new best practices for opt out management

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

Less Relevant

Less Relevant

Less Relevant

Less Relevant

Less Relevant

Very Relevant

Less Relevant

Very Relevant

Very Relevant

Less Relevant

Less Relevant

Less Relevant

Less Relevant

Less Relevant

Very Relevant

Less Relevant

Very Relevant

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: Jeff.Nicholson@pb.comT: @jnicholson30L: http://www.linkedin.com/in/jeffnicholson