August 29, 2012
These are exciting times in mobile, with mobile advertising spend set to reach $11 billion by 2016. Mobile makes big promises to leverage the unique utility of the uber device to acquire new customers, reduce servicing costs, and deliver more engaging reasons for loyalty—if only they can get past opt-in.
Thanks to Seth Godin, and many other anti-spam advocates, the concept of Permission Marketing and Opt-in has been around since 1987. But companies still have a long way to go to effectively understand and manage this critical gatekeeper of mobile’s potential value. This article will argue that opt-in needs to be managed as a strategic asset to be tracked and optimized across corporate functions and the customer lifecycle.
Opt-in is important because it drives key business outcomes. Several compelling reasons make an effective opt-in strategy that ultimately creates good business sense:
- Increase campaign performance: Open Rate X Conversion Rate = Sales Rate. Open rates on communications with an opt-in are, on average, 82% higher than those without.
- Unless you market canned meat or contraband pharmaceuticals, being considered SPAM is not good for your brand. One of the biggest issues marketers experience today is overcoming audience fatigue, apathy, and spam filters. Brands that over communicate to customers with non-value added messaging can actually damage customer trust and reduce reach through opt-out and spam filters.
- Regulation: Communications are under increased scrutiny to protect consumers from invasive email, phone, and SMS marketers. The cost of breaking these rules can be $500 to $25,000 per violation in addition to the risk of losing the right to communicate in a specific channel.
Companies need to earn opt-in every day: While it’s clear opting in newly acquired customers is an important component of an opt-in strategy, it is by no means complete. Companies need to focus on delivering ongoing value through relevant content and provide offers to reduce opt-outs while elevating existing customers to higher and more profitable relationship stages. Take a look at the various stages and progression of an opt-in relationship:
The Opt-In Relationship Meter
The first step to creating your opt-in strategy is to understand where you stand:
Review your current opt-in process.
- What kind of measurement do you capture?
- Who owns the opt-in list?
- Is opt-in binary (yes or no) or does it progress to deeper permissions?
- Is the process compliant?
Figure out the current performance for each channel (email, call, SMS, push).
- % of total customers opted-in for each desired stage and how it is trending
- Estimate the value of an opted in vs. non-opted-in customer:
- Customer Value = Cost to Acquire – ((Annual Revenue per customer – Annual Cost to Service)(1+N) ) where N = average # of years in customer tenure
- Service Cost: What is the change in servicing behavior as a result of opt-in? SMS balance alerts means the customer calls 2 times less per year, that’s 2 X $5.50 per call = $11.
- Annual Revenue Per Customer: If done correctly, customers who are opted-in for marketing offers actually buy more.
- Benchmark against your industry: How do you compare with opt-in rates of your competitors?
- Average Customer Lifetime Tenure: Customers who are opted-in to receive alerts and promotions are more engaged and more loyal.
- Example: Velti worked with a large retailer in the US that powered a mobile community campaign aimed to test response with incentivized alerts—results showed they received almost 25% overall response in ONE day!
Once you figure out where you stand, here are four steps you can take to optimize your opt-in strategy:
Create Opt-in Ownership: Add opt-in to your scorecards and dashboards and start tracking its movement as a key performance indicator (KPI). Consider assigning responsibility for overall opt-in to one person.
Incorporate Opt-in in your Processes and Data: Consider enabling opt-in through all of your service channels (web, app, phone, email). At the same time, make sure opt-in is included in your major data sets to expand the ability to understand and engage with your customer.
Give Value to Get Value: Let’s face it; everyone is flooded with irrelevant emails and marketing messages. If you leave this channel on autopilot and fail to give a compelling reason to stay in, you will soon find yourself in the spam folder. A popular way to make sure you’re sending your customers valuable messages is through creating mobile SMS communities.
Example: Velti worked with popular clothing retailer, Armani Exchange, to further engage their target customers—young, progressive professionals—by creating opted-in mobile communities. Velti aimed to increase the community membership through an SMS campaign where they offered incentives, such as a $10 discount on their next purchase, by simply joining through a dedicated short code. Their ‘LOVE’ keyword campaign increased the mobile community by 25% in less than 2 weeks—demonstrating the key to building a healthy database is providing continual value-added interaction.
Trust Trumps Trash – be conservative in how you use opt-in: Bait and switch, sharing customer info and contacts without consent, and other desperate tactics can quickly kill a marketing channel and valuable customer relationship.
The power of individual consumers continues to grow. They are more informed, more vocal and have higher expectations. By actively cultivating and managing opt-in lists, companies can continue to develop and enrich relationships with customers and foster trust and openness. In a customer-empowered relationship, these traits can make the difference between success and failure.