JRosenfield Article

PRIVACY AND "PERMISSION-BASED MARKETING"

James R. Rosenfield

June 2004

For those who had eyes to see, privacy first loomed as a major issue about twenty years ago. Most direct marketers continued on their merry way, though, paying no attention whatsoever.

By the end of the 1990s, ignoring things was no longer possible. But privacy concerns were misinterpreted, most notably by the American Direct Marketing Association, as a strain of anti-business prejudice welling up from somewhere in the dark depths of the consumer's psyche.

Now, in the early 21 st Century, privacy concerns-after being ignored and scorned in previous decades - have bitten back big time. It's the return of the repressed, haunting direct marketers every minute of the day.

Americans have voted, so to speak, with their feet. The Do-Not-Call Registry now has over 58 million phone numbers, covering virtually every sentient American household.

But it wasn't telemarketing per se that caused the problem. It was the fatal combination of technology, obtuseness, and greed, a toxically volatile mixture that will be the biggest threat to direct marketing over the next few years.

Everyone has hated outbound telemarketing for a long time, but it still made money. Why? Because predictive dialing made telemarketing's economies so favorable that even if most people hung up, the profits were still there.

Add unintended consequences - always a byproduct of technology - to the mix. Predictive dialing creates "abandoned calls," in the jargon of the trade. Unless the phone gets answered immediately, the dialing machine bails out, and moves on to the next number. The constant hang ups, of course, irritated, inconvenienced, and scared people, further fueling the public's fury.

You see the pattern here? Technology plus obtuseness plus greed plus unintended consequences equals disaster.

Untrammeled telemarketing made people feel out of control. That's what bad technology, or misfiring technology, does. And losing control (privacy angst is a subset of this) looms as the single biggest consumer concern of the early 21 st Century.

Outbound telemarketing invades people's private space. So does Spam, so does some (but not all) direct mail, so does the multiplicity of unwanted messages that everyone gets from all media these days. (Last month I cited a recent Yankelovich research study in which a startling percentage of Americans claim they're willing to lower their standards of living if only they were spared omnipresent marketing!)

Privacy concerns are even greater than what meets the eye.

Privacy anxiety not only has to do with privacy itself. It neatly encapsulates everything that creeps people out these days: Contamination, invasion, violation, and loss of control.

The solution to all of this, from a marketing perspective? Give customers control. If you don't, they will rebel, and seize control, as happened with the Do-Not-Call Registry.

Here's the threat: If you don't give customers control now, in ways that you can live with, you will be forced to do so in the future, in ways that will harm you.

Remember that even if you are a responsible direct marketer, people tar you with the same brush that darkens outbound telemarketing, Spam, and unwanted junk mail. This means you might be a good guy, but unless you are proactive, you're very much behind the 8 ball.

Alas, putting customers in control - so called "permission marketing" - fills direct marketers with fear and trembling.

Direct marketers have always reacted to change that way. Part of that is human nature, but part is the risk-averse culture endemic to direct marketing, where you test, test, test, cautiously, cautiously, cautiously. This is no time, though, for testing or caution.

Direct marketing has a brilliant future as long as practitioners act intelligently. Doom-sayers don't impress me: The direct marketing world has been doomed periodically through the years, and - guess what! - it's still here!

In 1967, U.S. mailers were required to use new postal codes ("Zip codes"). Garments were rent as direct marketers wailed to the heavens about the costliness of re-doing addresses. Zip codes ended up being the best thing ever for direct mailers, providing thitherto unprecedented refinement in analysis, sorting, and targeting.

Since at least 1900, every postal rate increase in America has been greeted by cries of perdition.

These days privacy in general of course will be the end of the world, as will the Do-Not-Call Registry, as will "permission marketing."

All of this is nonsense. But the stakes are now so high that protracted obtuseness will certainly limit our horizons.

The world won't end, as long as:

--We appreciate the depth of our customers' concerns about privacy and control, and don't dismiss them as mere anti-business feelings.

--Learn how to market opt-in (logically, if our products are good, and we communicate properly, the customer should want to opt-in).

This requires a certain degree of culture change. When organizations natter on about changing the culture, they usually succeed only in maintaining a culture of meetings, instead of a culture of action.

Cultures change only under dire threat. The threat is here, so you must act now.

Here's a sketch of a plan, for direct mail. (Anyone half-coherent does email marketing on a permission basis, and the Do-Not-Call Registry has solved some of the telemarketing problem, although the fact that you still get calls from companies you do business with is most worrisome.)

Some strategic thoughts:

-- If you act now, you can hedge your bets through testing.in the future, any form of opt-out testing might be closed off to you.

--Test objective: duplicate non-permission direct mail in net results (i.e., do what you're now doing but on a permission basis).

--Time span: 18 months minimum.

--Logical hypothesis: if people get messages they care about, they will buy more stuff from you and like you better, all of which creates a virtuous circle.

--Short-term risk of getting up the learning curve trumps long-term risk of being out-of-business.

--Predicate bonuses not just on sales, but on how the sales are made.

--Everyone needs to champion this, because if you don't, there will be no future.

Some tactical thoughts:

--Include "control restoratives" with each mailing, "If your name or anything else is incorrect, please call us." Important: A misspelled name used to be a minor nuisance. Now it's a reminder of technology run amok. Control restoratives, by the way, have the excellent side-effect of cleaning up your data file, and improving your results. Customers don't respond to direct mail that mangles their names.

--Include "relevance probes" in each mailing/email contact/telephone contact, "Is this message of interest to you?" (Irrelevance wastes time, creates loss-of-control feelings)

-- Craft opt-in wording carefully, otherwise customers who really don't want to opt-out will end up doing so anyway.

-- Spend more time and money on thank you and apology messages.

-- Radical solution: look into rewards program based on willingness to receive marketing messages (e.g., 1 point per dm package, 3 points per phone call, etc.)

The ultimate outcome of all of this: customers only get relevant and desired messages. Marketing becomes less coercive, less manipulative, more human. ( Peter Drucker once said, "Pure marketing eliminates the need for selling.") You are now doing things with the customer, rather than to the customer.

In order to have full impact on customers, as well as to remind them that they gave you permission, every direct mail communication should include copy stating your mission and policies.

When you succeed at this (and you will have to, make no bones about it), you should then do some "meta-marketing," the marketing of permission-based-marketing itself, both in mass and direct marketing media, as well as via vigorous public relations.

Respecting the customer is good ethics and good business. Our customers become more satisfied, and we make more money. Take the high road, be the good guy. Otherwise, you really might be doomed this time around.