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Marketing consent: Are you maximising your customer value?

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27th Apr 2009
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Marketing consent is an area of ignorance and neglect in most organisations, according to recent research. As such, Nigel Grimes explains how to achieve best practice.

By Nigel Grimes

If ever there was a time to focus on your assets, such as your existing customers and data, it's now. And while there are plenty of areas of CRM for most companies to develop, perhaps the most neglected is the issue of marketing consent - and it is for this reason that it is worthy of particular attention.

Many companies are committing commercial suicide by having poor policies or implementations of customer consent. Hands up those of you who know what percentage of your customer or prospect bases you can legally approach? It varies greatly by industry and by individual company. I have seen opt-in rates from 90% through to 0!

"Companies need to let customers know that non-consent means they may well miss out on relevant new products and special offers."

You should, of course, also know what the figures are by the likes of customer segment, channel, affinity partner and even media because, again, they vary dramatically. And if you do know these figures (well done to those who do!), are they key business or marketing KPIs? Are they reported to the executive and the customer-facing teams? I was a consult to a company where the sales target meant selling to one in four customers and discovered they only had a 25% opt-in rate - you can see the challenges they were going to face.

A recent consent survey by TANK! and Royal Mail has shown that opt-out is growing. This is partly due to customer concerns over usage and some high-profile losses of data by government departments. But sometimes the individual departments in companies are all working to their own agenda and not thinking of the bigger picture.

Consider, for example, the direct sales forces who encourage customers to opt out of central communications so that they will be the only customer channel, or the call centre agents who suggest to customers that they opt out to avoid all that 'junk mail'. I have also come across pre-ticked opt-out boxes on websites and interactive voice reponse systems (IVRs) encouraging customer to opt-out!

Thorny question

The survey has also highlighted another real problem, which is over-conservatism by compliance officers. While they see their jobs primarily as keeping the directors out of prison and avoiding bad PR and fines, in fact they need to understand that their jobs are about helping to grow the business whilst keeping the directors out of prison, etc.

The trouble is, of course, that rarely can anyone in marketing or IT consistently construct systems, wording and data integration, and maintenance rules to assure compliance that best practice is or will be applied. Also, having no owner of customer consent was another obstacle to achieving best practice.

And of course, there is the thorny question of how to tell customers about the benefits of consent. Many customers see witholding consent as an obvious no-brainer – what's in it for them? Companies need to let customers know that non-consent means they may well miss out on relevant new products and special offers.

"At one company I worked for, opted-in customers were three times more valuable in terms of the number of products held, tenure and profit than their opted-out customers."

One company surveyed found out that over 90% of opted-out customers had no idea they were opted out. The wording is very often legalised and confusing to customers and doesn't allow them to make an informed choice. Interestingly, marketers often see the consent policy as a way of reducing wastage, which can be true, but it pays to be careful.

By focusing on consent the rewards can be great. At one company I worked for, opted-in customers were three times more valuable in terms of the number of products held, tenure and profit than their opted-out customers. They reviewed their partners as well as their own consent policies, which resulted in putting on an extra £500k previously non-consented customers into their contact programme overnight.

This 'virgin' base was hugely responsive and, along with the increase in their ongoing consent rates, led to millions of pounds worth of bottom-line growth.

So, the bottom line is, take ownership of consent and raise its awareness within the company. You might want to consider employing an expert to help you carry out a review of existing practice and build a business case for the development and implementation of a new consent programme. But don’t delay, as the longer you wait, the more you will lose out on in terms of future value from the huge banks of non-consented customers you are acquiring or already hold.

Nigel Grimes has over 20 years' marketing experience gained at the likes of Carlson, Royal Mail, BT, AIRMILES and Centrica. In recent times, he has been a key contributor in reducing churn and growing customer value at O2 and BT Openworld, and most recently was director of customer insight at Royal Bank of Scotland Insurance.

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