It's Relationship Marketing 101: Companies that don't listen to their customers don't stay in business for long. But paying attention to what customers have to say isn't a matter of simply being attuned to their product or service needs. It means establishing a two-way conversation with them in a way that they are truly heard -- and not just a repository for company promotions.
Take, for example, communication preferences. At its most basic, preference management occurs whenever a customer opts in or out of a company’s methods of marketing communications, such as newsletters, SMS alerts, or social media feeds. Unfortunately, the simple on-off click available to customers for the last decade hasn't evolved much, even while the ability of marketers to analyze customer behavior has revolutionized the industry. Companies that get this part of the customer conversation wrong not only risk alienating customers, but also face an increasing array of regulatory compliance issues, including fines that can rise to tens of millions of dollars.
Customers: The playing field isn't level
The customer is already aware of this communication imbalance -- and they're none too happy about it. Recent surveys from TRUSTe and Consumer Reports WebWatch all point to an alarming level of mistrust. Three out of four consumers say they are aware that their online behaviors are tracked and are concerned about how it affects their privacy. In its 2013 U.S. Consumer Confidence Index, TRUSTe found that 89 percent of consumers will avoid doing business with companies they think are abusing online privacy.
Consumer unease is spurring regulators worldwide to restrict how and when marketers can communicate with customers. In the United States, what started with the widely-known Do Not Call List more than 20 years ago has become a real headache for marketers. President Obama just announced a Consumer Privacy Bill of Rights and, come October, the Federal Trade Commission plans to enforce rules requiring companies to obtain prior written consent before sending promotional SMS messages, even to established customers.
The stakes are high
Non-compliance with these rules can be expensive. Since 2011 alone, companies like Jiffy Lube and Sallie Mae have been hit with multimillion dollar judgments for violating regulations. The pizza chain Papa John’s is defending itself in another case that could cost the company as much as $250 million.
Why are these cases so costly? The law allows fines based on the exact number of discreet messages sent. So an errant SMS blast to tens of hundreds of thousands of customers can be a very expensive mistake indeed.
The goods news is, companies have a choice in how they navigate this legal maze. Some companies have taken a conservative stance, limiting their marketing communications and sacrificing a huge opportunity to engage customers. Others are taking more risks and are willing to suffer heavy fines for the opportunity to push their messages to consumers.
The savvy ones are actually listening to customers and what the laws are trying to accomplish. They are letting consumers control the communication process -- and, along the way, building trust and avoiding the many pitfalls of getting customer preferences wrong.
At Responsys, we've been working with marketers who are managing some of the most sophisticated messaging out there, across virtually every digital touch point. And we've been building solutions to help these brand navigate compliance pitfalls while still taking advantage of customer data and cross channel communications.
To learn more about these issues, as well as what can be done about them, check out our new Interact Preference solution,