A-Clue.Com
by Dana Blankenhorn
Volume III, No. XVIII
For the Week of May 3, 1999

This Week's Clue: Misusing Permission

This Week's Clue: Misusing Permission

Shameless Promotion 

SSP (Shameless Self-Promotion)

Late to the Party

Amway, Click Here

Spam Update

Clued-in, Clueless

Last week I raved over Seth Godin's book, "Permission Marketing". This week I want to rant against how Web permission is often abused.

Godin writes about some of these cases. He dumps on AOL's "pop-up" ads, which are now featured heavily in Prodigy's advertisements. He hates the idea of selling e-mail lists. It's not that Godin is more ethical than you are (or I am). It's bad business, he writes. Permission is hard to get and it's a trust to the grantee. When you sell that permission (or name) you break that trust. When you attempt to steal attention you're shoplifting - that's Godin's term for it, and it's right-on.

By that reckoning, deals like Free-PC  and NetZero  are completely Clueless. Permission is granted on a one time basis, then re-sold in pieces many times. But what is that permission really worth, if the objective is simply to interrupt the grantor as often as possible (and in as many ways as possible)? If the marketer's idea is to gather data, there are plenty of other avenues

If you're really going to use permission marketing, in other words, you have to use it consistently. Interruption marketing (or conventional advertising) becomes merely a call to action, a request for permission (in marketing terms, a pick-up line). 

There are other ways to abuse permission, however, even if you're already using it. One way to abuse it is to underestimate it. A personal relationship with a customer, obtained through permission marketing, should be leveraged, not harvested like a crop of beans. Stamps or discounts for regular customers are a good start. Expanding that into knowledge of other customer requirements, and an ability to fulfill those requirements, is the next step.

American Airlines, for instance, is failing miserably at leveraging its frequent flyer awards, Godin writes. They've gotten a lot of people to offer miles, but they haven't found enough good ways to redeem them. How many miles might it take to upgrade a room at the Plaza into a suite - say for your son or daughter's honeymoon? And if you're gathering data showing that, for example, a Mr. Godin of New York is traveling regularly to the San Francisco area, why aren't you plying him with offers (payable in miles) from restaurants, hotels, and other services in that area? (Again, it's his example and his book.)

The real goal of a permission marketing relationship should be to make purchases automatic. (Godin calls this kind of permission "intravenous.") Magazine subscriptions are automatic, cable TV subscriptions are automatic, and telephone service is purchased automatically. (The best possible "discount PC" plan under Godin's formula, then, might be that of Intersquid , an ISP which is offering a PC and ISP service for a $30/month charge, without assuming buyers will then be subject to other messages or control.) But the point is that even an intravenous relationship can be leveraged. If you know your customer intimately, and can bring them additional products and services they might like as well as yours, you're leveraging the relationship and earning yourself more money.

There's one exception to all of this, however. Remember that the goal is to build a relationship with your client. What happens when you break faith in an intimate relationship means more than the loss of a customer. It may mean you're making an enemy for life, because the end of an intimate relationship is called a divorce. So let me leave you with this final Clue, and I hope I'm not being too bold in how I state it. If you're going to be intimate with your customer, make very, very sure you satisfy them completely. 


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SSP (Shameless Self-Promotion)

This week I start daily work for ClickZ, putting a "clued-in" spin on the day's news. I'm also continuing to do monthly columns for  NetMarketing, Boardwatch, and  Intellectual Capital. I'll also begin work soon with the IC folk on a book project concerning politics and the Internet, which will appear first on the Web. A-Clue.Com is also the Monday e-commerce column of Andover.News. Buy my book now. Subscription instructions are at the bottom of each issue.

Remember that it's still journalism -- checking the news, calling people, listening carefully and writing on deadline -- which keeps the Clues coming. If you're looking for excellent work, give me a call at 404-373-7634. Now back to the show...


Late to the Party

Internet mania is so intense that when someone new arrives, no matter how late and Clueless, they still get money thrown at them. It's that point in the party when everyone's drunk, dancing, and completely heedless of hangovers to come.

Our first example is Hewlett-Packard Co., which last week announced a host of e-commerce bundles built around its own network and Web management tools. There's someone offering merchant accounts, someone offering card processing, a Web host , a bank , even a software vendor . Two years ago this would have been very clever. Now it looks fairly lame. And apparently they haven't figured out (yet) that just because a customer gives you an e-mail address they don't want to be on a spam list. They'll learn soon enough.

