new best practices for opt out management
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New Best Practices for Opt Out Management
Jeff NicholsonVP of Product Marketing, CAI
Pitney Bowes Business Insight
What is Opt-out?
Opt-out: “When a recipient unsubscribes or opts-out of further communications”
Source: The Direct Marketing Association
What’s Happening to our Outbound Response Rates?• The new customer is in control
– Social circumvention– Ad fatigue
• The changing view of “marketing”– (A) advocational marketing– (B) adversarial marketing
“Crouching customer, hidden opportunity.”
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What happens now when you get it wrong…
The New Marketer?
“For the longest time, marketers have mistakenly regarded email marketing as “free”. Strategic marketers are finally waking up to the consequences of getting it wrong.”
Source: Pitney Bowes Business Insight
Opt-out rates are Significant
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The Impact of Opt-out is Cumulative (snowball effect)
Reachable Customers Reachable
CustomersReachable Customers
Reachable Customers
Real-world Example:
Major US Retailer
• Email address for 70% of customers
• 50% of these customers have opted out
Time
“Re
ach
ab
ility
”
Opportunity• Cross-sell offers• Retention & renewal• Engage in dialogue
The Customer “Reachability” Funnel
Reachability vs.Deliverability
Spam Filter• Level 1 deliverability
failure (often blind)
Mental Opt-out• Deletion is now habit
Junk Filter (client)• Level 2 deliverability
failure (blind)
Explicit Opt-out• Unsubscribe flag
requested
Incomplete Data• Absent or inaccurate
email address
WHAT’S STANDINGIN YOUR WAYSYMPTOMS
Your Ability to Influence
Frequency + Relevancy
Data Quality
Content Quality
DRIVERS
One Moment in Time.
Outcome:• Opt-out
Outcome:• Response• Ad Fatigue• Spam rating
Impact: • Short Term
Impact: • Long Term
YourCampaign
No Opt-out Opt-out
How are YOU measuring campaign success?
Time
Cu
sto
me
r R
eve
nu
e
Campaign
Your Campaign is a Fork in the RoadDid your campaign have a net positive effect?
Campaign-derived Revenue vs. the Degraded Future CLV
Opt-out CLV(Incidental Lifetime Value)
Degraded CLV(The slashed value due to opt-out)
Opt-in CLV(Influenced Lifetime Value)
How Much is Opt-out Costing YOU?
“To optimize customer lifetime value, organizations must fundamentally change how
they measure campaign effectiveness”
Metric How to Calculate
Opt-out # of unsubscribes x dCLV
Junk filter # unsubscribes x 2 x dCLV
Mental opt-out
# unsubscribes x 4 x dCLV
Assessing the Impact of Opt-out to your Organization
Incremental Value from Campaign
Slashed Lifetime Value from Opt-out
Response Rate x
Conversion Rate x
ASP
# of unsubscribes x
dCLV?
Not Delivered20%
Spam
67.5%Noise
No Immediate Action
6%
Mental-Opt-out
Mental Opt-out
3%Junk Mail Filter
JunkResponse
1%Opt-out
Opt-out
Contribution to Future Opt-out= 5,000Opt-outs
= 3,000Purchases = 10,000
Flag as Junk
$600KImmediate
Value
($1.75M)Lost Future
Value
($3.5M)Lost Future
Value
X $200Avg Per
Purchase
X ($350)Impact to
Future Value
X ($350)Impact to
Future Value
Example:• Campaign Size: 500,000• Revenue per
Conversion: $200• Response rate: 2%• Conversion: 30%
2%
X 30%Conversion
Response
• Opt-out rate: 1% • Degraded CLV: $350
Marketers Must Re-assess Campaign Success
The Critical Importance of “Getting it Right”
Very Relevant
Less Relevant
First 30 Days 31 – 60 Days 61 – 90 Days 90 – 180 Days
Less Relevant
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Very Relevant
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Less Relevant
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Less Relevant
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Less Relevant
180 – 240 Days
Very Relevant
Less Relevant
Less Relevant
Less Relevant
Very Relevant
Very Relevant Less Relevant
Very RelevantLess Relevant
Which straw will “break the camel’s back?”
What to send + What NOT to send
The new “getting it right”: It’s not just about potential relevance
Ask Yourself:• How many emails does your highest value
customer receive every week?
