When Viral Marketing Goes Too Far
A couple of years ago, our local newspaper, The Philadelphia Inquirer, ran a disturbing story about how a mortgage loan company in Phoenix had sent spam advertising messages which appeared on the screens of thousands of wireless phone customers. Not only were the messages not requested, but these customers had to pay to retrieve them.
In the United States, phone numbers are allocated to wireless companies in blocks of 9,999, all beginning with the same three-digit prefix following the area code. The text messaging address for each mobile phone is derived from the phone number assigned to each customer's handset and the wireless company's name. This means that an advertiser can simply choose any three digit prefix in an area code and send a message to 10,000 people by changing the last four digits after the prefix
One industry analyst noted that this is just the tip of the iceberg. This type of spam is cheap and easy for advertisers to use. Wireless text messaging is widely used in the U.S.; and, while some carriers are taking precautions to protect their customers from text message advertising, so far neither the direct marketing industry nor the federal government has been able to control this form of spam. As the president of the mortgage company noted, the advertising had brought in new clients and "There still isn't any rule against emailing." Online, the concept of "permission marketing" is similarly tossed aside each day with the receipt of unsolicited promotional emails.
We call this indiscriminate solicitation of prospective customers one variation of the "Casanova Complex" customer acquisition model, reflective of the 18th century Italian adventurer, perhaps best known for his many female "conquests." In the haste to bring in customers, companies can often forget to court the right customers, those who represent the best long-term revenue potential, or who won't overtax the company's customer service and support structure.
If offline instances of the Casanova Complex are a disease, then it is an epidemic among Internet companies. Many online retail sites have engaged in sweepstakes and other customer generation programs. Their objectives, they say, are to create "viral" promotions which create excitement for their sites and build their databases of available names both inexpensively and quickly. In one instance, a portal site which runs more than 1,000 websites featuring links to other sites signed up 50,000 registrants in a "Win Up to $4,000" game. Another sweepstakes program secured 126,000 registrants. An online travel products retailer, offering 1 million air miles to the winner, generated more than 60,000 names in 90 days, almost all of whom were new to the site.
The big issue for any of these sites is—do these promotions and schemes draw attractive customers who can then be cultivated over time through the various marketing tools available today? And, once these customers are on board, are companies doing enough of the right things to keep them? Or is this just another extrapolation of the Casanova Complex? As one site marketing executive said: "This is a great, low-cost way for us to acquire new names. The jury's still out on how many of those new people will come back." Companies involved in developing or using promotional tools like sweepstakes, unsolicited email, or wireless spam seem inclined, though, at least for the moment, to believe that these possibilities generally don't apply to them.
For traditional offline companies, the Internet may be "commoditizing" their industry or undermining customer relationships. Many brick and mortar CEOs say a key corporate goal is to transition more of their offline customers to online, self-transactional usage. Why? Because an online transaction costs dramatically less than a brick-and-mortar transaction, there is less risk for service error, and the company can more effectively capture and leverage information from an online transaction, to cite a few advantages. Certainly, the transactional advantages of e-commerce are very appealing. But what about the effects on loyalty—especially for new customers?
One of the important ways both online and offline companies can discipline themselves to avoid the Casanova Complex is to apply personalization in all contact with customers, both new and established. This, at least, gives companies a better chance of establishing the basis of a value-based, viral relationship with these customers.
While it's been estimated that more than 80 percent of e-commerce sites have customer and visitor email personalization capabilities (Opens as a PDF), less than 10 percent of the sites used personalization in follow-on marketing campaigns. For websites favoring incentive devices like sweepstakes and frontal assault "push" email programs to attract potential customers, personalized communication is the perhaps the best opportunity to demonstrate ongoing interest in customers—especially new ones.
Personalization is at the heart of the "relationship" in successful online CRM programs. Ultimately, it's what makes any CRM effort viral.
"Marketing Nuggets" will include observations regarding trends, and often study results, representing current, real-world issues of high importance to direct marketers. Those issues include omnichannel communication usage, mobile marketing, content, informal offline and online social communication, consumer behavior, message personalization, internal customer-centric processes and organization, strategic customer life cycle planning, proactive employee contribution, etc.