Perception toward Permission- based E-mails in Banks

Abstract

In order to reach consumers at the right time with the most appropriate message, it is crucial that marketers understand consumer behavior first and then properly encode their message, followed by right frequency and time management to ensure success. Financial services companies who send to customers permission-based e-mails, reap bonus in form of enhanced credibility and brand loyalty. Permission-based e-mail marketing is a useful tool of contemporary marketing. The aim of the study is to gauge the perception toward permission-based e-mails. This empirical study focuses on various variables affecting the perception of respondents. The results show “Privacy,” “Content,” and “Promptness” are important variables in permission-based e-mail by banks. Finally, the results and their implications are discussed.

Keywords

Permission marketing e-mails banks permission-based e-mails

Introduction

Marketing communications will not provide desired results if they are not targeted to the right customers at the right time. Also, it will enable the customer to blow whistle for issue of privacy. There are several key stakeholders involved in the management of consumer privacy. The most important are the consumer, marketer, and the government. The onus of making privacy viable for consumers is not only to be handled by the government alone but onus is also on professionals practicing in this field to inform marketers about the economic benefits that privacy practices can create for an organization. Therefore permission is required before marketing to consumers. Milne and Gordon (1993) discussed the role of customer permission and its importance in marketing. This acted as a foundation point of evolution of “permission marketing” as a new mantra of ethical marketing. According to them, the information could remain the property of the consumer, and no organization would be permitted to use it for any other purpose without taking permission from the consumer. According to MacPherson (2001), millions of people use e-mail for communication of professional and personal nature. Advertisers consider e-mail as a perfect tool. As a result e-mails require pre-permission of consumers. Also, there here is a universal lack of confidence regarding security of everyday communications channels particularly when it comes to the use of online tools specially e-mails. The same e-mails that improve education, health, and governance can also cause considerable damage when used for purposes of theft or fraud. Therefore, there is a need of safe and pre-approved e-mail communication.

Permission-based e-mail marketing is a useful tool of contemporary marketing. It is very cost- effective method to market offerings to both existing and new customers. Permission-based e-mail has emerged as the cost-effective technique for driving sales and building powerful brand loyalty among the potential customers. “Permission marketing” is perceived as a promotional tool which is used for targeting those recipients who consented to receive commercial messages from the sender, either with the Internet practices or with the advent of mobile communication practices. Permission relationships start with the consumer’s explicit and active consent to receive commercial messages and always give consumers the right to stop receiving messages at any time. Marketer can use permission marketing appeals to advertisers because it enables global diffusion of communication messages, while enabling customization without sacrificing the economies of scale of a one-source message origination. Over the years, banking sector had undergone many changes including nationalization, use of technology, and liberalization. Banking sector has been going through constant changes during the last decade. These changes were caused by establishment and bankruptcy of new commercial banks; changes in monetary policy; establishment of foreign capital banks, bank mergers, and acquisitions. Because so many changes are happening in the banking sector, the level of competition has increased. Therefore, permission-based e-mail marketing is useful and adopted by banks for the précised and targeted customers.

Literature Review

Peter (1998) suggests that communication from new medium is different from traditional communication. According to him, the style of communication has changed and online customer service is now possible. Hoffman and Novak (1996) pointed out that in Internet the relationship of sender and receiver of information is affected by web-based environment. Online marketing/e-marketing involves the use of the Internet medium to market goods and services through virtual shops, which are the websites of marketers. Through this channel, one can get information about the product or service provided by the organizations. Therefore, online marketing has revolutionized the marketing landscape for both the companies and for online customers. E-mail marketing is becoming integrated source for communication as good number of customers prefers to get the desired marketing information by e-mail. E-mail is emerging as a vital link between marketer and consumer that can provide customers rich information about products and services of various organizations to customers. According to the study conducted by emarketer (2001) four-fifths of e-mail marketing messages are responded within 48 hours, as compared to traditional direct marketing method in which it takes six to eight weeks for the same response. De Lussanet (2001) had revealed that e-mail marketing helps a marketer to start a conversation with customers and in further developing a relationship, which is mutually benefited for both, theconsumer and marketer. With the rapid development of e-commerce, e-mail has become an important tool of marketing communication. Therefore, e-mail marketing is becoming a major marketing tool for marketers (MacPherson, 2001; Tezinde, Smith, & Murphy, 2002).

Rettie (2002) stated that success of e-mail marketing depends on various factors of interest. Vriens, Scheer, Hoekstra, and Bult (1998) had developed a direct mail response process model (see Figure 1, which describes the process and steps involved in direct mailing).

Figure 1.

