A TCI Book Review
Permission Marketing Turning Strangers into Friends, and Friends into
Simon & Schuster, New York, 1999, ISBN 0-684-85636-0
Seth Godin is the Vice President of Direct Marketing at Yahoo!, and is billed on the cover of the book as an 'Internet marketing pioneer'. (In a former career, he founded Yoyodyne, which was the first company to create promotions and direct-mail campaigns on-line.) He therefore knows a thing or two about Internet marketing (although this book isn't expressly devoted to that topic).
Godin's basic premise is that we are continually bombarded with ads and solicitations that compete for our limited time and attention span. As time is our most precious commodity, we naturally enough resent these intrusions, and will increasingly ignore them, tune out and refuse to respond. Traditional advertising will therefore become more difficult and more expensive, as an increasing number of exposures (frequency and reach) will be required to achieve the same result. The cycle is a vicious one: more advertising breeds more resentment and less attention paid, which breeds more advertising...and so on. Godin calls this paradigm Interruption Marketing and heaps scorn upon this approach throughout his book.
Permission Marketing is the other end of the spectrum. Here the strategy is to first ask the potential customer's permission to initiate a relationship, by providing them with something desirable for free, or for very low cost. Then, once a relationship is established, it is gradually strengthened by the customer giving more and more 'permission' to the supplier in return for increasing benefits. The customer or potential customer might give the company information about themselves and their purchasing patterns (which can be very valuable data for the company's future marketing initiatives), for example. Or they might provide feedback on potential new products or services. Another form of permission would involve customers allowing a company to supply them on an on-going basis without a separate contract being negotiated each time. (An example of this latter approach would be the Book of the Month Club, where the organization has the customer's permission to send them a new selection and an invoice every month.) In each case, when an exchange occurs between supplier and customer, the relationship is strengthened.
"The heart of Permission Marketing is giving the stranger a reason to pay attention, while Interruption Marketers hold people hostage." (p.136)
The underlying philosophy at work here is that with Permission Marketing a company can increase the frequency with which it can contact the customer (or potential customer). The customer welcomes these frequent contacts, because they receive some benefit. These contacts breed trust, which then will lead to a sale, or reinforce repeat purchase patterns.
Godin identifies five levels of permission. From the lowest (i.e. least powerful) to the highest effectiveness, these are:
- situation permission: where the customer will allow the supplier to assist them by providing information or assisting with a transaction
- brand trust: where the customer allows the company to continue to supply their needs over time with only minimal 'shopping around' because they trust the brand
- personal relationships: here the customer's permission is granted because of a personal relationship that the customer has with somebody within the supplier organization
- points permission: at this level, customers have given the supplier organization permission to sell to them and collect data because they are rewarded with redeemable points or a chance to win a prize if they do so Godin identifies two variants of this permission level: the points liability model, where every point has a real value to the consumer and a commensurate cost to the supplier (as in the airline's frequent flyer programs) and the points chance model, where customers earn more chances to win a reward if they purchase more and/or yield more information to the supplier organization
- intravenous permission: here the supplier has in a sense 'moved into' the customer's organization, and taken over the supply function for the particular product or service needed the analogy that Godin uses that has given rise to this term is as follows: "This is what you've got going when you're in the intensive care unit with a needle in your arm and a bag of medicine dripping into your veins...Your doctor has your written permission to inject just about anything he wants into your IV bag. Not only can he select and administer the drug, but he then can charge you for the treatment and fully expect that you'll pay for it." (p.98) The 'Book of the Month Club' example used earlier would be an example of intravenous permission, as would all such 'negative option' schemes.
This five-part framework should not be thought of as a seamless sequential process for all types of businesses. (For example, the 'personal relationship' level could be unique to a particular industry (e.g. one that relied on a large sales force), or could represent a unique personal situation where the buyer happens to know the seller for other reasons). Rather than think about these five levels as necessary steps in a transition, then, it is probably more appropriate to regard them as different levels that may apply in the buyer/seller relationship, depending upon the nature of the business. Further, more than one level could apply at any one time, in any given situation.
At each successive level of the permission framework, the selling costs to the organization become less. Part of an organization's strategy thus might be to position the customer into these various levels of permission, to as high a level as can be achieved. The ideal would be to have a relationship operating at the 'intravenous' level, thus minimizing their selling costs and probably maximizing the amount of product sold over the length of what would likely be a longer-term relationship.
