eventually may lead to the loss of trust.
In chance program customer's merely get to accumulate more chances to win something.
One of the recent initiatives is a referral program that Australian online retailer, Kogan, ran a couple of years ago - you can increase your chances of success in a "lucky draw" by referring more people to sign up for company's email updates. I'd like to see what their unsubscription rates were after the campaign finished - judging by the absence of the re-runs of such initiative it wasn't great.
Interesting phenomena - when a prize in a lottery $5 mil, it attracts entirely new audience, not commonly found participating in draws - people with middle-to-high income - lawyers, doctors etc.
Although I wonder it there are any confounds in this observation - for instance advertising budget might be just bigger for those draws, which results in higher frequency/wider reach and hence the acquisition of these participants.Permission vs Data
While you can somewhat easily collect the data on what customer purchases, say at a supermarket (if they are using a store rewards card that's linked to their identity) and offer them tailored rewards/discounts based on their shopping history, this does not really put you in a "trust" category, where you can talk to customers from a position of informed marketer that knows something about them.
For instance, sending them a letter with congratulations on the arrival of a baby (based on their recent purchase history of nappies and baby food) is likely to rise eyebrows and feel rather creepy.
Data != Permission.
Personal Relationship Level
Based on a personal trust. Takes long time to develop. They also don't scale.
Great for retail, you are more likely to deal with a place where people are nice to you and remember your name.
Very important in business-to-business relationships. Examples:
Brand Trust Level
Relied upon by interruption marketing a lot. Way lower down the chain of trust. Dramatically overrated. Expensive to create. Takes long time to develop. Hard to measure, hard to manipulate.
Most common way of marketing.
Brand extensions - products that are built on top of existing reputation. If you like Ivory soap, you may like Ivory dishwashing liquid. If people like the extension, it enhances their positive feelings towards the brand in general, although if they didn't like it, it harms the brand perception overall. Example - Apple's Newton; Microsoft with the release of new OSes.
Hard to attack head-on - if there's a known and trusted brand in some space, a new entrant will have hard time grabbing attention of the people.
Also applies to so called "personal brands" - if you're a writer and your books are anticipated, releasing clunkers will damage your "brand".
Example of brand trust abuse: Bell Telecom designing its ads to look like phone bills: initially people responded quite actively since bills are anticipated, but over time learned to ignore the interruption, as well as the bills themselves.
When somebody walks into a store to buys something and needs an advice.
Example of good situation level marketing - McDonald's employees asking "Do you want fries with that?".
There's potential for transferring this trust to the next level - offer on the purchase to subscribe to whatever points program, frequent flyer, newsletter etc.
Need to train your front line - cashiers, store attendants to handle the requests properly.
Lowest level. Classic example of interruption marketing. Even if you target carefully, it's still spam.
Most marketing is spam - tv ads, direct mail, radio ads, emails.Working with permission as a commodity
Once you have earned permission, you must retain and extend it.
While you can buy contact details of any sorts, you cannot buy or sell trust.
Problem with getting in touch with prospects via those purchased lists is that you catch them by (highly likely unpleasant) surprise. People don't like data about them to be collected.
Relevant but unexpected advertising it is always going to be less effective than expected.
Example of permission transfer attempt - personalised online ads that are based on information on you supplied by partnering sites.
Permission is Selfish
People are selfish. They don't care about you, your products, services or company.
You need to provide them with something that's good for them, what's interesting, what's relevant. Some sort of reward. Interesting reports.
You need to answer customer's question: "What's in it for me?"
Example: job/agency sites offering to subscribe to email updates based on your job search parameters (keywords, location, salary etc).
If you provide useful content to the right audience who's happy to receive it, it makes it easier to escalate the permission.
Although if after earning permission you start to utilise it solely to your own advantage, forgetting about what's important and interesting for your recipients, there will be a sharp drop in the permission levels.
Permission is a process, not a state
Although you start the permission marketing "relationship" with a customer with interruption, you need to continue on developing that relationship.
You can offer for free insights and tools for your customer, something that your competition doesn't offer.
I suppose instead of blowing money on the ads and "brand awareness" you can rather build an infrastructure that provides these free services.
Permission can be cancelled any time
I think it's important to stress that often enough, and not try to hide it - telling customer upfront that he can unsubscribe any time gives him this empowering feeling - that he's in control of the situation. I don't think you need to hide it in any way or small-print it - say it upfront.
