Reduce the Impact of GDPR with Customer Segmentation

Phil Rothwell is an ecommerce expert with more than 20 years’ experience helping retailers to sell online. He was there at the beginning of ecommerce and played a leading role in growing Actinic Software from dot com start-up to floatation on the London Stock Exchange

This article was updated in December 2018.

If you were aware of the General Data Protection Regulations (GDPR for short) that came into effect on 25th May this year, but were not certain what the implications were for your business, then you were certainly not alone.

This time last year the World Federation of Advertisers has found that 70% of marketers in global organisations say their companies were not completely aware of the GDPR’s implications.

If big companies were struggling to get their heads around GDPR, then what hope is there for the rest of us?

Now that some time has passed since the deadline we can look back at the what happened in May with perspective and share our experience.

What is the GDPR?

You can view the introduction of the GDPR in two ways.

You can see it as another annoying regulation imposed by the powers that be, or you can take it as an opportunity to improve your current way of doing business.

Although I hate the idea of putting a positive spin on something to make it seem more palatable, it is hard to deny that many of the disciplines required to comply with GDPR are good practice.

At its heart, the GDPR is a set of data privacy regulations that that apply to any company, managing, processing or holding the personal data of EU residents.

It applies to you whether you are in the EU or not. The GDPR is backed by law and fines for violations can be can reach of to 4% of a company’s global annual turnover, or EUR 20 million, whatever is greater.

Some serious implications for marketers?

From now on, treating customer data with the respect it deserves will be tougher. Some adjustments to your privacy policy and terms and conditions of business are required, and you will need new processes to meet your new legal obligations.

A significant challenge is also going to come from the ePrivacy Regulations, which come into effect at the same time as GDPR. These will say that your customers will:

  1.  Need to give you explicit permission to monitor their activities, so every cookie will need a permission.
  2. Have the right to view the personal data that you hold on them, receive a digital copy of it and even update and delete it.

A good summary would be to say that from 25th May, all marketing will be permission-based marketing, with harsh penalties for those who play fast-and-loose with the rules.

Facing the GDPR challenge

The problems for small online retailers are two-fold. Not only are new processes and systems going to be required to comply with GDPR, but there is also the clear and present danger that when given a clear option, many of your customers will simply choose to opt out of marketing. It is essential, therefore, that you do everything possible to retain their interest.

At EcomEvolve, we recommend the following:

1 – Understand your Legal Obligations

The key to this is getting your head around the lawful basis which you use to contact your customers.

For regular customer mailings, most online retailers use the “legitimate interests“. So long as you give customers a chance to “opt out” of future mailings when they first purchase goods and on subsequent communications, this provides a friction-free way of growing your mailing list whilst complying with the regulations.

2 – Work in your Customers’ Interest

In the past, I have been as guilty as anyone of sending out sales promotions with insufficient regard for those receiving them. Playing fast and loose in this way has always been a bad idea.

Post-GDPR, you need to work hard to make your communications relevant to the people on the receiving end. Time spent minimising opt-out rates and spam reports is worthwhile, because under the GDPR, once customers have opted out, permissions are difficult to recover.

3 – Use Customer Segmentation

If you currently use a one-size-fits-all approach to marketing, then you are at maximum risk.

If you segment your customers, then research undertaken by MailChimp suggests that you can substantially reduce opt-outs, by as much as 25.65% if you segment using Interest Groups.

Making your communications relevant to the people you send them to is the best way to grab their attention and retain their interest in your business.

4 – Personalise Communications

Find a way to personalise the salutation at the top of your emails. If you address them by name, research by Campaign Monitor suggests that you can improve click-through rates by 14% and conversion rates by 10%.

5 – Implement a Preference Centre

Instead of offering a single in/out option, give customers different ways to connect. Facebook, Twitter and Instagram are obvious ways to extend your reach, but you can go further. If you do not currently offer customers a choice of the different types of communications you want to setup, you can do so relatively easily using preference centre features available in most email marketing platforms.

Ask for Help

This all may seem like a lot of unnecessary work, but the good news is that implementing any, or all of the above is going to be beneficial to your business, especially if you include some data science in the process.

Many retailers will be able to implement these features themselves, but if you need some help, please feel free to contact us on +44 (0) 1932 450 654.