Marketing without waste: how to stop spamming people

Marie arrives home from work. She checks her email on her laptop. She has 12 offers for sexual potency pills, three from music download companies and 58 offers from online casinos.

'Spam' thinks Marie.

She checks her mobile. On it are three texts offering her a free holiday, discount ringtones and a pizza.

'Spam' thinks Marie.

Her home phone rings. Someone wants to sell her new doors and windows.

'Spam' thinks Marie.

On her doormat are five letters offering her credit cards, loans and a hair colouring treatment.

'Spam' thinks Marie.

She looks out of the window. Outside are eight billboards talking about credit cards and loans.

'Spam' thinks Marie.

She switches on the TV. There are three ads for ringtones, followed by one for loans. Then comes the show – sponsored by an insurance company. Marie realises that the TV is spamming her too.

Marie is being bombarded by more commercial messages than any human being ever before. And like most mammals in such a situation, she's developed a defence mechanism. A laboratory rat forced to live next to a constantly ringing bell learns to switch the sound off in its head. After a while, its brain just doesn't register it.

Faced with so many messages, Marie too has reached overload. And she too has learnt to switch off the noise in her head.

But Not Quite All of It...

But Marie doesn't ignore quite all the communications being flung at her. She replies to the offer of a pizza. She also reads the offer about the new hair-colouring treatment. And she looks at one of the emails about music downloads as well.

Why does She Do So?

She responds to the offer of the pizza because it came from her mum, whom she hasn't seen for two weeks. She looks through the hair-colouring offer because it's from her favourite hair salon, and she wants to know what her stylist Pierre has planned for her. And she looks at the email about the music downloads, because it was from iTunes, and she is in love with her iPod.

What's the Common Link?

In each case, Marie registers and reads the message because she has an existing relationship with the sender. The existing relationship makes the message stand out to her like a light in the gloom. It lets messages get through that usually wouldn't – no matter how many times they are repeated. In a world where companies otherwise scream all the time about their wares, how much they scream is no longer the decisive factor.

Today, it's not what the consumer knows, but who they know that matters.

MARKETING WITHOUT WASTE

Relationships are a powerful answer to the incessant noise of modern marketing. They allow messages to get through when they otherwise wouldn't. But they are also a much more efficient way to market than spamming (or 'classical marketing' as its advocates prefer to call it).

Classical Marketing Isn't Efficient

Classical marketing uses the blunt instruments of mass media. It's not that easy to target a specific group of people with them.

If you're looking for women aged 18–30, your TV commercial, however carefully targeted, is going to hit millions of people who aren't in that group. Indeed, in some countries, TV stations will only sell you one broad audience anyway – like 'housewives 18 to 49'.

The end result is money down the drain.

You spend ten million euros on advertising to women aged 18–30, and nine million of those euros hit men, and women who aren't aged 18–30. Only one million euros hit home. If you are targeting a smaller part of the population, things get worse.

If you're targeting say the 5% of people who buy premium skincare products, then as much as 95% of your advertising goes to people who don't ever buy premium skincare, and only 5% hits home.

And if you are targeting a very small audience, say the 1% of a city's population that fly frequently on business, as much as 99% of your advertising impressions are wasted, and only 1% hit home.

Compare that with Relationship Marketing

Compare that with marketing within a modern computer-powered relationship:

• Supermarkets now have efficient loyalty schemes that combine customer address details with a complete record of every item that their customer has ever put into their basket in their store. So that supermarket can easily promote a new product to the 5% of its customers who already buy premium skincare products – and to those people alone.
• The better airlines possess an intimate picture of their customers' travel habits, as computers process everything from bookings to seat preferences to lounge visits. So if they want to talk to the 1% of people who fly frequently on business from a city, they can do so – and to those people alone.
• Even taxi services are developing good databases nowadays. London's Addison Lee takes its bookings via the web, and alerts customers to their taxi's arrival by texting their mobile phone. So they too can talk to all their best customers – and to those people alone.

Plane Sense

The massive new efficiencies of relationship marketing explain why you rarely see airline commercials on TV any more. In the 1990s, TV ad breaks in London, Paris and New York were full of business-class air travel ads. Today, they're virtually all gone.

But the relationships the airlines have made with their frequent fliers have got stronger – they receive more information, more frequently and more timely than ever before – but via email and post with 100% efficiency, rather than via television with 1% efficiency.

What's more, because it knows who it's going to, it's better information than before. It allows customers to change their seat the night before they fly. It clears airport queues for them. And it allows them to select their meal – regular, vegetarian, halal or kosher.

Competing on Relationships: Package Goods RIP?

However, when packaged goods companies try to compete on relationships, they face an uphill battle. A modern supermarket has a €7000-a-year-plus relationship with its shoppers – it feeds them and their family, provides them with toiletries and cosmetics, clothes them and ensures their homes are clean.

This big need makes for a big relationship. By comparison, the needs that packaged goods fulfil are simply not big enough. People value their relationship with their supermarket. But no one wants a relationship with a can of beans.

