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Permission Marketing: Turning Strangers Into Friends And Friends Into Customers (A Gift for Marketers)

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Permission Marketing: Turning Strangers Into Friends And Friends Into Customers (A Gift for Marketers)

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Highlights & Notes

Take the interruption challenge! Write down all the companies that ran commercials during your favorite TV show last night. Write down all the companies that paid good money to buy banners on the Web during your last surfing expedition. If you can list more than 10 percent of them, you’re certainly the exception.

Powerful advertising is anticipated, personal, and relevant.

In fact, the worse the clutter gets, the more profitable your Permission Marketing efforts become.

Every marketing campaign gets better when an element of permission is added. In some cases, a switch to marketing with permission can fundamentally change a company’s entire business model and profit structure.

That’s because you need two things in order to have an economy: people who want things, and a scarcity of things they want. Without scarcity, there’s no basis for an economy.

Consumers are now willing to pay handsomely to save time, while marketers are eager to pay bundles to get attention.

The alternative is Permission Marketing, which offers the consumer an opportunity to volunteer to be marketed to. By talking only to volunteers, Permission Marketing guarantees that consumers pay more attention to the marketing message. It allows marketers to tell their story calmly and succinctly, without fear of being interrupted by competitors or Interruption Marketers. It serves both consumers and marketers in a symbiotic exchange.

Permission Marketing encourages consumers to participate in a long-term, interactive marketing campaign in which they are rewarded in some way for paying attention to increasingly relevant messages.

Permission marketing is anticipated, personal, relevant. Anticipated—people look forward to hearing from you. Personal—the messages are directly related to the individual. Relevant—the marketing is about something the prospect is interested in.

Permission Marketing is just like dating. It turns strangers into friends and friends into lifetime customers. Many of the rules of dating apply, and so do many of the benefits.

The incentive you offer to the customer can range from information, to entertainment, to a sweepstakes, to outright payment for the prospect’s attention. But the incentive must be overt, obvious, and clearly delivered.

Second, using the attention offered by the consumer, the marketer offers a curriculum over time, teaching the consumer about the product or service he has to offer.

The third step involves reinforcing the incentive. Over time, any incentive wears out. Just as your date may tire of even the finest restaurant, the prospective customer may show fatigue with the same repeated incentive. The Permission Marketer must work to reinforce the incentive, to be sure that the attention continues. This is surprisingly easy. Because this is a two-way dialogue, not a narcissistic monologue, the marketer can adjust the incentives being offered and fine-tune them for each prospect.

Along with reinforcing the incentive, the fourth step is to increase the level of permission the marketer receives from the potential customer. Now I won’t go into detail on what step of the dating process this corresponds to, but in marketing terms, the goal is to motivate the consumer to give more and more permission over time. Permission to gather more data about the customer’s personal life, or hobbies, or interests.

Five Steps to Dating Your Customer Offer the prospect an incentive to volunteer. Using the attention offered by the prospect, offer a curriculum over time, teaching the consumer about your product or service. Reinforce the incentive to guarantee that the prospect maintains the permission. Offer additional incentives to get even more permission from the consumer. Over time, leverage the permission to change consumer behavior toward profits.

Permission Marketing Is Anticipated, Personal, Relevant Anticipated—people look forward to hearing from you. Personal—the messages are directly related to the individual. Relevant—the marketing is about something the prospect is interested in.

And Permission Marketing requires a leap of faith. Even a bad interruption campaign gets some results right away, while a permission campaign requires infrastructure and a belief in the durability of the permission concept before it blossoms with success.

Interruption Marketing was easy. Build a few ads, run them everywhere. Interruption Marketing was scalable. If you need more sales, buy more ads. Interruption Marketing was predictable. With experience, a mass marketer could tell how many dollars in revenue one more dollar in ad spending would generate. Interruption Marketing fit the command and control bias of big companies. It was totally controlled by the advertiser, with no weird side effects. Interruption Marketing was profitable. The right product generated more profit than it cost the company to advertise.

So, argue the authors, instead of focusing on how to maximize the number of new customers, the focus should be on keeping customers longer and getting far more money from each of them over time.