One point that Godin stresses with almost missionary zeal the supplier organization must never, not ever, abuse the trust that is bred in a permission relationship by releasing the information collected on the customer (e.g. selling or renting a mailing list). This betrayal would destroy the permission contract, and undo all the hard work done in developing the relationship in the first place. Chapter 7 of the book is devoted to this topic, where the author outlines four rules for keeping permission:
- permission is non-transferable in other words, a permission relationship cannot be transferred by a supplier to a third party this is a violation of the trust built up with the customer, and will destroy the relationship: "Contact the great Permission Marketers and ask to rent their list. They'll all turn you down. The reason is simple: Permission rented is permission lost. They can make far more money protecting this asset than they can by destroying it." (p. 134)
- permission is selfish "[In Permission Marketing] the marketer is not in control, the consumer is. And the consumer is selfish. Consumers care very little about you, your company, your products, your career, or your family...You must find a reason for the prospect to pay attention. You have to offer an explicit reward information, education, entertainment, or even cold, hard cash to get the consumer to opt in to the message." (p. 136)
- permission is a process, not a moment As distinct from Interruption Marketing, which tries to grab your attention through impact (noise, images, 'in your face' messages, etc.), Permission Marketing tries to become a dialogue or exchange with the prospect. It is thus a process over time, not a one-time assault.
- permission can be cancelled at any time In Permission Marketing, the customer is in control. They can cancel the relationship at any time, if they feel that they are being mistreated, or that the exchange is not worth their time and attention. And this is good: "Knowing that the end is always a moment away makes the marketer do a better job. Every communication must be crafted with the goal of ensuring it's not the last one." (p. 142)
A paradox of Permission Marketing, though, is that it starts with Interruption Marketing. To get the attention of the prospect in the first place, in order to begin to develop a permission relationship, the marketer must somehow intrude upon the awareness of the individual. On the Internet, for example, this would likely be done with banner advertising, a form of Interruption Marketing. Or, for a frequent flyer program, the airline may initially gain attention through a direct mail campaign again a form of Interruption Marketing. Once the prospect's attention has been gained, however, (through the offer of some free benefit, whether it be education or information, a chance to win a prize, entertainment, bribery with cash, or whatever), then the permission relationship can begin.
While many of the examples Godin uses are based on the Internet (which is an ideal medium for Permission Marketing because of the very low virtually nil costs of communicating with customers) the concepts are clearly not restricted to Internet-based businesses. In Chapter 10 of the book, Godin presents several case studies where Permission Marketing has been used. The examples he cites include the following industries, and specific companies and products, including:
- selling mutual funds
- car salesmen
- American Airlines AAdvantage program
- Bell Atlantic
- the Roman Catholic Church
- Columbia Record Club
- American Express
- the magazine industry
- hospitals (and suppliers to hospitals)
- America Online (AOL)
- Value America
Godin ends the book by outlining 10 questions that a company needs to consider when initiating or evaluating a Permission Marketing program. These are:
- What's the bait? or, how can we initiate a permission marketing relationship with an existing or potential customer?
- What does an incremental permission cost? In other words, what does the company have to give away to entice the prospect into a Permission Marketing relationship, and what does this cost?
- How deep is the permission that is granted?
- How much does incremental frequency cost?
- What is the active response rate to communications?
- What are the issues regarding compression? In other words: "Do you have a feedback loop and technology in place to increase the bait as its effectiveness begins to tail off?" (p.214)
- Is the company treating permission as an asset?
- How is the permission being leveraged?
- How is the permission level being increased?
- What is the expected lifetime value of one permission?
Permission Marketing contains very valuable concepts, and is a refreshing counterpoint to the predominance of Interruption Marketing (which we guarantee will become even more annoying after reading this book).
THE TCI MANAGEMENT CONSULTANTS RATING:
IF YOU HAVE ANY COMMENTS ON THIS REVIEW (I.E. DISAGREEMENTS, ADDITIONAL PERSPECTIVES, ETC.) OR SUGGESTIONS FOR FUTURE BUSINESS BOOK REVIEWS, WE'D LIKE TO HEAR FROM YOU! CONTACT US AT firstname.lastname@example.org