The future of Permission Marketing Spring 2001

Transcription

1 The future of Permission Marketing Spring 2001 in association with

2 This re s e a rch was conducted by The Pre f e rence Serv i c e, in association with Precision Marketing in Spring A questionnaire was sent by post to a sample of marketing directors and managers from companies c u rrently using Direct Mail in order to gain an understanding of the perceptions towards, and use of, P e rmission Marketing. CONTENTS Page EXECUTIVE SUMMARY Introduction and Methology Definition of Permission Marketing Usage of Permission Marketing by 4 Industry Sector 1.0 Trends Online EU Legislation Key motivations and Rewards of 5 Permission Marketing 1.3 Companies currently using Permission 5 Marketing - What are the rewards? 1.4 Mailing Activities Future Trends Data Selection Conclusion - The Future 10 1

3 Executive Summary The future of Permission Marketing A common criticism of Permission Marketing is that it is something that only works on-line. Today, the largest mailers are moving into the use of Permission Marketing. Fuelled by the belief that traditional DM will be replaced by new marketing methods such as the Internet - over 50% of all companies are starting to use Permission Marketing in their off-line activities. The emergence of new data sources which provide opt-in information to a broad range of companies at the price of traditional consumer data, means Permission Marketing will continue to grow and grow. Permission Marketing programmes are being planned in 76% of all companies in our study. Key motivations for using Permission Marketing Better targeted marketing communication (56.5% of current users) Increase in profitability (48.9% of current users) CRM get more value from current customer base (48.4% of current users) Key rewards of using Permission Marketing Permission Marketing is more cost effective than current marketing activities. (60.5% of current users) It gives a long-term competitive edge. (60.6% of current users) Companies currently using Permission Marketing believe that using opt-in files attract new more profitable customers. (61.4% of current users) It helps build a stronger and more loyal relationship with both current and potential customers (78.9% of current users) Permission Marketing helps cut down on wasted resources (70% of current users) 2

4 0.1 Introduction and Methodology This research was conducted by The Preference Service in Spring A questionnaire was sent by post to a sample of marketing directors and managers in companies currently using Direct Mail. The results of the research will therefore be biased towards such companies. Direct Marketing Profile of the Respondents: 320 companies answered the survey from various sectors of the market, making it the largest quantitative survey to be undertaken within the industry. On average, 50% of marketing budget is allocated to Direct Marketing, mailing on average 35K pieces per month. Permission Marketing is all about giving the opportunity to the consumer to say "yes" or "no" 0.2 Definition of Permission Marketing Permission Marketing is all about giving consumers the opportunity to say "yes" or "no" to being contacted by a certain company. Consequently, the marketing communication becomes targeted to those consumers who "opt-in" to communication, explicitly giving permission to receive particular information. According to this study, 76% of the responding companies think it is a good idea to only contact those consumers who want to learn more about its products or services. This shows that there is a strong tendency to move towards permission based communication and away from mass media. This is reflected further in the significant proportion of companies currently using and planning to use Permission Marketing. 50 Permission Marketing (On & Off-line) % Currently using Planning to use No plan to use 3

5 0.3 Usage of Permission Marketing by Industry Sector The analysis of Permission Marketing by industry sector, shows there is an overwhelming number of companies in the IT/Internet sectors that are already using or are planning to use this in conjunction with other marketing activity. This is most likely due to Netiquette within the online industry, that is the establishment of good business practice, and also due to the pending EU legislation. 78.5% of the survey respondents said they either are using or planning to use Permission Marketing It is also apparent that those using Permission Marketing are those most likely to measure results in terms of sales. 1.0 Trends The 51% of respondents identified who plan to use Permission Marketing offline include Agencies/Brokers, Internet/IT, Publishing/Mail Order companies. 49% of these already use Permission Marketing and wish to continue using it, that is, 25% of all survey respondents. 4