But without some way to grab the attention of a stranger, the permission process never starts.

At each step, the only goal of the next step is to expand permission.

Step two in the process, after the consumer has been interrupted, is to make an offer and ask for volunteers. The offer should provide selfish motivation and offer virtually no downside.

Before a marketer can build trust, it must breed familiarity. But there’s no familiarity without awareness. And awareness—the science of letting people know you exist and getting them to understand your message—can’t happen effectively in today’s environment without advertising.

Marketing guru Jay Levinson figures you have to run an ad twenty-seven times against one individual before it has its desired impact. Why? Because only one out of nine ads is seen, and you’ve got to see it at least three times before it sinks in.

Frequency-Related Marketing Problems Because people don’t pay attention to advertising, ads that run without a lot of frequency are ignored. Because marketers must interrupt a busy consumer, advertising carries a lot of fluff and sizzle along with the message, so there isn’t a lot of room to tell a compelling story. Because consumers are overwhelmed with data, they ignore or misunderstand most new concepts. Frequency is extremely expensive, and it’s tempting to focus on untouched consumers instead of those who haven’t yet responded. Running ads frequently is boring.

Because they’re trusted, they’re profitable. In fact, in virtually every industry the most trusted brand is also the most profitable. Frequency led to awareness, awareness to familiarity, and familiarity to trust. And trust, almost without exception, leads to profit.

School was sort of like that as well. The one-room schoolhouse was the domain of a single talented individual. Her job was to work with each student individually and, after a few years, turn out students who had actually learned something. Then the Industrial Revolution occurred and we changed our work habits to include factories, and that change infiltrated our concept of schools. Instead of relying on a unique individual to shape a few students, we built school factories. Each room is like a workstation in a factory assembly line. The desks are lined up in rows. Teachers teach from a standardized curriculum. Instead of being rewarded as craftsmen, they’re hired for their ability to follow instructions. And at the end of each semester, the students move to the next stop on the assembly line. Students who don’t fit their “batch” on the assembly line are removed to special programs. Students who don’t meet the quality standards set by a centralized quality-control facility are disciplined, repaired, or rejected. The teachers’ union, just like the autoworkers’ union, pushes for ever more standardization and job protection.

The goal of the Permission Marketer is to move consumers up the permission ladder, moving them from strangers to friends to customers. And from customers to loyal customers. At every step up the ladder, trust grows, responsibility grows, and profits grow.

Intravenous (and “purchase-on-approval” model) Points (liability model and chance model) Personal relationships Brand trustSituation There’s a sixth level, but it’s so low I won’t even refer to it as a level at all. It’s called spam (unsolicited advertising), and it’s covered last.

A marketer who has achieved intravenous permission from his customer is making the buying decisions on behalf of the consumer. The privilege is huge, but the downside is significant. If the marketer guesses wrong or, worse, abuses the permission, it will be canceled in a heartbeat.

As computers make it easier for marketers to understand and catalog the various individual nuances among customers, this reason will become increasingly important. The more successful the marketer is at selecting products that are relevant to our lives, the more likely we’re willing to let them pick.

The idea of automatic replenishment can be extended in more ways as technology makes it easier to execute these systems. Virtually every product, therefore, can be sold by subscription!

The more you collected Green Stamps, the more you collected Green Stamps. This is an essential tautology for any points program. They must be constructed in a way that earning ever more points is easier and more compelling. Points marketers love to give away rewards, because it means that the program is working.

Green Stamps became a currency. And like all currencies, they acquired a particular value. Marketers got to decide exactly how much currency they were willing to spend for attention and ultimately for a sale.

Because different people have different attention thresholds, cash discounts are a crude form of points. Frequently the discount is given to someone who could have lived happily without it. Other times the discount is insufficient to get an ideal prospect to buy from you the first time.

Part of the attraction of the miles programs is that they offer users a sense of mastery. It’s easy to feel smart about the way you’re using miles. You can understand and even try to beat the system.

Yes, it is difficult and expensive to get someone to sign up for and then become fascinated by a points program. Yes, it’s unlikely you’ll get as many sign-ups as the airlines did. But for those industries in which a points program can be implemented, it’s a remarkably inexpensive way to attract and keep exactly the right people.

