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Permission Marketing Reloaded – thanks to data protection

Permission Marketing Reloaded: The concept coined by Seth Godin in 1999 and describes a marketing concept where marketers obtain the consumer’s permission before advancing to the purchasing process. This form of marketing is mostly used in e-marketing by online marketers. Its opposite is Interruption Marketing.

Permission Marketing, as its name implies, requires the marketer to obtain the prospective customer’s permission to send their promotional message, either explicitly or implicitly. An example for explicit permission would be requesting e-mail newsletters; implicit permission can be given through search queries in search engines (as looking for specific information implies that the customer is asking for offers that would meet the query) or the participation in a survey. This gives the marketer a higher efficiency in utilising their resources since the offers are sent only to prospective customers with a previously stated interest in the promoted product.

Since the consumers targeted by Permission Marketing have volunteered to be marketed to, this strategy guarantees a higher degree of attention paid by consumers to the promotional message. It serves consumers and marketers in a symbiotic exchange that encourages customers to participate in a long-term, interactive marketing campaign. Godin himself describes it as “turning strangers into friends and friends into lifetime customers” – having volunteered for receiving promotional messages, the consumer anticipates their arrival and is therefore more likely to pay attention to its content and provide the response the marketer aimed for. This is improved further by customizing the promotional messages to match the consumer’s interests.

According to Godin, there are five steps of establishing a successful exchange with a customer. In the first step, the marketer must offer the prospective customer an incentive for volunteering. If there is no benefit from entering this business relationship, the potential customer will refuse the offer or simply opt-out of the program. The offered incentive can range from information, to entertainment, to outright payment, but no matter the shape of the incentive, it has to be “overt, obvious and clearly delivered”. Secondly, the marketer offers information over time to teach the consumer about their product.

Because the consumer is already paying attention, the marketer can focus on the product’s benefits that will capture the consumer’s interest. In the next step, the incentive is reinforced to ensure the continued attention of the consumer. Fourthly, the level of permission the marketer receives from the potential customer is increased. This involves the amount of (detailed) information the marketer receives from the consumer and allows the marketer to further customize their promotional messages.

The level of permission is not limited to personal information; the consumer may also, for example, permit the marketer to send offers on new product categories for consideration or provide product samples. Furthermore, the marketer has to leverage the permission given by the consumer into a profitable situation for both parties. This means changing the consumer’s behavior towards profits.

Although the term Permission Marketing became popular because of Godins book, the general idea of customer permission in direct marketing had surfaced in earlier marketing literature, mainly in the context of privacy issues in direct marketing. However, permission was seen mostly as a tool to establish privacy rights rather than to enhance targeting.

The literature regarding direct marketing has also been concerned with the importance of consumers controlling the terms of their relationships with marketers, mainly how their information is used and the kind and volume of advertising they receive. This literature views direct mail as a social contract between marketer and consumer. It is also recognized that what is necessary to improve direct marketing relationships does not consist of simply a reduction of individuals’ privacy concerns, but an improvement of the consumer’s trust in the marketer.

Permission Marketing is one logical conclusion of this assumption as a method of building trust and providing the marketer with a consumer base that has an acutal interest in their products (this also reduces the fallout that comes with a broader approach in targeting that is based on averages).

Contrary to most marketing strategies, Permission Marketing does not target on averages. Rather than obtaining an average profile of potential customers and risk a relatively low targeting precision, it promotes a more direct approach on a one-on-one basis.

Theoretically, as a direct marketing strategy, Permission Marketing promises a considerable improve regarding targeting precision since the idea of one-on-one marketing proposes reduced market segments of size one, which allows for customizing the marketing strategies for each individual. The marketing mix for a product can be customized accordingly to the needs and wants of each consumer.

This also takes a long-term orientation in targeting as opposed to a short-term transactional orientation. The idea is understanding the customer’s lifetime value and allocating resources accordingly, with emphasis on retaining existing customers rather than continuously targeting only prospective customers and risk losing the existing customer base.

However, several problems arise with such a marketing strategy that proposes targeting initiated by the marketer. Since consumers receive such an excessive volume of proposals for buying a product and consecutively entering a business relationship with a company, they do not perceive themselves as having control over the terms of this relationship and therefore do not place much value addition on such relationships. As a result, such techniques breed consumer cynicism. This is a problem especially with the Internet since the marginal cost of sending an additional promotional message is nearly non-existent for the company.

Even though Permission Marketing can be implemented in any direct medium, only the advent of the Internet allowed the idea to emerge in any seriousness. There are two reasons for this: firstly, the cost of marketer-to-consumer communication is very low on the Internet; secondly, the Internet has enabled rapid feedback mechanisms due to instantaneous two-way communication.

Another motivation for Permission Marketing on the Internet was the failure of the direct mail approach of sending unsolicited promotional messages – a prime example of this being unsolicited commercial e-mail or “spam”, which cannot be a legitimate form of marketing communication even though the cost of obtaining a new e-mail address is minimal and the marginal cost of contacting an additional customer is nearly zero. Using it would lead to an excessive message volume for consumers, which would weaken the brand’s reputation and slow down the entire network. Hence, Permission Marketing is seen as a feasible alternative for Internet marketing communication. By now, Permission Marketing is a large-scale activity on the Internet and had additionally been incorporated in leading texts on marketing management.

A key construct of Permission Marketing as it is practiced on the Internet is permission intensity, which is formally defined as the degree to which a consumer empowers a marketer in the context of a communicative relationship. In other words, consumers define the boundaries of their relationship with companies in such businesses; in some cases they allow the company tremendous leeway, in others the company is held on a tight leash. The more detailed the information the consumer provides is regarding their tastes and preferences, the greater the consumer’s role for the marketer and hence, the greater the permission intensity. High permission intensity is characterized by three factors: high information quantity, high information quality and information usage flexibility.

First, an individual recognizes that providing detailed information is in their self-interest. This results in the individual’s willing participation in an exchange of information for a promise of better service in the future. Second, the consumer realizes that their life will be most enriched if they present information of a high quality, as inaccurate information provided by the consumer will only lead to messages of little to no interest and will increase clutter. The exchange between marketer and consumer is recognized as an incentive-compatible one. Third, the consumer’s constraints on how their information can be used in the development of marketing messages will be few.

The trade-off in Permission Marketing is breadth versus depth. The corresponding strategies would be a business relationship with a large number of consumers with a low level of permission intensity or a relationship with a smaller consumer base with detailed information and high permission intensity, respectively. However, a low permission intensity does not necessarily mean that a company does not have a detailed customer profile. Several companies did not ask for detailed information since they already have information about the customer through an offline database or cookies.

Albeit, in the light of new data protection rules, the game is changing again. And thankfully, deliberate, explicit permission becomes more important than ever before.