Beans Means Small Needs

The problem is that packaged goods brands were built for the era of TV, not for the new era of relationship marketing. In a 30-second TV commercial, the kind of thing you need is small, like 'fixes dandruff'. As long as the benefit and the brand name stick in the prospect's mind, all's well and good.

But that need isn't enough in the era of relationship marketing. Strong relationships have bigger needs at their core. Packaged goods brands need to redefine themselves around big needs to succeed in this new era of relationships.

It need not be too much of a leap. We have been so used for the past 50 years of thinking of packaged goods as simple brands in cans that we have forgotten that they can be bigger than that, that they can form systems, educate their consumers as well as mirror them, and that the needs they address can be as big as the human imagination is large.

No one wants to form a relationship with a pot of skin cream. But they will form a relationship with something that helps them look young at 40.

No young man wants to form a relationship with a deodorant. But he will form a relationship with a brand that promises to get him a hot date.

And indeed no one wants to form a relationship with an insurance company either. But they will form a relationship with someone who promises to look after them in old age.

No More Problem/Solution

'But we can't fix big needs the way we can fix body odour', complain packaged goods marketers. They are still living in the era of 30-second TV.

The point of a relationship is not to provide a quick before-and-after fix for problems, but to share them and discuss them. Solving things permanently is only a goal. If packaged goods can redefine themselves around these big needs, they can prosper in this era of relationships.

If not, as the supermarkets get smarter, packaged goods brands are likely to struggle – and become the roadkill of the relationship revolution.

WHY LOOK FOR A NEW CUSTOMER WHEN YOU ALREADY HAVE ONE?

Each year marketers spend billions of dollars on activities aimed at finding new customers. They spend precious little on keeping their existing customers. Perhaps this made sense when marketing was invented in the 1950s. Then, Western populations were young, with huge numbers of young adults in their early twenties.

With cheap television and few channels to watch, you could hit all of them, every night. Acquiring new customers was like shooting fish in a barrel. Today Western countries are much older. Their populations have flat age profiles: there are no more 20-year-olds than there are 60-year-olds.

Western populations today can be visualised as conveyor belts with roughly equal numbers of young adults getting on at one end each year, and roughly equal numbers of 80-year-olds falling off at the other end. In such a population, the way to win is to make sure the people who commit to you remain with you for the six decades they remain on this planet.

This Means Keeping them Loyal to You

Today, the most important mission of marketing is to ensure that those people stay the course. Does this mean building a real relationship with them, or just treating them well? In the short term, the commercial impact is negligible.

But in the long term, the commercial difference between treating them well each year and thus keeping 90% of them, and building a secure relationship and holding on to 99% of them is astounding.

• Keep 99% of them each year and after ten years, you've lost 10% of your business.
• But keep only 90% of them each year, and after ten years your business is only a third the size it was on day one.

For most businesses, this is the difference between success and collapse.

Relationships can make Money Too

What's more, unlike trial-based marketing, relationship marketing can actually make you money. In the past, most big companies made most of their sales on five or fewer product lines. In the 1980s  for example, toy giant Fisher-Price produced hundreds of types of toy. But around 80% of its sales came from its talking telephone and four other toys.

Strip a company down, and most of them are like this. They sell lots and lots of a few lines, and very little of anything else. In the age of digital-based relationships, that need no longer be the case.

With a modern e-company like Amazon, something like a third of their sales come from lines that aren't just in their top five, they aren't even in their top thousand lines.

The picture is similar for online tune downloads. And ringtones. Once you have a customer in a committed relationship with you, you can offer them all sorts of products and services via your website that they might otherwise never discover.

The infrastructure you need to set up to fulfil is small. Distribution can be via online download or mail. And you don't need masses of marketing support. You can talk to very few people, with no waste. And as they are committed customers, they are half sold on your products already.

In the offline world, small, niche product lines nearly always lost money for their makers. Today, the so-called 'Long Tail' can be a source of massive, easy incremental revenue. Relationships are thus not just a more efficient and more impactful way to market. They may also – eventually – make your marketing process pay for itself.

Here are ten principles that should help.

1 THINK IN CUSTOMER TIME

In the past, relationship marketers sent out mailshots. They ran relationships according to their own timetables, not the consumer's timetable. Today, they can strengthen the relationships they build with consumers by thinking in customer time. Here's an example.

If you are the mother of a six-week-old baby, then it's pretty likely that the top issues in your life concern six-week-old babies. But go to any newsstand, and there is no magazine that caters for you.

Most mother and baby titles have articles on toddlers, one-year-olds, and the first months of pregnancy. There are no magazines specifically about what it's like to be a mother of a six-week-old baby. And that's where relationship marketing comes in.

A good relationship marketer, like Tesco, finds out when your baby was born, and sends you a magazine tailored to you. So mothers of a six-week-old baby get a magazine about being a mother of a six-week-old baby. And mothers of babies aged 18 months get a magazine tailored to them too.

2 ALLOW FLIRTING

With most relationship marketing schemes you have to fill in three pages of personal details before you get into the website. But many people at this early stage aren't convinced they want a relationship with the company. Like people in a singles bar, they want to connect and they want to know more. But they don't want to make a binding commitment.

