Permission marketing has become one of the most powerful ideas to shape the way advertising and promotions are conducted on the web. Seth Godin's book on the topic is a contemporary classic and a must-read for serious e-marketers.
The main idea of permission marketing is simple. Traditionally, customers have been the passive recipients of promotional messages from firms. In permission marketing, customers fill out a questionnaire indicating categories of interest. The marketer then sends the customer only messages pertaining to these categories. This reduces the clutter in consumers' lives and increases the targeting precision for advertisers.
Postmaster Direct, Yes Mail, and Bonus Mail are a few examples of companies using this technique. Many other web sites, such as nytimes.com, ask for consumers' permission when they register in order to send them future promotional information.
Permission marketing will yield better results than untargeted marketing techniques. However, it can take you only so far. This is because it has several limitations.
First, consumers are typically asked for their permission when they first register. They are not asked to revisit their preferences from time to time. Obviously, as people change, the marketing messages will become more and more untargeted.
Second, marketers initiate the promotional conversation. Customers give their permission once. After this act, they are repeatedly targeted with marketing messages. Most consumers forget what they said they like to play, read or drink and become passive recipients of messages. This reduces permission marketing systems to the level of direct mail. As marketers send more and more messages, the consumer becomes less and less engaged in the process.
Enter Partnership Marketing
Partnership marketing calls for new business models that fully utilize the promises of Internet technology to overcome these problems. In short, it calls for the marketer to make the consumer an equal partner in the promotional conversation.
Partnership marketing recognizes two important features of Internet technology. First, it is now possible for a company and its customers to communicate rapidly for the first time in our history. Email technology has reduced the cost and increased the speed with which a company can receive customer feedback.
Second, this is the age of empowered customers. Consumers decide which companies they wish to pursue partnerships with and which companies they would rather not talk to. They are also sick and tired of the marketing clutter in their lives and are seeking simple ways to achieve their buying goals.
Companies must wake up to these two new realities by fully embracing partnership marketing. In partnership marketing, companies no longer target consumers; instead, consumers choose companies.
Sophisticated consumers realize that they would like to pursue relationships with a few companies that they trust. Then, the companies could monitor consumer behavior to design ads and promotions that meet customer requirements. This would lead to an even stronger relationship with those customers. Companies that do not build such relationships will be left out in the cold.
Here's a concrete example of how partnership marketing would work. A customer is in the market for a DVD player. He visits his favorite partnership marketing company's web site. A search for DVD players reveals a set of companies that are advertising their models. He notices a company that he is comfortable with and clicks on its icon. A list of the top offers from this company is provided. Happily, he chooses one and buys the product.
Then the customer includes this company in his partnership portfolio. This portfolio is a list of companies this individual is comfortable dealing with in the future. For future buying occasions, he goes to his portfolio first and searches within it for companies making offers on his favorite products. He chooses from that offer set. At any point, he can drop companies he no longer wishes to partner with. For instance, if he receives bad service from a company, he immediately drops it.
The partnership portfolio would be accessible only to the consumer. Over time, companies get information about how many customers have retained them in their portfolio and what types of consumers like them. They would use this information to design even better ads and promotions. Companies who refuse to learn will die.
There are three key elements required for a partnership marketing model - empowered consumers, active consumer participation, and a transparent facilitating space.
Partnership marketing companies realize that the true power in the market lies with the customers. Customers decide whom to partner with and their portfolio changes with their experience.
The customer is not a passive recipient; rather, she actively participates in the advertising and promotion process. She determines whom to partner with. Targeting is futile. Instead, companies must respectfully listen to the customer verdict. Companies that do not meet her expectations will be dropped from her partnership portfolio - never to be considered again.
Finally, there needs to be a space in which this transaction will take place. A key component of this space will be complete transparency. Consumers can access company offers and decide whom to place in their portfolio. The portfolio is accessible to the customer at all times.
In sum, partnership marketing goes much beyond permission marketing. Instead of merely asking consumers once for their permission to be sent email messages, companies engaged in partnership marketing establish true relationships with consumers. Consumers are active participants in the relationship rather than passive recipients.
The company that creates the facilitating space for this first will be the next big company in e-business.
Sandeep Krishnamurthy, January 11, 2000, ClickZ Corp.
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