A few more points if only because some people  have called this deal clever. None of the partners are leaders in their key areas of competence. Nearly every company of any size already has merchant services, a bank, and a Web host. Why would new companies want to go with a hardware vendor that's not offering any merchandising help? Wouldn't it be smarter to go with, say, USWeb/CKS ? Maybe this is "Commerce for the Millenium" but from here it looks like the last millenium, not the coming one.

Next we have Toys R Us . Their stock popped on word of new e-commerce investments. (In the interest of full disclosure, my IRA has held some Toys R Us stock for some time, bought at $35/share. Its run-up gets it to around $24.) Toys R Us has been floundering for some time. Wal-Mart has replaced it as the largest toy seller, and eToys has been eating its lunch online. Yet the stock popped, on high volume, when Toys R Us muttered "e-commerce."

What does Toys R Us plan to do now that they haven't had every opportunity to do before? Here are some Clues. They can sell gift certificates (Geoffrey dollars) online with physical delivery the next day. They can offer "Birthday Clubs" and "Santa Clubs" (like a wedding gift registry) where kids can reveal what they want (and where the gift givers can learn of their needs discretely, then order it automatically, so each new gift gets taken down from the list before the next gift-giver arrives). They can publicize this by getting the lists of poor children - a "Secret Santa Club." The point is, Web merchandising is different from real-world merchandising, and Toys R Us is just taking baby steps here. There's no reason to give them any kudos until they deliver something worth applauding.

My point isn't to write-off either of these companies. Through a great deal of struggle, they'll find their way in time. They'll each achieve some natural level of some piece of the market over the next five years (how's that for an endorsement?). But neither is going to dominate anything any time soon.

There are two Clues you can get from this. First, everyone's in the game, and they're going to get their play. Second, if everyone gets some play, where do those four-digit multiples on revenues come from? This hangover's going to be a beaut...

Amway, Click Here

While I've gotten a lot of notes concerning the pending launch of Amway's Web site , they should know that it's already been done by Hand Technologies  of Austin, Texas. I understand that Hand is a unit of Fingerhut, which is being acquired (or already has been acquired) by Federated Department Stores Inc.

Hand is a re-seller network of 5,000 "consultants." Its key man is former Comp USA head Nathan Morton, although two former Dell executives hold the top slots on the pyramid. Each "consultant" gets their own home page, a commission on sales, and a collection of products. AOL and Mindspring were recently added to the list - a $40 bounty is paid on AOL subscribers who stay three months, $25 on Mindspring users who stay for two months. (This information, by the way, came from an offer-collection site called Infovision.Org.)

The Clue here is that the e-commerce battle is fought on the ground as well as over the wires, and you need ground troops to fight it. An online "Amway," with lots of moms and pops selling, may prove especially potent after a market correction ends the online "air war," because a recession will create millions of recruits for the "ground war." Hand is fighting this ground war in the form of salespeople, but it's also important in terms of logistics and delivery, as we wrote last week .

Spam Update

Some 100 spams have hit my inbox over the last two weeks, a much faster pace than previously. Here, briefly, are some highlights.

First, I got a prayer filled spam from what purports to be a real address (near Orlando) and real ministers John & Phyllis Rice. The subject line: "wine and beer." I've also gotten spammy "article submissions," advising people about and advocating spam, from an AOL address.

But the most frightening (from a legal perspective) was my first political spam, from the Academic Information Center of Serbia , a pro-Milosevic site. Political speech draws the broadest possible protection under the U.S. Constitution (wait until a pro-choice hacker gets an anti-choice e-mail list, or vice versa), yet spam can also do the same job as a virus, inundating target servers. If your intent is to provoke (rather than win agreement) spam may be a powerful weapon...

Clued-in, Clueless

Clued-in is Unity Mail 3.0 . The previous version made e-mail lists a database. The new software integrates with all types of other databases. The term for this is an outgoing spam filter - you don't send an e-mail unless there's a reason to send one. Don't underestimate the time and expense of making this work right, but it is time well spent.

Clueless is Microsoft's MSAudio 4.0. Let's see if I've got this right - no industry support, incompatible with everything, and a drummer (Mick Fleetwood) for an endorser! What Microsoft needs to offer the market is some humility, but it seems to have entirely disappeared from the corporate culture...when you're on top, humility simply makes good business sense.


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