Example with a tongue-in-cheek - Scheherazade and her stories that interested the king so much that he forgot about the usual beheading of his wives.Marketing for Web
Many marketers see Internet as just an extension of traditional media where you can "run ads" to get "audience".
Here Seth proceeds on a long rant why it's stupid to emulate TV with every new media and gives some examples.
For your web marketing strategy, you need to answer the following questions:
Internet is a greatest direct marketing medium so far.
Focus of your website should be on getting people to sign up to your mailing list. You should be obsessed with getting permission.
In his context, the cost of getting a person to subscribe to your list is:
Cost of a visit = cost of N ad impressions that brings M visitors / M (number of visitors it brings)
Cost of acquisition = Cost of visit * [100 / % of people who sign up ]
Alternatively if you're running not CPI, but CPC campaigns, your cost per click is known already and you just need to multiply that by [100/conversion rate]
Then you need to measure:
Keys to setting up permission based site
In this case their message would be relevant, anticipated and personal. Better yet, they wouldn't have to spend all these money next year to obtain the permission, as compared to never-stopping need to re-run the ads - they would've built an asset - an interested, anticipating user base.
Ten questions to ask when evaluating any Permission Marketing program:
1. What's the bait?
What is that you offering for customers to sign up? Offer most obvious and selfish bait to attract more people.
It must also be relevant/related to the product or service that you offer.
2. How much does it cost to get one person on the list?
3. How deep is the permission?
Be sure to make it clear what your expectations are - if you promised to send them something in the exchange for their email address, do just that, and then try to "upgrade" the permission carefully.
4. How much does it cost to send one more email?
Not sure why this is listed at all, is Seth running out of steam already?
5. Response rate to comms?
What are the open rates/click rates?
6. Can you track drop-offs and act on it?
Measuring the decrease in activity and deciding to add some more incentives to re-encourage people, since the initial stimulus may tend to wear off. You need to be able to answer the question if it's cheaper for you to acquire new people vs keeping the existing ones interested.
I would also say you need to be able to measure the effectiveness of that "re-encouragement" - what is the rate of final conversion (sale) for the re-encouraged group? Was it worth it in the end? Shall we continue doing that or just let those people to drop off?
7. Is company treating the acquired audience as an asset?
Need to be aware of how wide and deep the the permission is. You should be able to calculate ROI over time.
8. How is the permission being leveraged?
Are you using the data you've got properly? Is your comms relevant and anticipated?
9. Are you increasing the level of permission?
Permission is not a state, it's a process. It will decline with time if not stimulated. Bring more useful or interesting or fun or valuable or otherwise interesting stuff to your prospects. This will increase their trust. Then do it again.
10. What's the expected lifetime of one permission?
What's your lifetime value of a customer? Is that a once-off purchase or something that you can cultivate into long relationship and have them coming back for more? This will define your marketing budget and how much can you spend on acquiring and keeping one prospect.
Interesting technique suggested by Seth - to track user's activity on the service (in that case - use of the ancient beepers) and if it drops - rekindle user's interest by offering them promotions and alike. Although this one can be a shot in the dark - I'd rather figure out the most common reasons why people stop/reduce their use of service (this can also be done via the permission marketing model, by offering the prospects to answer the questionnaire in exchange of a gift voucher or a relevant discount/promotion) and then decide whether giving away anything is likely to get people back to using the service. For example, if the use of beepers drops because people just started switching to mobile phones and use SMSes more often, they are unlikely to use your service in the long run. On the other hand, if they just lost the beeper or had any other issues that distracted them or made them to loose interest, then your re-marketing attempt might be quite relevant.Interesting analogy - Interruption Marketing is like hunting, Permission Marketing is like farming, first one brings some results straight away, but those cease to exist after campaign is gone, while second one takes time to develop but keeps on giving and can be scaled.
Notion of "gatekeepers" - resellers of manufacturers' products/services, for example what WalMart does for Proctor&Gamble. Problem that manufacturers face is that with sufficient customer base gatekeepers start treating the supplies as a commodity and weld rather huge bargaining power - nobody wants to loose such a giant portion of sales (say 25% of all detergent market in US of P&G). And this power is going to grow if the gatekeepers start on accumulation of Permission Marketing recipients. So basically who controls the access to the minds, wins.