A year ago, and email in Europe was in turmoil. The May 25th deadline for the new General Data Protection Regulations (GDPR) had finally arrived, and many email programs were frantically trying to get out their privacy policy updates, or their re-permissioning emails (or both!) in time. Overwhelmed by volume, many consumers simply chose to do nothing, secure in the knowledge it would soon end. It was the email apocalypse, which I later wrote about in a DMA blog post.
However, some forward thinkers were already considering GDPR in a more optimistic light. An article from Information Age predicted, “GDPR is the perfect opportunity for businesses to rethink their approach to data and the enhanced customer relationships and experiences it allows”. Marketo identified the “two tribes of marketing” (legal-first vs marketing-first) and predicted the latter would benefit more as stronger consent, better data quality, and greater transparency combined to deliver stronger and more trusting relationships.
They were both correct, and it makes absolute sense. GDPR wrote into law a number of best practices that we have talked about for years, so improved performance was to be expected. In this article, we’ll examine the resulting uplifts through a few different lenses:
Better deliverability
Email deliverability has shown a significant YoY uplift. Comparing Return Path’s 2017 and 2018 Deliverability Benchmark reports produces the following inbox placement summary:
Email deliverability is informed by a broad set of signals that includes data quality (low unknown user rates, no spam traps) and positive subscriber engagement (good read rates, low complaint rates). GDPR has clearly moved the needle for these factors, and senders are benefitting as a result.
Reduced list churn
We have also been seeing signs that some of GDPR’s benefits will be longer-term in nature. At a 2018 data protection conference, Homeserve reported ”people are more receptive to and interested in what we are selling . . . plus we are receiving fewer complaints and unsubscribe requests.”
Return Path’s own data provides validation. As part of our GDPR thought leadership, we monitored a “basket” of 250 major senders. Average complaint rates for these senders have reduced by slightly more than half.
This will have a big positive commercial impact for email program owners. The US DMA’s 2018 Response Rate report shows email cost per acquisition at $22.50 (£17.65), while Bluecore’s Cost of an Unsubscribe report values each lost address at $17.92 (£14.05).
According to IBM Watson’s 2018 Marketing Benchmark report average list churn (bounces, unsubscribes, and complaints) for UK and Europe is 0.8 percent. Halving this metric will protect around £60K ($75K) of customer lifetime value (CLV) per million emails sent!
Enhanced performance
Program performance metrics have also shown big improvements. We plotted the YoY change in email read rates for the same basket of 250 senders, and identified the following:
Updating the privacy policy was generally the “legal-first” approach while marketing-first programs generally went the re-permissioning route, illustrating the greater benefit of the latter approach (note many programs took a blended approach, updating their privacy policy for existing customers, and re-permissioning their prospects).
Recent research from the DMA corroborates these findings, with respondents to the 2019 Marketing Email Tracker report identifying clear GDPR-influenced improvements in open rates, click rates, and conversion rates:
Increased ROI
As a direct result of the improvements outlined above, email programs have become more profitable. In the DMA’s 2019 edition of its Marketer Email Tracker report, email return on investment (ROI) has increased YoY from £32.28 in 2017 to £42.24 in 2018, a 30 percent uplift.
Litmus provides a nice visualization of the comparative ROI between Europe and the US, and we can see that the European programs are currently >20 percent more ROI-effective than their US counterparts.
For the same period, subscriber lifetime value has also increased, rising from £28.56 in 2017 to £37.32, again an increase of 30 percent. Lifetime value is the most important metric email marketers are focused on in 2019. Programs that want to move the CLV needle can start by embracing GDPR’s core principles, even if they don’t fall within its jurisdiction.
The rest of the world is watching with great interest. India has already released its Personal Data Protection Bill, while Brazil’s General Data Protection Law (LGPD – blog post here) will become effective in early 2020. In the US, California’s new The California Consumer Privacy Act (CCPA) is expected by many to be the forerunner of similar federal legislation (see our great recent blog series on CCPA).
The key learning for email marketers is to embrace these changes as a force for good. While they are hard work to implement, the payoff is greater trust between senders and receivers, which in turn boosts program performance and ultimately generates greater returns.
As Michael O’ Leary, the irascible CEO of Ryanair once remarked: “If I had known being nice to people was so profitable I would have done it long ago!”