Source: Rettie (2002).

Rettie, Grandcolas, and Payne (2003) compared e-mail marketing with other forms of Internet marketing and identified the key advantages of e-mail marketing. Respondents were asked to register at a music website for a customized e-mail newsletter. After two weeks an e-mail questionnaire was sent to respondents. They highlighted that respondents liked the “permission component.” They had suggested that respondents were more optimistic for e-mails which were more relevant and useful for them. According to them, if e-mails were given on high frequency, it may not give desired results and will lead to deletion of e-mail without reading or may sometimes lead to unsubscription. There is low marginal cost involved in sending e-mail messages; therefore marketers often send too many mails which annoy the recipient. Thus, it is desirable to have such a technology which automatically sensors and decides the adequate frequency of messages.

Godin (1999) proposed a new theory of permission marketing and stressed on the importance of permission marketing. According to the study, consent of customer influences marketing communication programs. According to Cecil (1999), permission marketing persuades only those selected customers and prospects who raise their hands or volunteer themselves (Nath & Gupta, 2006a, 2006b). Permission marketing is defined as promotional e-mail to recipients who consented to receive commercial messages from the sender, typically by signing on website of the company (IMT Strategies, 1999). Sheth, Sisodia, and Sharma (2000) have proposed the concept of customer-centric marketing. They stressed that marketing become advantageous if both marketers and consumers participate in shaping of marketing mix. Krishnamurthy (2000) had identified six characteristics of permission marketing. The most important characteristic of permission marketing is that the permission must be obtained in an explicit rather than an implicit manner. Hence, permission-seeking process must be clear and devoid of deceptive tactics. According to Macpherson (2001), permission marketing is a process in which if a customer gives permission to receive promotions, he/she tends to become loyal and profitable customer. Tezinde et al. (2002) elaborated that permission marketing is more relevant and useful, if it contains affiliation in terms of customer commitment and personalization. Seeking of the permission should not be the objective for organizations deploying permission marketing; rather they use it with utmost customization, relevance, and rewards. The greatest application of permission marketing practices lies with maintaining consumer interest. Nielsen (2002) argued that instead of marketers seeking permission, it should be the consumer who should request for information. According to this study, customers seek information and marketers provide that information on request. The researcher also quoted the example of Amazon.com in this regard, showing how a customer makes a request and gives permission. Consent of customers matter because unsolicited e-mails may lead to consumers’ frustration and thus hampers the image and brand value of any organization (Barnes & Scornavacca, 2004).

According to Rosenspan (2001), permission marketing is only the beginning of an interactive marketing system and provides few benefits (Porter, 2001). According to Swanson (2000), Rizzi (2001), and Rosenthal (2001), permission-based e-mails provide better meaning of communication and reach target audiences promptly. According to Yager (2001), permission marketing respects the privacy of targeted customers (Phelps, Nowak, & Ferrell, 2000) who have actually expressed interest in the product and target a level of trust and responsibility with them which further lead to brand loyalty. According to Book (2004) in order to market well, organizations should use an integrated multi-channel marketing strategy, where the key focus should be on permission-based e-mail. He argued that by using this technique, organizations are able to synchronize customer marketing activities with the overall business activities. Permission e-mail campaigns strengthen a company’s online community of users by providing various benefits (Brodeur, 2000; Moe & Fader, 2004). According to Epsilon’s (2009) study consumers around the world are using online communication tools and are responding to permission-based e-mail in various ways based on their country of origin. As per the study, in order to reach consumers at the right time with the most appropriate message, it is crucial that marketers understand consumer behavior first and then properly encode their message, followed by right frequency and time management to ensure success. The study also stressed that financial services companies who send customers permission-based e-mails reap bonus in form of enhanced credibility and brand loyalty. The research also revealed that the prime reason why consumers subscribed to receive e-mail from financial services companies is to get updated information. Nath and Gupta (2008) in their research survey acknowledged the future of permission-based e-mail marketing. According to them, masses consider this concept to be beneficial for them in the long run. The concept of permission marketing will be a useful concept in the future, primarily, because of finite time and limited attention of the customers.

Banks are evolving at a fast rate in making themselves more accessible to their customers anytime and anywhere. Touch is becoming a key part of the marketing strategy for banks. The bank also promotes itself and its range of products/services using direct mail. Generally banks have different customer segments to cater. Banks therefore will be successful if they offer the services as required by the target group of customers (Zineldin, 2000). If the information as communicated by the banks is reliable, it will lead to the loyalty. Banking customers show a negative attitude toward those banks that use direct marketing strategies which include unsolicited e-mails. Marketing media include mail promotion, telephone, and e-mail promotions. Purchase intention is significantly influenced by attitudes toward direct marketing media rather than response channels. In present time, the most popular tool for promotion of banking services is e-mail marketing. Banks uses e-mail as a marketing tool because e-mail marketing by banks not only promotes the services by giving offers but it also interacts with the person and a potential customer can purchase the product with help of this (Gupta & Mittal, 2008).

