Opt-4 is concerned that ever increasing opt-out rates are causing havoc with subscription marketing efforts and damaging customer lifetime value.
In recent years, consumers have become increasingly guarded about giving their marketing consent. In 2002, two million households had registered on the do-not-call Telephone Preference File but, today, registrations stand at nearly fifteen million. In 2003, only 16% of those registered on the Electoral Roll said they didn’t want their details used for marketing purposes but by 2007, 41% had declined. Consumer research by the Information Commissioner’s Office now shows that 87% of people are concerned about receiving unwanted marketing approaches.
Speaking at February’s Publishing Expo, in a presentation titled, “The Missing Millions - How Opt-Outs Can Ruin Your ROI”, Opt-4 directors Rosemary Smith and Jenny Moseley showcased the latest analysis into opt-outs and explored the drivers for refusal levels as high as 80%.
The survey of 68 publishing professionals questioned at Publishing Expo aimed to provide further insight into this alarming issue.
Permissions not a threat?
Surprisingly, only 15% of respondents felt permissions were at a level to impede their ability to market and 47% didn’t know if they were having an impact. This could mean either there isn’t a problem or, there is a problem waiting to happen.
Longer term impact not measured
A recent Direct Marketing Association benchmarking report gave an estimated value of a consented email address at £9, but it seems that the value of permissions is rarely calculated.
The survey hoped to uncover the extent of long term financial damage caused by opt-outs but, disappointingly, most respondents didn’t know how they were impacting their business.
Only 12% actually knew the levels of permissions on their company’s database and only a further 17% felt able to give an estimate of typical unsubscribes from their company’s marketing communications.
Where the figures were known, the average amount of opt-outs on the respondents’ databases was 20% and one publisher spoke of having over 50% opt-out.
A further concern is that publishers use past consumer behaviour as an indication of how they will act in the future. But as has been seen with the Telephone Preference Service and the Electoral Roll, change can be swift and the consequences stark. 55% of respondents are witnessing rising numbers of opt-outs and the rate of increase is sometimes dramatic. Once lost, it’s very hard and costly to regain consumer permissions.
Only two out of the 68 respondents spoke of any testing they had undertaken to reduce opt-outs. This contrasts with virtually all respondents who had firm opinions (both as consumers and as publishers), as to why opt-outs occur. Four possible causes were offered to respondents, with an opportunity given to add any additional reason or comment.
The combined impact of wording for data protection notices and the inability to offer permissions by channel – both ultimately in the control of the publisher – was clearly significant.
Unnecessary use of opt-in
Defaulting to opt-in is a common contributor to low permission levels. Full opt-in is only required by law in very limited circumstances and provides very low permission levels.
This isn’t commonly understood and the survey found many companies apparently making life unnecessarily difficult for themselves. Some publishers, however, argued that opt-in provides for better customer relationships.
One third of respondents use opt-in only and a further quarter use both opt-in and opt-out. Of those remaining who are currently only using opt-out, 40% intend to move to opt-in.
Keep what you can
Many of the respondents said that unsubscribe rates are usually low at about 1-2% per communication although they acknowledged that whilst the average on individual campaigns may seem low, the compound effect over time can be very significant.
When questioned further, respondents noted that the lowest unsubscribe rates occur on newsletters, information broadcasts with specific interest topics and communications for which recipients have opted-in. It was said, much higher unsubscribe rates result from more blatant marketing communications.
One company had suffered a 20% unsubscribe rate, even though their emailing was sent to customers. By not clearly communicating their brand and identity in the messaging, they found they had caused many recipients to unsubscribe by mistake.
Conclusions
Given the high profile of data breaches, it is perhaps not surprising readers are worried about who they give their data to. Breaches have certainly contributed to opt-outs but many publishers remain unconcerned or in ignorance about the impact this could have on their businesses.
As a result, they are not maximising permissions by careful scripting of data protection statements, by offering channel options to readers or by giving reassurance about third party use.
The fear of brand damage, restrictive legal advice or concerns about the customer relationship means that many publishers are defaulting to an overly conservative approach. Permission strategy should be part of customer service and there is a real need for publishers to adopt flexible, plain English wording.
Publishers frequently spoke of their own experiences and clearly there is a fear of having one’s email inbox swamped with numerous and irrelevant material. One respondent described an appalling situation of typically receiving 700 unsolicited emails per day.
Consent is a privilege, not a right and unless publishers fully understand what’s required to gain this consent, future opportunities for contact and profit will be severely restricted.
