Topic: Zero Party Data
At face value, listening to customers and honoring their preferences is obvious. Every business listens to their customers on some level and the outcomes are immediate and apparent.
At the macro-level, the picture gets blurrier. This is the arena of enterprise preference management: the active collection, maintenance and distribution of unique consumer characteristics, such as product or topic interest, communication channel preference and desired frequency of communication.
When large organizations attempt to collect and react to millions of unique data points, they encounter significant challenges. Alongside legal and logistical quandaries, many enterprises struggle with measuring the effectiveness of their preference management initiatives.
Five key preference management metrics provide the basis for what companies can use to gauge success:
1. Contact retention
Many marketing contact databases are experiencing high churn and outright decline because enterprises lack the technology to correct the conversation with customers and prospects. The only choice provided is to completely opt-out of all communications. A critical priority for a preference management initiative is the deployment of opt-down functionality that enables contacts to avoid irrelevant topics without blocking all future communications.
Given the power to control the conversation, far fewer contacts (in many cases greater than 60 percent) choose the universal opt-out and instead opt down to a more targeted stream of communications. It’s not that your customers don’t want to hear from you, they just want your communications to be relevant.
Define retention as a goal and track your contact loss.
2. Cost reduction
If given the option to switch to a cheaper communication, your customers will save you hard dollars. This savings can be significant in a relationship that involves regular billing, privacy notifications, explanations of benefits and expensive marketing collateral.
Millennials as a group prefer to receive communications electronically and from our studies we know they rarely check their physical mailbox.
Even if all communications are already electronic, savings can often be found through the elimination of redundant databases and delivery tools and customer research rendered unnecessary because of preference collection.
Define cost reduction as a goal and track savings from paperless communications and improved efficiency.
3. Revenue growth
Proactively adding customers and prospects to new communications – or prevent them from opting out by correcting the conversation – is critical to boosting revenue.
The flip side of your contact retention statistic should be a positive sales number driven by sharper messaging and a larger pool of potential buyers. This can be a challenging number for some marketers to pin down without an understanding of internal user flow. Connecting preference management to revenue is vital when the time comes to budget for expansion or enhancement of the program.
Use retargeting campaigns and educational content to keep your customers in the conversation between buying cycles and purchase decisions.
Define revenue growth as a goal and calculate the value of preference management by A) lifetime revenue from customer following an opt-down or B) an assigned value per customer contact retained.
4. Technology governance
The proliferation of marketing technology in recent years has led a corresponding increase in tech purchases and implementations within the typical enterprise. Anxious to stay ahead of the curve, marketers buy more and more automation and distribution tools, inadvertently locking customer information in silos scattered across the company. Eventually, no one has a clear picture of who the customer is and what they want.
Preference management empowers better decision-making when it comes to technology investments by centralizing customer data and offering a clearer picture of what they actually want. Based on this information, CMOs can more easily sunset an underperforming technology or maximize value from the platforms already in use.
Define technology governance as a goal and track the elimination of redundant technologies and reorganization of approved systems and tools.
5. Risk mitigation
A robust preference management program ensures not only the active collection of consent but also ongoing correction of consent. In other words, it empowers companies to identify and react to changes in contact information or permission status driven by government regulation or internal business decisions.
Many companies initiate preference management projects in an effort to mitigate compliance risk. Tracking its effectiveness – the absence of violation – requires analysis to identify problems avoided by preference management. Examples of this include corrected contact records, changes in channel of choice or collections of express written consent to contact.
Define risk mitigation as a goal and track corrected customer records that otherwise would have represented vulnerability to litigation or regulatory action.
Eric V. Holtzclaw is Chief Strategist at PossibleNOW and the author of Laddering: Unlocking the Potential of Consumer Behavior