Like S&H Green Stamps, frequent flier miles are a huge success because consumers can incrementally win discounts and awards. And the incremental nature of the program allows large numbers of people to participate in a quick and easy way.

If the reward is big enough, if the participation is easy enough, if the odds seem good enough, if there’s enough trust—just about everybody wants to win something. Just about everyone wants to save a buck.

So why do they work? In my company’s experience, it’s because consumers have a good time. They feel smart. They feel in control. They feel safe. They like getting me-mail, not e-mail (every interaction is anticipated, personal, and relevant, not to mention unique, to them).

The chance model is almost a reverse of the liability model. Consumers don’t earn a guaranteed reward; instead they earn more chances to win a reward. Sort of like getting lots and lots of lottery tickets, for free, in exchange for a desired behavior. The biggest advantage of the chance model is that the cost of one more point is basically zero. If the prize is fixed (win $1 million or win a free car), then inflating the number of entries doesn’t cost the marketer anything at all. The biggest disadvantage is directly related to the advantage: If a consumer doesn’t think he has a chance to win, he’s not going to enter. And one step further, if it isn’t fun to keep playing, he’ll walk.

Points programs with a chance element must do the same thing. The prize must be so life changing and so relevant to a particular consumer that it cuts through the clutter, gets people to sign up, and, of greatest importance, leads to frequency.

No one enters a promotion thinking he’s going to lose. No one quits a promotion when she’s tied for first place. The fear of losing because you don’t have enough points outweighs the cost of attention that comes from performing in the way the marketer asks. If the interactions are fun and good for the ego, it’s likely the consumer will continue to participate.

Without permission, a reward to the consumer is worth far less to the marketer. So it’s important to define the permission very carefully. Is it transferable? American Airlines knows a lot about you—what can they do with that data? The goal is to avoid surprising the consumers and interacting with them by sending only messages they expect.

The third level of permission is personal relationships. Surprisingly, these rank behind points in the permission hierarchy. Why? Because they don’t scale. Using the relationship you have with an individual is an extremely effective way to temporarily refocus his attention or modify his behavior, but this approach is completely dependent on individuals. An employee may move on, but a permission program remains. Dentists, for example, don’t get very much money when they “sell” their practices. Why? Because there’s no guarantee that the consumer will enjoy the new dentist as much. Personal relationships in the business world are slow and difficult to make deeper. It might take years of golf and excellent products and focused selling and word of mouth to make a relationship more profitable.

Much lower down the permission list is brand trust. This is the tried-and-true branding that is the mantra of most Interruption Marketers. It is the virtually unmeasurable but oh-so-fun way to be in the marketing business. Marlboro communicates brand trust. So do Ivory and Campbell’s and Starbucks and even Tom Peters. Brand trust is a vague, but soft and safe form of product confidence that consumers feel when interacting with a brand that’s spent a ton of money on consistent, frequent interruptive messages. Brand trust is dramatically overrated. It’s extraordinarily expensive to create, takes a very long time to develop, is hard to measure, and is harder still to manipulate.

The last useful level of permission is situational permission. This is very time sensitive but also very useful. Situational permission is usually preceded by the question “May I help you?” When a consumer calls an 800 number, she has given situational permission. When you stop to ask for directions, or to ask a store clerk for advice on a gift, or when you buy just about anything from anyone, you’ve given situational permission. In some ways this is a very powerful tool indeed. The consumer and the salesperson/marketer have very high physical and social proximity. The consumer has initiated the particular interaction, so there is no question of appropriateness. Generally, there is either money on the table right now or in the near future, or the consumer wouldn’t have initiated the dialogue.

It’s clear to me that the most important part of the permission troika—anticipated, personal, and relevant—is anticipated. And spam is not just unanticipated, it’s dreaded.

ONCE YOU HAVE EARNED PERMISSION, you must keep it and attempt to expand it. These four rules go a long way to help marketers understand permission: Permission is nontransferable. Permission is selfish. Permission is a process, not a moment. Permission can be canceled at any time.

