For marketing to be possible in targeted channels, it first needs consent. Rosemary Smith, director of Opt-4, looks at new evidence that shows a worrying trend towards removal of that permission to be contacted by consumers.
With new regulations on cookies hitting the headlines and what seems like a constant stream of highly-publicised data losses, it is not surprising that consumers are getting tight-fisted with their personal data. A breakdown in trust of the brand through bad personal experience, fear of a data breach, ID theft and concerns about inundation with unwanted marketing are all up there as reasons to keep data close to their chest.
But some savvy consumers are after more - they want something of value in return for marketing consent. That may be increased control of what happens to their information (as in the Government’s Mydata pilot or the Mydex personal data store), reassurance and the promise of a “safe data harbour” through enhanced privacy settings (like those adopted by Facebook when user pressure got too great) or even a financial reward in exchange for information use (anything from electronic coupons to a model where the consumer gets a cut of the revenue derived from data use).
Is it any wonder that three-quarters of brands are now concerned about their opt-out rates? The results of a new survey underline how gaining marketing permission is increasingly difficult. In Opt-4’s “Permission Please” report, nearly three-quarters of respondents - 44 household names from a range of sectors - agreed that marketing opt-out rates represented a major business threat.
More worrying still, close to 60 per cent of brands reported an increase in refusals to share personal data for marketing. Yet amazingly, nearly 30 per cent were not even tracking this key measure of customer engagement.
Judith McClelland, a media consultant at Royal Mail which sponsored the report, finds this surprising: “The fact that so many brands don’t track opt-outs says that they may be in for a shock. Those that are tracking reported widely varying opt-out rates proving that assumptions can be dangerous.”
Previous research among consumers by DMA and Fast.MAP has shown the vital role that brand trust plays when it comes to parting with data. But there are other factors at work here, including the “data value exchange” provided by offers, competition prizes and discounts. Paul Seabrook, co-Founder of fast.MAP, comments: “Consumers are very savvy and should not be taken advantage of when it comes to producing relevant and appealing ways of creating win-win situations.”
It is also worth remembering that consumers may have opted-in to other brands’ messages (maybe inadvertently when using comparison sites) even if they have closed the door on their current supplier. David Milnes from Kytemark Solutions, which conducted the “Permission Please” research, points to the impact of not being able to communicate freely with current customers.
“It may be a much harder sell at renewal time if your customer has been bombarded with competing offers which you cannot match. As well as losing out on cross and upsell opportunities, lack of permission will certainly impact churn rates,” he says.
What’s driving opt-out?
The “Permission Please” survey asked brand owners what they thought were the most important drivers of opt-out. Consumer awareness, poor targeting and over-communication were seen as major factors in increasing opt-out rates. But only 22 per cent of marketers recognised the impact of data protection wording on the level of permission received (see Chart One).
This lack of care about the wording of privacy statements is definitely contributing to opt-out rates. Consumers are more affected by wording than marketers like to think. When presented with better-written statements there is a significant upswing in permission rates. “Our Privacy Statement test has shown that via different, more personalised wording, it’s possible to reduce opt-out rates by 17 per cent. This attention to detail throughout the customer experience shows what’s possible via active engagement,” says Seabrook.
Despite this evidence, less than a third of respondents to the “Permission Please” survey had tested different permission statements. Those that had run tests reported massive variance between the best and worst permission rates achieved. One respondent who had tested statements made the point that vague wording doesn’t really fool anyone. Her experience was that if consumers are tricked into giving initial consent, unsubscribe rates when the data is used are usually very high.
So, many brands are missing the chance to “woo” the consumer with optimised privacy wording, but are there other things driving this increase in opt-out? During the survey, marketers were asked what internal factors were contributing to opt-out rates and how much impact this was having. There was a wide acknowledgement that insufficient training and restrictive legal advice were big contributors (see Chart Two). Interviewees also mentioned poorly briefed call-centre operators and front of house staff who often defaulted to opt-out.