Good relationship marketing builds in a flirt phase, where customers are allowed to feel their way around the facilities, meet other members, and enjoy the benefits of being part of it – but without  the hassle of total commitment.

3 DON'T BE ARTIFICIALLY UNINTELLIGENT

'Congratulations Ms Smith' run letters from some direct marketers 'on your purchase of your new product from us.' It's personalised. It's a nice, interesting letter. But it doesn't know what model you just purchased.

In a relationship, forgetting basic facts about the other person is plain rude.

If you buy a washing machine from the man at the local white goods store and you go in a week later and he can't remember what you bought, you'd be more than a little insulted. The trick is to make your purchasing computer and your marketing computer talk to each other.

If they don't, your relationship marketing can actively turn customers off.

• You have fifty thousand euros on deposit, but your bank keeps sending you loan applications.
• The online travel company keeps sending you offers priced in dollars when you live in France.
• You surf onto an investment website, and it instantly spawns 20 new windows all selling online casinos.

People you meet face to face are rarely this brainless. You know they are smart, thinking people – even if the only messages you get from them are via text. If relationship marketing can match the simple intelligence of a teenage text message, it will move on miles.

4 DON'T MOVE TOO FAST

'Congratulations Mrs Dupont, you're married.'

'Please take the keys to our home, car and credit cards.'

'And live with me happily ever after.'

Real relationships aren't like this – they develop slowly over time.

Let yours do so too.

5 AND DON'T GET INTIMATE TOO SOON

'Hello Ms Dee. We noticed that you bought a tube of haemorrhoid cream at our store a few months back. We've got together with the manufacturer and can now offer you a 5%-off coupon on your next purchase.'

Yes, if you're a supermarket, you can do it. And certainly most relationship marketing has a sexy intimacy that most people find a little troubling the first time they see it.

But this goes too far.

Overall, the trick is simple. Treat customers with a little respect and distance at the beginning. Get your kit off together later.

6 LET THEM MEET FELLOW USERS

'Come and join our club' say many of the Japanese electronics brands when you buy one of their digital cameras. They make you fill in three pages of personal details, and then offer you passworded access to ... nothing. The software downloads on the site are the same as those on the CD that came in the box. There is absolutely no value in the clubs whatsoever.

How much better if these clubs offered something of value to their users – perhaps offering lessons in digital photography on their pages, or a gallery where users can upload their latest snapshots, and where they can discuss issues that they are having with their new purchase.

If you buy a new digital camera and the next day you see someone else at a party with the same model, you will not be able to resist talking to that other person.

And this is the role that such clubs can perform to perfection.

7 DON'T WASTE WORDS

There's a certain sort of family that sends out a detailed five-page letter at holiday time about what they have been doing all year: '... and Dee Dee the dog has started to eat dried dog food, but she's been having problems with her bowels ...'. They send it to everyone, occasional acquaintances included.

It's too much information. Many relationship marketers do the same:

• Some write letters to tell their consumers about their company's investment in shiny new computers.
• Others want to explain their exciting new granular marketing strategies.
• Others just want to introduce customers to their thrilling new CEO.

The consumer doesn't care. The old adage of 'the more you tell the more you sell' doesn't apply to communication in a relationship.

If you don't have much to say, just say it and leave.

8 LET THINGS DEVELOP

Relationships between humans develop through three stages. In the first early stage, the protagonists are attracted to each other through stimulus. As the relationship progresses, both sides in the relationship move on to find a sense of shared values. Finally, they negotiate roles as a precursor to moving in together. We are coming to realise that commercial relationships go through exactly the same processes.

Thus a skin cream evolves from something that delivers a moisturising benefit into something that reflects their personal sense of beauty, and then develops into something that occupies a deep, important role in their personal care regimen.

Your relationship too needs to move on and deepen over time.

9 WORK ESPECIALLY ON ROLES

As just said, people first look for stimulus. This is what gets them into the relationship. Then they are looking to share values. They want to know that you think the same way they do. Finally, they start to negotiate roles with you.

In long-term relationships, clear roles are vital. This is particularly important for customer magazines.

Defining the role of the customer magazine in the life of its user is absolutely vital, if that user is going to value and relate to its editorial in the medium and long term.

By defining its role, we mean whether the magazine seeks to be a solid and trusted advisor on the issues of life, or a provocative and animated friend who exposes the reader to all that is new and cool in the urban world she has recently left to start her family. A clear role in the consumer's life gives them a clear reason why they should look out for subsequent issues of the magazine, and helps it embed in their lifestyle.

If you achieve this, you'll find your consumers waiting for it to land on their doorstep.

10 RELATE TO THE RIGHT PERSON

Good relationships mean understanding who makes the real decision to transact. In many cases, this may not be the end user. AmEx understands this well.

It understands that the people who get their corporate charge cards into companies are the finance decision makers, not the people who carry them. And so it rewards finance people for letting them in.

The only people with prestigious Amex Black cards are billionaires and rock stars – and the finance directors who sign up for corporate card deals with AmEx. Imagine you're a finance geek and someone offers to give you the same pulling power as Coldplay. You're not going to say no.

This article featured in Market Leader, Autumn 2006.