• When was the last time you had a management discussion regarding which campaigns NOT to send to your top customers?
• Yet, do you have a goal of maximizing the lifetime value of each customer?
The New Fundamental Framework for Opt-in Optimization
Don’t just manage the opt-out process.Address the opt-out problem.
Opt-in Optimization Fundamental Framework
Understand
Preserve
Comply
Re-engage
CaptureDeclaration Adhere
Preference & Prediction
Contact Governance
Inbound Interactions
Transactional Contact
Measure Exposure
InformSegmentation
Prevent future opt-outs.
Maximize the opt-in opportunity.
Measure and monetize opt-out.
Ensure regulatory compliance.
Don’t just manage the opt-out process. Address the opt-out problem.
C. Pre-filter• Filter opt-out during
segmentation
D. Consider• Assess recency and frequency
metrics for segment
Increase opt-out visibility to
improve offer selection
Understand Measure and monetize opt-out
Measure Exposure
InformSegmentation
A. Measure• Understand campaign’s true
success (response vs. opt-out)
B. Monetize• Understand the impact of opt-
out on customer value (opt-out x dCLV).
Understand what opt-out is costing your business
Understand
Preserve
Comply
Re-engage
C. Enforce• Governance rules in place
D. Alternatives• Offer alternatives to opt-out
Make sure the business
adheres to plan
A. Listen • Channel • Frequency• Focus
B. Predict• Predict uplift• Predict likely opt-outs
Understand desires of individual customers
PreserveStop your best customers from opting out
Preference & Prediction
Contact Governance
Channel
FrequencyFocus
Understand
Preserve
Comply
Re-engage
A. Listen • “Capture the flag”
Accept opt-out flags across customer base.
B. Enforce• Subscription compliance rules
and systems in place
Ensure compliance
across affected channels.
ComplyEnsure regulatory compliance
Capture Declaration
Adhere
Understand
Preserve
Comply
Re-engage
C. Transactional Documents• 95% open rate
D. POS• Initiate opt-in dialogue
E. Incentivize• Incentivize opt-in (CLV)
Leverage the transactional
engagements.
A. Prove it• Demonstrate value
first
B. Re-connect• Preserve using customer
preferences, contact governance, dialogue
Engage with opt-outs when they come to you!
Re-engageMaximize the opt-in opportunity – get your opt-outs back
Inbound Interactions
Transaction Touch Points
Understand
Preserve
Comply
Re-engage
Opt-in Optimization Fundamental Framework
Understand
Preserve
Comply
Re-engage
CaptureDeclaration Adhere
Preference & Prediction
Contact Governance
Inbound Interactions
Transactional Contact
Measure Exposure
InformSegmentation
Prevent future opt-outs.
Maximize the opt-in opportunity.
Measure and monetize opt-out.
Ensure regulatory compliance.
Don’t just manage the opt-out process. Address the opt-out problem.
Opportunity• Cross-sell offers• Retention & renewal• Understand VOC• Engage in dialogue
Spam Filter• Level 1 deliverability
failure (often blind)
Junk Filter (client)• Level 2 deliverability
failure (blind)
Mental Opt-out• Deletion is now habit
Explicit Opt-out• Unsubscribe flag
requested
Incomplete Data• Absent or inaccurate
email address
SYMPTOMS
Your Ability to Influence
Frequency + Relevancy
Data Quality
Content Quality
DRIVERS
Maximize Opt-in,Minimize Opt-out
Understand• Measure exposure• Inform segmentationPreserve• Preference & prediction• Contact governanceComply• Capture declaration• AdhereRe-engage• Inbound interactions• Transactional touch points
Improve• Collect valued data• Validate accuracy• Enrich 360° view
Assess• Deliverability validation
RESOLUTION
The “Reachability” Challenge NOW has a Solution
• Customer Analytics and Interaction Solutions
• Communications Management Solutions
• Consulting Services
• Customer Data & Location Intelligence Solutions
• Customer Analytics and Interaction Solutions
• Customer Analytics and Interaction Solutions
PBBI CAN HELP
Optimize CLV
“More Customer Base”
Thank You
Jeff NicholsonVP of Product Marketing, CAIPitney Bowes Business Insight
E: [email protected]: @jnicholson30L: http://www.linkedin.com/in/jeffnicholson