Figure 2.

Source: MailerMailer (2006).

Therefore, banks are promoting their products and services using various techniques of electronic marketing thereby creating and communicating unique value. The primary communication channel used by banks is e-mail marketing. E-mail communications provide touch points with banking clients, keeping them engaged with bank’s financial services. Klang (2001) pointed out that customers assess the behavior of banks and make judgment about integrity of bank. Customers evaluate past e-mail sending behavior of bank to decide whether it has provided friendly advises protecting the interest of the customers or has it been opportunists, before making any transaction decision. According to MailerMailer (2006), click-through rates are better for banks as compared to other industries (see Figure 2).

According to Synergistic Research Corporation (www.synergisticresearch.com), one-fifth of Internet users who receive financial e-mails actually obtain a financial service as a result. The market size of online banking is maturing; so competition is heating up. Consumers are no longer loyal toward any bank. One-third online consumers who have a savings account are leaving the primary bank they were associated with because other competitive banks are giving them lucrative promotional offers like high interest rates on deposits, low fees, gifts, and identity theft insurance (www.jupiterresearch.com).

Methodology

In order to remain unswerving with previous studies, measures were adopted and implemented with diligence. The questionnaire was designed in a manner that made it capable of translating the research objectives into precise questions. At the same time, it was also taken care that the designed questionnaire enables the researcher to acquire the required data. The respective questionnaire was then pre-tested on a group of 50 consumers of banks. After the testing, a final questionnaire was developed and administered on 200 respondents by three consecutive stage sampling. In the first and second stages, probability sampling was applied and in the third stage convenience sampling was done. The research was conducted during summers of 2014.

The questionnaire was prepared in two parts. The first part gathered information regarding profile of consumers such as age, education, gender, occupation, and income level. The second part was designed to study the attitude of banking respondents regarding permission-based e-mails by the banks and the possible associations with it (if any). In this part, pairs were also formed for developing perceptual mapping. The reliability of the questionnaire was tested using Cronbach Alpha IBM-SPSS Version 19 software. It was found to be above 0.60, which is acceptable (De Vellis, 1991; Nunnally & Bernstein, 1994; Spector, 1992).

Results and Discussion

The usage intention of Internet banking, especially for outbound e-mails could be affected by customers’ perceptions of credibility regarding security and privacy offered by the bank (Wang, Wang, Lin, & Tang, 2003). Perception of lack of security has been identified as an important factor which affects the use of e-mail by banks (refer Table 1).

In order to find out the perception toward permission-based e-mails in banks, multi-dimensional scaling was used to get a spatial map of the respondent’s perception toward permission-based e-mails sent by banks. Multi-dimensional scaling (MDS) configuration was constructed using Alscal.

Table 1.

Characteristics of the Respondents

Characteristics	Frequency (N 1= 200)
Characteristics	N	%
Gender
Male	134	67
Female	66	33
Age Group
18–25	99	49.5
26–40	73	36.5
40–60	24	12
60 & Above	4	2
Educational Qualification
Undergraduate	12	6
Graduate	61	30.5
Postgraduate	95	47.5
Higher	32	16
Occupation
Businessman	16	8
Salaried	72	36
Self-employed	36	18
Housewife	13	6.5
Student	63	31.5
Income Level
Upto `20,000	82	41
`20,001–40,000	57	28.5
`40,001–60,000	41	20.5
Above 60,001	20	10
Account in Bank
Public	96	48
Private	84	42
Foreign	20	10

Source: Authors’ own.

For this purpose, five variables were used namely:

Variable 1: Privacy

Variable 2: Content

Variable 3: Promptness

Variable 4: Speed

Variable 5: Security

Different pairs of various variables were established to identify perceptions of respondent about permission-based e-mails in banks by the means of 7-point scale where 1 represents no association and 7 represents strong association.

Based on the aggregated grouped plots, as derived from various group data, a two-dimensional spatial map was created. The two dimensions were

Attention to detailing

Attention to reliability

Attention to detailing refers to the level at which tasks are performed carefully, accurately, and in accordance with specific instructions. For bank it includes accuracy of content and privacy.

Attention to reliability refers to the ability of the system (bank in this case) to perform and maintain its functions in normal circumstances. For bank, it relates to promptness, speed, and security of the information sent (e-mails in this case).

