Value of Message is Key for Consumers

Last week, the Ponemon Institute released the 2005 Online Consumer Permissions Study. The study represents a step forward in our collective understanding of permissions management. It also makes a strong case for equating responsible privacy practices to smart marketing policies.

In the interest of full disclosure, I'm pretty familiar with Larry Ponemon's work. I'm a research fellow on the Ponemon RIM council, which helped put together the questions for this study, and I conducted a similar study of consumer perceptions last year with Larry and Revenue Science.There's some great information to be culled from this study, and I encourage everyone to download the study on the site of its sponsor, Dotomi. Here are some of my thoughts:

Consumers mean it when they opt-out of your marketing programs… sort of -- According to the study, most consumers wouldn't mind being contacted by an online merchant -- even after they've specifically opted out of the merchants' marketing programs. In fact, nearly all (92 percent) of the respondents indicated a willingness to receive post opt-out marketing messages "If the new product or promotion would be of great value to me based on my past purchasing habits." The net/net of that statement is that consumers are overwhelmingly accepting of marketing messages that are relevant to their interests, and are looking for marketers to use their data intelligently to increase relevance. Consumers don't mind getting marketing messages, but they don't want to be deluged by them.

Personalized messaging is not necessarily the same thing as relevant messaging --The Ponemon study notes that understanding customer interests is a far better way for a marketer to demonstrate that they value a customer's business than simply sending personalized messages. In fact, over twice as many respondents indicated that understanding interests (56 percent) is a key way for companies to demonstrate that they value a customer's business. Only 25 percent of respondents felt the same way about personalization. Permission marketers are wise to take this lesson to heart.

The email marketing space is rife with examples. Email marketers like to pull a customer name and some basic preference data from their database, and use that to personalize a message to the email recipient. While I certainly don't think that's a bad thing, the real trick is to take personalization to a much higher level. Using data to send me the red banner instead of the blue banner is nice. Using data to help you understand that I'd be interested in the new Flaming Lips album is better.

The consumer really does want control of this relationship -- Eighty-four percent of respondents indicated that having direct control over the types and frequency of Internet ads sent by online merchants would be preferred. Over half (56 percent) indicated that the ability to exercise control is a way for Web merchants to demonstrate that they value the consumer's business. I strongly believe that in the not so distant future, smart marketers will provide a preferences page for their customers -- similar in nature to many email preference pages that you see today. The new preference pages will offer consumers a much greater degree of choice regarding how often they receive marketing and other outreach messages. Moreover, consumers will be offered a choice regarding which channels they'd prefer that the marketer use. Perhaps the customer would rather be contacted via text message, email, RSS, TiVo, phone,  postal mail, or via something else that comes down the pike in the next year or two. Part of the problem today is that there are too many messages trying to get through too many pipelines. Companies that are able to offer a simple way for their customers to exercise control of the preference marketing process will be in a good position.

Consumers worry less about their privacy when they feel there's a value exchange -- Let's face it, folks. Consumers tend to be a fickle lot. They want the power of the SUV, but they don't want to pay for the gas. They want the $250 million infielder, but they don't want to pay $9 for the stadium hot dog. And they want to receive ads that are relevant to them, but they are skittish about having their behaviors tracked across the Web.

According to the Ponemon Study, only 20 percent (the lowest number) would let a marketer share information in order to track their buying behavior and project future buying decisions. Conversely, many more (71 percent) of respondents would be willing to let that same marketer share information if that helps to better understand what they as customers want. And nearly all (89 percent) respondents would be willing to let that marketer share their data if it would improve the quality of the products or services the consumer would receive.

Why are consumers unwilling to have their buying habits shared, but willing to allow marketers to share their preference data? My sense is that consumers are generally more willing to share their data if they believe that a marketer will use that data to directly benefit them. If they are certain that a marketer can be trusted to handle their data with care, AND to use that data to benefit them in some way, consumers will be much more willing to share that data. Having said that, I think this is an area that definitely merits some additional research.

Do you have any thoughts on this research or my analysis? Feel free to send me an email.

Alan Chapell is a consultant focusing on Privacy-Marketing -- helping companies understand privacy and incorporate consumer perception into product development. He has been in the interactive space for more than seven years with firms such as Jupiter Research, DoubleClick and Cheetahmail. Mr. Chapell is the New York Chapter Chairman of the International Association of Privacy Professionals, and he publishes a daily blog on issues of consumer privacy.