Permission Marketing is at odds with the secret sorting and evaluation of data. Why? Because it takes consumers by surprise. And when you surprise a consumer, not only do you void permission, you increase fear. More than 80 percent of all consumers polled indicated that they’re afraid of the data being collected about them. Far worse (from a marketer’s point of view) is that this same fear is the single greatest impediment to consumers shopping online.

Permission leveraged is permission enhanced. Permission rented is permission lost.

The heart of Permission Marketing is giving the stranger a reason to pay attention, while Interruption Marketers hold people hostage.

In today’s infoglut, people are more selfish than ever. And they’re most selfish about their time and attention. Without a really good reason, you’re not going to grab a piece of their most precious resource.

Permission Marketers make every single interaction selfish for the consumer. “What’s in it for me?” is the question that must be answered at every step.

Traditional marketing has the consumer at its mercy. Marketers can send ads as often as they can afford to. With permission, the tables are turned. Consumers can cancel permission at any time.

Imagine a prospect walking into a retail store wearing a ski mask. “I’m just looking,” would be an understatement. People in masks are rarely good citizens, and they virtually never buy anything. Anonymity leads to spam, to onetime visits, to a lack of marketing effectiveness, and to bad behavior. Great marketers entice consumers to give up anonymity. Permission Marketing rewards individuals for giving up their anonymity. Traditional Web techniques embrace anonymity and fail because of this shortcoming.

A mass-market campaign must be the same for each viewer. But using the power of computers, the marketer can customize them for an audience of one.

People who need more rewards to stay active can get them without corrupting the entire system.

The opt-in step, the first one, is tricky, expensive, and slow. Because of this, many marketers may decide to skip it and just rent or buy a list of e-mail addresses. This is a bad idea

The spammers who believe that consumers should have to opt out of these mailings miss the point, too. Macy’s doesn’t have to opt out of shoplifting. Shoplifters don’t have the option of waiting until they get caught and then agreeing to stop. Spammers face the same obligation.

The more unique the audience, the more anticipated the messages, and the more overt the opt-in (permission), the more valuable the list is.

Your Web site should be 100 percent focused on signing up strangers to give you permission to market to them.

That’s all. It doesn’t have to be big or fancy or complicated or expensive. Instead, this front door to your business should be obsessed with getting permission.

Early on at Yoyodyne, we discovered that we needed one full-time customer service person for every 10,000 people in the database. It quickly became clear to me that this would bankrupt us. So we reset our expectations on what we should provide to the consumer and built a sophisticated automated solution. Today we have millions of people in the database but still don’t need even a single full-time customer service person. We’ve successfully removed the need for much personal contact from our system.

If you can build simple tools that work, and you can make people feel smart for using them, prospects will flock to you and stay with you.

Compare this approach with that of the typical contractor, who attempts to earn the maximum amount on each job yet spends most of his time looking for new work and earning nothing during his downtime. Without a loyal base, the word of mouth isn’t as forthcoming, further compounding the typical contractor’s woes.

When they do give information to advertisers, it is in the form of grouped statistics compiled from all participating members’ answers to survey questions.

With Value America you get the convenience of shopping at a store that knows you, remembers what you’ve bought, and even adjusts the scope of its presentations to meet the capabilities of your computer.

By appealing to one of the simplest human desires (the joy of winning) and balancing it with judicious doses of relevant information, we capture and keep attention.

The power of permission played a big role. Because the messages were anticipated, personal, and relevant, people paid attention. And because there was a curriculum, they learned.

If you measure it, it will get done. THERE ARE TEN QUESTIONS TO ASK when evaluating any marketing program: What’s the bait? What does an incremental permission cost? How deep is the permission that is granted? How much does incremental frequency cost? What’s the active response rate to communications? What are the issues regarding compression? Is the company treating the permission as an asset? How is the permission being leveraged? How is the permission level being increased? What is the expected lifetime of one permission?

The best bait is easy to describe, coveted by a large portion of your target market and economical to deliver. And the bait must be tangible enough that the consumer will give up precious attention and privacy to participate.

Obviously bait doesn’t have to be a prize. It could be a coupon, information about an interesting subject, entertainment, or membership to a privileged group.