The R-square value was 0.99 and the stress value was 0.51, hence the solution is acceptable. The Euclidean distance model achieved for two dimensions (refer to Figure 3).

Figure 3.

Source: Authors’ own.

In dimension 1, security was at the upper side and speed was on the lower side. In the second dimension, it was found that privacy, content, and promptness were close together on the upper side and security and speed were found to be on the bottom side.

In the spatial map, the parameters that were close to each other were being perceived in a similar manner in the respondent’s mind. Thus, respondents laid more importance to privacy, content, and promptness in permission-based e-mail by banks.

Conclusions

Online transaction with bank involves creation of username, password, sharing of e-mail id, mobile number, and sometimes personal details possessed. This requires establishment of mutual trust and an agreement in which the bank does not leak or share or sell information to any other person/organization for commercial use (Barwise & Strong, 2002). On the other hand, bank creates this trust in its customer by sending mails regarding awareness of online frauds and educates its customers not to share personal identification number or net banking details with anyone. Thus an environment of trust is being created by banks through e-mail communication from time to time. Thus trust on bank about “privacy of details” is very crucial and sometimes is sole decider for the decision of giving permission or not to bank for sending e-mails. Banks are considered to be one of the safest places for assets of people. Trust is the linkage which makes people decides which bank to choose. People also trust the bank in case of permission-based e-mails that bank will not harm them in any manner. Plotting of perceptual mapping on two dimensions, namely “attention to detailing” and “attention to reliability,” of the data gathered from the respondents revealed that privacy, content, and promptness were closely associated on the positive side of dimension 2 (attention to reliability). This means that if banks are taking care of all these three variables namely aptly, privacy, content, and promptness, the customers will readily give permission to banks for sending them relevant e-mails. Hence it will be one step further in creating better relationship between the banks and their customers through information technology as a bridging tool and e-mail as a messenger for carrying information to and fro between the two parties. This study along with the study by Anthony and Fernandez (2000) and Yager (2001) reveals that permission marketing based e-mails respects the privacy and security of targeted customers who have actually expressed interest in the product and a level of trust and responsibility with them which further lead to brand loyalty. Also the results of the study indicate that e-business has made customer more loyal toward the organization and therefore banks are no exception. Banks send personalized and targeted electronic messages to targeted groups of customers and provide information of banking products, events, and offers. Therefore, online banking has become the hottest new customer service trend for banks especially in developing countries. The major concern is perceived lack of security which affects the use of banking e-mail by consumers. These findings help marketing actioners to develop strategic plans for future use. In conclusion, future research could investigate this response on global level.

References

Barnes

S. J.

& Scornavacca

(2004). Mobile marketing: The role of permission and Acceptance. International Journal of Mobile Communications, 2(2), 128–139.

Barwise

& Strong

(2002). Permission-based mobile advertising. Journal of Interactive Marketing, 16(1), 14–24.

Bednar

D. A.

Reeves

C. A.

& Lawrence

R. C.

(1995). The role of technology in banking: Listen to the customer. Journal of Retail Banking, 17(3), 35–41.

Book

(2004). How permission-based email drives sales, leverages customer relationships and creates powerful brand loyalty. White Paper, pp. 1–11.

Brodeur

(2000). The magic formula for email marketing. Retrieved from wysiwyg://136/http://www.digitrends.net/scripts/print_page.as

Cecil

(1999). Permission to stay in touch: Critical marketing lessons from a childhood game. The Rough Notes Magazine. Retrieved from www.roughnotes.com/rnmag/august99/08p90.htm

De Lussanet

(2001). The marketer’s guide to SMS. Forrester Research Inc. Forrester Report, European Research Centre, Amsterdam. Retrieved from www.forrester.com/home/0,3257,1,FF.html

De Vellis

R. F.

(1991). Scale development: Theory and applications. Newbury Park: SAGE Publications.

eMarketer. (2001). eMail marketing report. New York, NY: Author.

10.

Epsilon. (2009). Building brands one inbox at a time: An inside look at email marketing for the consumer packaged goods industry. White Paper, pp. 4–5.

11.

Godin

(1999). Permission marketing: Turning strangers into friends, and friends into customers. New York: Simon and Schuster Publishing Company.

12.

Gupta

S. L.

& Mittal

(2008). Mobile banking: Present status and future perspectives, “The analyst” (pp. 98–100). Dehradun: ICFAI University Press.

13.

Hagel

& Singer

(1999). Net worth. Boston, MA: Harvard Business School Press.

14.

