May I?

Entrepreneur, Oct, 1999 by Scott S. Smith

GET YOUR BUSINESS IN FRONT OF CONSUMERS THE SETH GODIN - AUTHOR AND MARKETER EXTRAORDINAIRE - WAY.

ADVERTISING AND MARKETING ARE INCREASINGLY COSTLY, YET DECREASINGLY EFFECTIVE. MARKETING GURU JAY CONRAD LEVINSON SAYS A CONSUMER HAS TO BE EXPOSED TO AN AD 27 TIMES BEFORE IT HAS THE DESIRED EFFECT. ONLY 10 PERCENT OF VIEWERS REMEMBER TV ADS THE NEXT DAY, EVEN THOSE THEY'VE SEEN BEFORE (AND NEVER MIND ACTUALLY RESPONDING). DIRECT MAIL IS CONSIDERED SUCCESSFUL IF IT DRAWS A 2 PERCENT RESPONSE. AND THE ADVENT OF A PLETHORA OF CABLE TV STATIONS AND, OF COURSE, THE INTERNET DILUTE THE EFFECT EVEN FURTHER.

The problem is, we all suffer from an attention deficit, argues Seth Godin, marketing expert and permission marketing director for leading Internet portal Yahoo!, in his latest book, Permission Marketing: Turning Strangers into Friends and Friends into Customers (Simon & Schuster).

Interruption marketing, designed to capture attention for a moment, doesn't work like it used to. Godin says the only way for a company to break through the message clutter is to ask potential customers for permission to send carefully targeted messages - and give them an incentive to pay attention.

Permission marketing, which promotes cooperative interaction between companies and prospective clients, often produces astonishing results: It isn't unusual for 70 percent of an audience to read some of the messages, while 35 percent actually respond (and you can measure this precisely, unlike with most conventional advertising), says Godin.

But first you have to cultivate the potential customer, and ignore the attitude of interruption marketing, which says "Buy now or go away," Godin warns. He calls permission marketers farmers, while interrupters are hunters who go for the immediate kill. Agriculture wins big-time in the long run.

Godin's many years in the business world helped him form his marketing strategy. In 1982, he graduated from Tufts University in Medford, Massachusetts, with degrees in computer science and philosophy, and received an MBA from Stanford University two years later. Well-prepared as personal computers became part of daily life, he became brand manager at Spinnaker Software, where he led the team that developed the first multimedia products, working with such forward-thinkers as Arthur C. Clarke and Michael Crichton.

In 1995, Godin founded Yoyodyne, the direct-marketing pioneer acquired last year by Yahoo!. Along the way, he also wrote E-Marketing (Putnam), the first book about doing business online; The Guerrilla Marketing Handbook (Houghton Mifflin); and The Information Please Business Almanac (Houghton Mifflin), a ground-breaking reference book.

We recently discussed how to put "customize" into customer with the man Business Week has dubbed "the ultimate entrepreneur of the Information Age."

Scott S. Smith: As a proponent of permission marketing, are you actually able to use it to sell your latest book?

Seth Godin: After a long argument, the publishers agreed to put the first four chapters on www.permission.com. This asks a low level of permission: Would you like something free? The key is to attach no strings. People avoid buying books because of a lack of time. I call their bluff: Anyone can take a quick look at four chapters. In this case, they get it 45 seconds after asking. This beats a glowing review - they can judge for themselves whether it's what they want.

The next question is, will they buy the book? I've had 24,000 hits on the site in the past four weeks, and a huge number have clicked to buy it. Compare that with trying to sell a book by taking out a $20,000 ad in The New York Times that hardly anyone sees. The same principles can be applied to other products. Give people an incentive to contact you and start a dialogue, then upsell with the permission they give you.

Every business has permission opportunities with customers. When you buy a burger, for example, you're asked if you want fries. Or you're in a store and the clerk asks if you would be interested in buying something on sale. You've already given them permission to sell you something, and that can be leveraged. It's more cost-effective to increase sales to existing customers than to run ads to find new ones, yet most businesses don't seem to appreciate the value of what they have.

Smith: Why is that?

Godin: The business owner hasn't calculated the lifetime value of the customer. Figure out what you think an average customer is worth in profit and what percentage of customers you're able to turn into lifetime customers. That puts a value on dialogue - if a customer's lifetime value is $200 and if you convert one out of 10, you have $20 for every interaction. You can easily evaluate your marketing program once you understand the real value of your customers.

Smith: You offered free chapters of your book. What are other kinds of incentives to get people to volunteer to be customers?

Godin: Don't start there; just be friends - give them something. It could be a video, information, coupons, even a chance to simply offer an opinion. Of course, it should be related to your business. For example, H&R Block ran a sweepstakes. The prize was that they'd pay up to $25,000 of the winner's taxes. Fifty thousand people enrolled and went to the firm's Web site to answer questions in a tax trivia game that took place twice a week for 10 weeks. [These consumers] were thinking about H&R Block all the time. You can't buy that kind of attention with traditional advertising. The company created a dialogue about its premium tax service.