In a world moving towards digital privacy, it’s even more important to value your direct customer relationships. And direct customer data.
Digital Marketing and Privacy
As discussed in earlier posts ( see third-party cookies, Apple iOS ), the key issue is that a third party should not have access, without permission, to what is going on between a first party and a second party. To recap: the first party is the business and the second party is the customer. The first party could be an online store, and the second party would be a customer who buys something from a store. Thus, if you are on one app on your iPhone – other apps should not track you unless you permit them to track you. In the cookie world, third-party data aggregators could track you across the web. The goal for advertisers is to chase people around the web with ads after they click on a product and demonstrate interest.
In the offline world, law enforcement in democracies is not allowed to look at anyone’s EZPass records, just to fish around, without a court order. Disclaimer: We are no legal experts!
Long-term Customer Relationships as marriages
A great piece of academic research is a 1987 piece on “Developing Buyer-Seller Relationships” by Dwyer, Schurr, and Oh. They build a neat case, based on sociology, of the parallel between human marriages and long-term customer relationships. Written much before the Internet, they decry one-night stands (today’s Tinder) in favor of long-term marriages ( say eHarmony) regarding customer relationships.
Why? because:
- Long term-customers help pay the bills and salaries.
- Long-term customers are much easier to serve simply because they have learned how your organization works. And you have learned how they work, particularly in complex B2B transactions.
- New customer acquisition sounds sexy but is estimated at seven times the cost of keeping current customers happy.
- Long-term customers are far easier to study and work with for developing both radical and incremental innovations.
- You can observe all their actions on your website and adapt your offering to suit their interests. Thus Amazon and Netflix suggest what you might like, and Google and YouTube have tailored search results based on your search history. And Facebook/Instagram/TikTok offers “feeds” and ads based on what they know about your liking based on clicks, likes, and shares.
Mailing List Providers were the original Third Party cookies
Mailing list providers were the original third-party cookies. They gathered contact details of different demographics, and you could buy lists to mail (junk mail) to them. You could opt-out, and for a $2 fee, you can opt-out at the FTC. Similarly, you can opt-out of junk calls. You cannot opt out of list providers collecting your data, you can only opt out of junk mail and calls.
In direct mail, telemarketing, TV infomercials – a response was the only data point based on which the entire field of direct marketing evolved. Responders joined your customer list.
With the Internet, the mailing list providers were reborn as third-party cookie providers who picked up your behavior on one website and then used your behavior on other sites as “demographics” for advertisers.
This is what digital privacy advocates object to. Digital privacy advocates want consumers to be able to give or deny permission to be tracked.
But big tech companies require you to login
What people do not realize is that as soon as you log in to any website – you become a second party to the website. Your behavior is observable and monetized by tech companies, and to us, it is fair. You cannot expect a tech business to have any revenue model and provide services for free.
Google, Facebook, or Amazon serve paid/sponsored ads based on your behavior and observed preferences. See a recent article on How Google’s in-house marketers are adapting to a shifting privacy environment.
In other words, as far as we can tell, there is no privacy issue for a business so long you focus on current customers, including web visitors.
Opportunity is in your current customer list
For all businesses, your most valuable data is your current customer list. Smaller businesses like restaurants generally are too busy to stay afloat, and most do not have a list of emails or contact numbers of all customers who visit them.
Other small businesses like gyms have a customer list but do not seem to be doing a lot of marketing around them.
We suggest you look at your current customer list, and web visitors carefully as they give you valuable clues on how to grow your business.