Hoffman, D. L., & Novak, T. P. (1996). Marketing in hypermedia computer-mediated environments: Conceptual foundations. Journal of Marketing, 60(July), 50–68.

15.

IMT Strategies. (1999). Permission e-mail: The future of direct marketing. White Paper, pp. 1–9.

16.

Klang

(2001). Who do you trust? Beyond encryption, secure e-business. Decision Support Systems, 31(3), 293–302.

17.

Krishnamurthy

(2000). Spam revisited. Quarterly Journal of Electronic Commerce, 1(4), 305–321.

18.

MacPherson

(2001). Permission-based e-mail marketing that works. Chicago, IL: Dearborn Trade Publishing.

19.

MailerMailer. (2006, October). Email marketing metrics report January–June 2006. Retrieved from www.dmconfidential.com/blogs/category/Email/3160

20.

Milne

G. R.

& Gordon

M. E.

(1993). Direct mail privacy-efficiency tradeoffs within an implied social contract framework. Journal of Public Policy & Marketing, 12(1), 206–215.

21.

Miyazaki

A. D.

& Fernandez

(2000). Internet privacy and security: An examination of online retailer disclosures. Journal of Public Policy and Marketing, 19(1), 54–61.

22.

Moe

W. W.

& Fader

P. S.

(2004). Dynamic conversion behavior at e-commerce sites. Management Science, 50(3), 326–335.

23.

Nath

& Gupta

(2006a). In the realm of permission marketing. Review of Professional Management, 4(2), 62–66.

24.

Nath

& Gupta

(2006b). Permission marketing—To market with prior approval. Dias Times, 6(3), 23–25.

25.

Nath

& Gupta

(2008). Awareness and acceptance of permission marketing in general masses (M. Phil. Dissertation). Madurai, India: Madurai Kamraj University.

26.

Nielsen

(2002). Request marketing. Nielsen Norman Group. Retrieved from https://www.nngroup.com/articles/request-marketing/

27.

Nunnally

J. C.

& Bernstein

I. H.

(1994). Psychometric theory (3rd ed.). New York: McGraw-Hill.

28.

Peter

(1998). The new interactive media: One-to-one, but who to whom? Marketing Intelligence & Planning, 16(1), 22–30.

29.

Phelps

Nowak

& Ferrell

(2000). Privacy concerns and consumer willingness to provide personal information. Journal of Public Policy and Marketing, 19(1), 27–41.

30.

Porter

M. E.

(2001). Strategy and the Internet. Harvard Business Review, March, pp. 62–78.

31.

Rettie

(2002). Email marketing: Success factors. The Eighth Australian World Wide Web Conference, 6–10 July 2002, Queensland, Australia (Aus Web 2002). ISBN 9781863844536.

32.

Rettie

Grandcolas

& Payne

(2002). Email marketing: Permission to pester. Academy of Marketing (AM) Annual Conference 2002: The Marketing Landscape: Signs for the Future, July 2–5, 2002, Nottingham.

33.

Rizzi

(2001). Precision e-mail marketing. Direct Marketing, 64(7), 56–61.

34.

Rosenspan

(2001). Participation marketing (vs. permission marketing). Direct Marketing, 63(12), 54–57.

35.

Rosenthal

M. M.

(2001). The personal side of opt-in e-mail. Retrieved from www.digitrends.net/marketing/13640_15276

36.

Sheth

Sisodia

& Sharma

(2000). The antecedents and consequences of customer-centric marketing. Journal of the Academy of Marketing Science, 28(1), 55–66.

37.

Spector

(1992). Summated rating scale construction: An introduction. Newbury Park, CA: SAGE Publishing.

38.

Swanson

E. R.

(2000). Permission marketing: The new campaign tactic. Campaigns and Elections, 21(9), 50–51.

39.

Tezinde

Smith

& Murphy

(2002). Getting permission: Exploring factors affecting permission marketing. Journal of Interactive Marketing, 16(4), 28–36.

40.

Vriens

van der Scheer

H. R.

Hoekstra

J. C.

& Bult

J. R.

(1998). Conjoint experiments for direct mail response optimisation. European Journal of Marketing, 32(3), 323–339.

41.

Wang

Y. S.

Wang

Y. M.

Lin

H. H.

& Tang

T. I.

(2003). Determinants of user acceptance of Internet banking: An empirical study. International Journal of Service Industry Management, 14(5), 501–519.

42.

Yager

(2001). Customer, may I? Getting the OK to sell. InfoWorld, 23(4), 48.

43.

Zineldin

(2000). Beyond relationship marketing: Technological ship marketing. Marketing Intelligence and Planning, 18(1), 9–23.