Does opt-out vary by channel?
There was a pronounced trend towards the collection of separate permissions by channel, allowing customers to choose how they receive brand communications. Three-quarters of the brands interviewed were providing this choice and reported significant variance in terms of permissions by channel (see Chart Three).
Electronic channels were significantly ahead of post, with telephone and email tying for the dubious honour of delivering most opt-outs. Direct mail had the highest opt-out rate in just 13 per cent of cases.
Jenny Moseley, director of Opt-4, confirms that the growth in email opt-outs was a common problem. “Telephone opt-outs have always been high – we have rogue users and illegal recorded messages to thank for that – but there has been an escalation in the rate of refusal for email communications. Whether this is due to security fears or just over-loaded inboxes is hard to say.”
However, hiding behind the numbers may be another issue which relates to lack of understanding of the legislation covering marketing consent. Telephone and email are not only subject to the Data Protection Act 1998 but also to the Privacy and Electronic Communications Regulations 2003. “There is a belief that you always need explicit consent for email and telephone which may be driving these numbers up. We found 56 per cent of brands were using opt-in for email,” says Kitemark’s Milnes.
Higher opt-outs on the web
The “Permission Please” survey showed for the first time that consumer behaviour varies according to the method of data collection - 48 per cent of respondents had experienced a difference in permission levels depending on how the data was collected, but nearly a third did not know if this was the case.
The results showed that there is much less willingness to give permission online and on the telephone where the opt-out rates are usually highest (see Chart Four). Web expert Stefan Elliott of 6 Serving Men comments: “It is ironic that websites which offer so much opportunity for customer engagement seem to be encouraging opt-out. This is often a design issue - I see so many registration pages that fail to encourage opt-in by giving the individual a reason to part with their data.”
Data collection on paper rarely produced the highest opt-out rate and face-to-face collection was the most permission-efficient – although some respondents commented that this might be because in the relatively uncontrolled environment of retail operations or at exhibitions, data protection questions were not being consistently asked!
Opt-back-in by mail
The final part of the “Permission Please” survey asked whether brands were attempting to win back permission from customers who had initially refused or whose permission status was “unknown”. Thirty per cent of brands had tried opt-back-in campaigns, with the vast majority of these (73 per cent) using the mail channel for their conversion efforts (see Chart Five). Many brands believed this to be the least intrusive way of conducting opt-back-in campaigns and more legally defensible than unsolicited emails or calls. While relatively common, face-to-face re-permissioning was reportedly hard to control and not very successful.
Those who had tried to re-permission often used incentives – although there is a fine legal line to tread here as the communication should not be marketing-driven. Not surprisingly, results of opt-back-in campaigns with incentives were significantly better.
Royal Mail wants to encourage more opt-back-in campaigns and has persuaded EDF Energy to share results of a recent campaign. Overall, the campaign achieved a 17.11 per cent response rate - far in excess of a standard direct mail campaign. Some segments achieved a response rate in excess of 30 per cent.
Dan Towse, marketing controller at EDF, says: “It’s clear that the majority of customers are either unaware or ill-informed about the little tick box at the bottom of their contract. It’s also apparent that there has to be something in it for the consumer to opt-in – in this case a small incentive acted as a major pull.”
It is clear from these results that a lot of time and effort is being spent – by some brands at least – on winning the battle for marketing consent. In the “Permission Please” report, Royal Mail and Opt-4 have established some real benchmarks around gaining and winning back consent. The trends which have emerged show categorically that marketing permission is becoming a much more challenging arena and one which needs urgent management focus.
If, like one respondent to the survey, your database of 1.2 million names had “shrunk” to just 500,000 useable contacts, you might think so, too.
The online survey was completed by 44 top brands in a range of sectors including financial services and publishing. This was followed by recording comments made during in-depth interviews with a selection of respondents and at an open meeting of the Royal Mail Permission Users Group.
For more information on the “Permission Please” report, go to www.opt-4.co.uk