6 70.4% of the survey respondents believe that these EU plans will have a direct impact on marketing activity 1.1 Online EU Legislation The fact that EU legislation may be pending seems to act as an incentive for other companies to explore the possibilities of Permission Marketing. In fact, 70.4% of the survey respondents believe that these EU plans will have a direct impact on marketing activity. 1.2 Key motivations and Rewards of Permission Marketing Companies already using Permission Marketing invest on average 34% of overall marketing budget in Permission Marketing activities. The three key motivations for these companies, and also for those planning to use Permission Marketing, are: Better targeted marketing communication (56.5%) Profitability (48.9%) CRM get more value from current customer base (48.4%) 5

7 1.3 Companies currently using Permission Marketing - What are the rewards? 60.5% believe that Permission Marketing is more cost effective than current marketing activities. This view is shared by 63.3% of the companies planning to use Permission Marketing in the future. 65.2% of companies planning to use Permission Marketing expect to get a competitive edge from it 60.6% believe it gives them a long term competitive edge. 65.2% of companies planning to use Permission Marketing expect to get such an edge from it. 6

8 61.4% of companies currently using Permission Marketing believe that using opt-in files attract new more profitable customers. 67% of companies with plans to use Permission Marketing hold the same view. 78.9% believe it builds a stronger and more loyal relationship with both current and potential customers 78.9% believe it builds a stronger and more loyal relationship with both current and potential customers. 77% of the companies with plans to use Permission Marketing hold the same view. 7

9 The majority of companies surveyed believe that using Permission Marketing cuts down on wasted resources. 41.2% of companies are currently using opt-in data and another 39.08% are planning to 1.4 Mailing Activities Heavy users of direct marketing are already using Permission Marketing. The majority (58%) of companies using Permission Marketing have an active programme to collect data. Only 13.2% use external files only, whereas 23.7% use both. As it might be expected, 82.5% of companies currently using Permission Marketing have an internal database. 2.0 Future Trends Opt-in Usage According to our research, 41.2% of companies are currently using opt-in data and another 39.1% are planning to. This tendency is especially strong in IT/Internet, Agencies/Brokers, Publishing/Mail Order, Marketing/Charities and Services. The companies more likely to be using Permission Marketing are IT and Internet companies. 8

10 The trend towards the use of Permission Marketing is supported by the fact that many companies are now recruiting the necessary staff and expertise to implement this activity. 76.8% have or are planning to have a privacy policy. 52.4% are or are planning to employ a CRM Director. 19.1% are or are planning to employ a Privacy Policy Manager. 72.2% are or are planning to employ an Internal Analyst 2.1 Data Sources There is a rapid growth in Permission Based Data sources, with the two biggest growth areas being and Opt-in Data. The majority of companies disagree with the idea that traditional marketing will be replaced by the Internet Overall, managers appear to be relatively satisfied with the data that is available for marketing activities. However in an attempt to become more competitive, companies are looking to new data sources to gain higher conversion rates. The growth of and Opt-in Data sources may therefore be attributed to increased competitiveness within industries. 9

11 However, despite the increase in as a marketing tool, the majority of companies disagree with the idea that traditional marketing will be replaced by the Internet. Nevertheless, most agree that there will be more legislation on the use of opt-out files. 3.0 Conclusion - The Future The study has identified several trends in the use of Permission Marketing, the various rewards of its use and current perceptions towards it. The most significant finding is that there appears to be a growing trend towards using Permission Marketing, with 78.5% of the survey respondents either using or planning to use Permission Marketing. This would indicate that Permission Marketing is already impacting upon our marketing decisions and is set to become increasingly important to marketing directors and managers in the future. If you wish to discuss any of the issues raised in the research further or discover how Permission Marketing can help your company, please contact us: The Preference Service Shakespeare House 168 Lavender Hill London SW11 5TF Telephone: Fax: Research: Gillian Donovan gdonovan@thepreferenceservice.com Research: Caroline Tayor ctaylor@thepreferenceservice.com 10

12 The Preference Service Shakespeare House 168 Lavender Hill London SW11 5TF t: f: e: w: