A Framework for Reaching Online Customers

In part two of this three-part series, I outlined the customer design points that influence management practices and investments today. In this final segment, let’s take a closer look at them.

Privacy considerations are critical to designing online marketing program policies, rules, and management practices. In addition, privacy costs money and resources. Organizations will need to invest more in customer acquisition, database maintenance and update, and infrastructure to meet the demands of increasingly privacy-sensitive online customers. Additionally, privacy considerations must shape the design and execution of campaigns with clearly established privacy statements, the use of data, and the overall aggressiveness of campaign design. Privacy also has implications regarding the sources of data and the selection of online partners.

Permission marketing is fundamental to building relationships online and conducting e-marketing campaigns. Customers who grant permission for companies to communicate with them online can tell the difference between spam and email based on a relationship in which the marketer has sought their approval. Asking for opt-in permission (giving marketers the right to communicate directly with customers using email) is important to online communication and is the price of entry for doing business online.

In research we conducted at IMT Strategies, 60 percent of respondents reported that they had responded to commercial email more than once if the marketer took the time to ask permission. On the other hand, the majority of customers will not open a message from a marketer who has spammed them once. Customers require higher levels of control and access over their profiles and opt-in status in order to micromanage the relationship. The main reason customers want personalization is to control when and where they are contacted. In our research, “communication control” and “content selection options” were the top two personalization features preferred by customers.

Asking permission significantly impacts brand equity and ongoing customer relationships. Of respondents, 69 percent perceived that “asking permission” to develop an email relationship was “good marketing” or “superior customer service.” Since many different selling organizations use email as a tool, cross-functional governance of permission policies is critical. Permission requires diligence combined with collecting and maintaining extra customer data. Permission also shapes campaign design, creative and content, and campaign execution. For example, over 80 percent of customers were “neutral to very positive” to a marketing message when “permission” was asked first. By contrast, over 80 percent were “negative to very negative” to unsolicited commercial emails.

Opinions also sharpen over time. Online customers with over two years experience were 30 percent more likely to be negative about unsolicited messages than less-experienced online users. Permission marketing programs are not trivial. They cost money because they require policies, governance, processes, and infrastructure.

Frequency is a critical issue because customers are sensitive to online overload and clutter. Online customers have the tools, experience, and sophistication to actively manage online clutter if marketers do not. Frequency management is a key driver of campaign response and a top reason for customers to opt out of online relationships. It is an enterprise campaign management issue, because most online campaigns are executed in an independent fashion with little coordination or process control across the enterprise.

An increasing number of customers feel they receive too many emails. In 2000, most (69 percent) respondents felt the amount of email they received was “just right” or “too little.” When asked the same question a year later, 25 percent of the respondents shifted their attitudes from “just right” to “too much,” and 25 percent also cited “too much email” as the top reason for opting out of a relationship.

Understanding customers’ expectations for the relevance and context of interactive marketing messages is critical to campaign performance and sustainable online relationships. Lack of relevance is the No. 1 reason customers opted out of the opt-in email relationships. Customers will continually raise the bar in terms of what they deem relevant.

Online experience and frequency of interaction can make relationships erode unless the relevance of those messages is increased over time. Marketers must actively learn from these ongoing interactions, tuning and personalizing their messages to get a return on investment (ROI) in these customer relationships. Furthermore, in the future, leading marketers will be characterized by their ability to put customers in control of frequency and nature of online interaction. In turn, customers will expect marketers to integrate online campaigns and offers with offline channels and campaigns so that they make sense.

Understanding how customers feel about efforts to personalize and customize campaigns, offers, and products is critical to developing these campaigns and managing ROI. Most organizations report investing in significant levels of targeting and personalization with few demonstrated results. Some things do work today, however. Knowing lifestyle preferences and purchase history matters. On the other hand, without control over how and when customers are contacted, the risk of losing the relationship is virtually guaranteed. Fewer than half of customers were not thrilled with sophisticated personalization, such as scheduled alerts (e.g., birthday or anniversary reminders) and other customized marketing messages. Customers are simply not ready for them yet.

The relationship between levels of personalization and customer satisfaction is, and will remain, highly variable. Though customer expectations for personalization will rise with time, only some of these investments are driving significant increases in responsiveness and campaign performance. Marketers will need to experiment with and tune their personalization and targeting programs to get the biggest bang for the investment dollars and identify the Pareto optimal level of targeting that delivers 80 percent of the benefit with 20 percent of the effort. Because most of the new online marketing tools are focused on retention and loyalty, meeting customer expectations for e-care will be an important factor in brand perception, ongoing customer relationships, and responsiveness.

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