If it costs a company 5 in additional anticompression rewards to keep her, the choice is pretty obvious.

Building a booth at a trade show, for example, isn’t cheap. But how many companies build retention and attention programs that take the assets these trade shows create and really follow up on them? I know that I’ve swiped my badge through countless card readers at trade shows, and it’s rare indeed if there’s any follow-up at all. And I can’t remember one instance where there was a consistent suite of follow-up messages.

Building a base of qualified prospects is incredibly difficult, and not leveraging it is a sin.

America’s favorite radio station is still WII-FM (what’s in it for me), and if you don’t acknowledge that with the professionals you’re interacting with, they won’t give up their valuable time to respond.

Most marketers practice Interruption Marketing. The difference is simple. An Interruption Marketer is a hunter. A Permission Marketer is a farmer. Hunting prospects involves loading a gun with bullets and shooting until you hit something. You can take a day or a week or a month off from this endeavor and it won’t take you long to get back into successfully bagging a few. Farming prospects involves hoeing, planting, watering, and harvesting. It’s infinitely more predictable, but it takes regular effort and focus. If you take a month off, you might lose your entire crop. On the other hand, farming scales. Once you get good at it, you can plant ever more seeds and harvest ever more crops.

Opt-out is a sham. It takes power away from the consumer and provides a flimsy opportunity for the marketer.

To be clear, opt-in is a specific election on the part of a consumer to participate. Opt-out means that the election is made for them automatically by the marketer, and only by actively choosing not to receive the messages can the consumer be left alone. The junk mail that clogs your mailbox at home is opt-out. You can stop it by writing to the Direct Marketing Association, but until you do, it’s going to keep on coming.

The channel conflict issue is simple—should you stick with your long-term retailers, or should you try to bypass them and go straight to the consumer? Miss the opportunity to build a permission relationship directly with the consumer, and your company is likely to become a commodity supplier. If you acknowledge the coming power of the permission holder yet choose to avoid the battle to become one, you can still win. If you start now, you can optimize your company for the role of supplying the permission holder, making yourself more attractive to these gatekeepers and locking in the long-term relationships that can give you insulation moving forward. On the other hand, if you go for the opportunity to deal direct, you’ll face the wrath of your existing intermediaries. It’ll be expensive to build and maintain a permission base, and risky too. But if you succeed, you will have built an asset that can offset the demands of the gatekeepers. You’ll be able to maintain fair pricing and generate better profits. The worst path is to try to do both (which is also the most likely path for established companies). By trying to serve two masters, you’ll probably do neither job well. Company after company has floundered as it tried to build a direct relationship with consumers at the same time it tried hard not to offend the retailer or gatekeeper that initiated the original relationship.

If you get a chance, check out www.ge.com. General Electric’s Web site, built at some ungodly cost, is perhaps the worst example of a big company’s establishing a committee and then burning its cash.

What are the first steps to take to get started with Permission Marketing? You can walk before you run. In order, here’s what you should do: Figure out the lifetime value of a new customer. Without this data it will be extremely difficult to compute what it’s worth to acquire a new permission. Invent and build a series of communication suites that you will use to turn strangers into friends. This can be a series of e-mails, a series of letters, a number of scripts to use in phone conversations, a series of Web pages, and so on. Essential to each suite are four elements: Change all of your advertising to include a call to action. Never run an ad of any kind that doesn’t give consumers a chance to respond. Once they respond, initiate one of the communication suites. Measure the results of each suite. Throw out the bottom 60 percent and replace them with new suites. Continue testing different approaches forever. Measure how many permissions you achieve. Measure how much permission changes buying behavior. Reward all parties on the permission team for exceeding metrics. Assign one person to guard the permission base. Have that person focus on increasing the level of permission gained from each individual and reward her for resisting short-term profiteering. Work to decrease your cost of frequency by automating responses and moving to e-mail and the Internet. Rebuild your Web site to turn it from brochureware to a focused permission acquisition medium. Regularly audit your permission base to determine how deep your permission really is. Leverage your permission by offering additional products or services or by co-marketing with partners.

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