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Email 101 for Financial Services15 Proven Tactics to Boost Deliverability and Engagement

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EMAIL 101 FOR FINANCIAL SERVICES

Email is indispensable to financial services. It’s also so ubiquitous throughout society that most people take for granted that every email sent will be received almost instantaneously.

This short primer on email deliverability and engagement for the financial services industry describes what’s really happening behind the scenes with email. Boosting inbox rates begins with an understanding of how your company’s decisions and choices in several key areas can affect deliverability. This ebook is designed to help financial services companies learn how to improve the ROI of their email operations.

The Dollars and Cents of Deliverability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

What’s at Stake . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Reputation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

IP Segregation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Bounce Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Permission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

GDPR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

CAN-SPAM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Suppression Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Preference-Aware Messaging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Frequency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Relevance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Branding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Policy Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Technical Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

IP/Domain Acquisition • Valid Reverse DNS • Role Accounts • Authentication • Feedback Loops • Spamhaus

Email Health . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Maximize Business Results with Improved Deliverability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

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THE DOLLARS AND CENTS OF DELIVERABILITY

According to a 2018 study by Litmus1, the ROI of email marketing is $38 for every dollar invested. Another 2018 study by the Relevancy Group2 found email to be the top channel used by financial services companies to communicate with customers and prospects. And U.S. marketing executives who participated in the study believe that email by itself drives the same amount of revenue as social media, Web, and display ads combined.

So it’s clear that, if done correctly, high-volume email operations can deliver tremendous return on investment. But email only works if it actually reaches your customers. Most businesses achieve a deliverability rate of 80%, according to a 2017 study by Return Path.3 So 20% of emails never reach their intended inbox, which is unacceptable and results in billions of dollars in lost revenue each year.

Whether your focus is email marketing, onboarding and user engagement, retention or customer service, every undelivered message is a missed opportunity — and a hit to your bottom line. Don’t let mediocre deliverability rates erode the value of your email operations. The best practices discussed in this e-book will help you ensure the best possible inbox rates — and the best ROI for your financial services business.

1 https://litmus.com/blog/the-roi-for-email-marketing-the-good-news-and-the-bad-news2 http://www.relevancygroup.com/shop/the-state-of-email-marketing-in-financial-services-20183 See “2017 Deliverability Benchmark Report,” Return Path, https://returnpath.com/downloads/2017-deliverability-benchmark-report/

80%

20%

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WHAT’S AT STAKE

You can’t afford to be complacent about middling deliverability rates. Even rates that might seem “good enough” still translate into lost revenue. Consider two examples based on typical industry metrics.

While a 5% difference in deliverability might not seem like much, for a large financial institution scaling and sending messages at higher volumes, this discrepancy equates to millions of dollars in lost revenue.

Financial Institution A: 95% Deliverability Rate

Subscribers: 1,000,000

Delivered Messages: 950,000

Missed Messages: 50,000

Average Conversions: 1%

Lost Conversions: 500

Avg. Value Per Conversion: $3,000

Lost Revenue:

$1.5M

Financial Institution B: 90% Deliverability Rate

Subscribers: 1,000,000

Delivered Messages: 900,000

Missed Messages: 100,000

Average Conversions: 1%

Lost Conversions: 1,000

Avg. Value Per Conversion: $3,000

Lost Revenue:

$3M

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Reputation

Sender reputation is one of the most important concepts in deliverability. Every IP address and domain has a reputation based on factors such as past rates of bounces and spam reports. Domains and IP addresses with a good reputation have a better delivery rate.

Building and maintaining a good reputation should be central to the mission of your email operations.

Avoid sending risky content, especially on new IP addresses with unproven reputations. Don’t include anything that could be considered personally identifiable information (PII) about a customer, like their phone number, account number, or address. Instead, include in emails a call to action to click a Web link, where authentication can proceed.

Avoid using language like “GET YOUR FREE CREDIT CARD ACCOUNT” in a subject header. Avoid using all caps. These tactics can look like phishing attempts to ISP filters.

Avoid using the name of another financial institution or FinTech company (e.g., PayPal, IMG, Lending Club) in email.

Don’t send too much, too soon, from a new IP address. Start slowly and increase gradually. Have an IP warm-up plan and stick to it.

Maintain good list hygiene by respecting user permissions, paying attention to feedback loops (FBLs), and removing inactive users immediately.

Authenticate through the use of DMARC, SPF, and DKIM.

Segment and mail your active subscribers to build a positive track record and relationships.

Monitor the inbox rates of your IP addresses to identify emerging problems.

Watch out for deferral messages from your ISP, which can indicate impending blacklisting of your emails.

Make sure each email you send will be welcomed by its recipient — instead of being reported as spam.

Here are 15 proven tactics that Financial Services and FinTech companies can incorporate into their sending strategies to boost deliverability, engagement and the ROI of all email programs and operations.

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Bounce ManagementIP Segregation

Each message that bounces or gets reported as spam counts against the reputation of the originating IP. This reduces deliverability for future messages from that IP — or leads to them being blocked entirely.

Using the same IP for every type of email — user, marketing, transactional, alerts — means that a rogue email in any of these areas can jeopardize the deliverability of every message your company sends from that IP.

By segregating your IPs according to function, you help ensure that your mail receives the best delivery possible.

A high bounce rate can have a negative impact on your overall delivery rate. If your IP address is associated with too many

“unknown user” bounces at a particular ISP, you risk being blacklisted or blocked by that ISP.

Each bounce has a unique meaning and needs to be treated differently based on its associated SMTP code. The art of classifying and treating bounces is called bounce management.

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Permission

Permission is the consent consumers grant to receive emails from you. It’s important because email is so much more personal than TV, radio, direct mail and other marketing channels, and calls for a higher standard of privacy. It’s also an area of intense attention by government regulators in the U.S., Europe, and around the world. Most importantly, permission affects deliverability. There are two main forms of permission:

A global 2018 study by MailChimp1 found that 61% of email users never finish the double opt-in process. But with double opt-in marketers have generally found that there is a lower unsubscribe rate because these subscribers have demonstrated that they really want your newsletter, news links, account information, or other communications.

1 https://mailchimp.com/resources/why-single-opt-in-and-an-update-for-our-eu-customers/

Single Opt-In: The user enters an email address in a web form and checks a box agreeing to receive marketing emails, alerts, and other messages from the business.

Double Opt-In (a.k.a. closed-loop opt-in)The recipient needs to actively respond to a confirmation email sent after the form is filled out, either through a click in the email or by responding to the message itself.

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GDPR

The General Data Protection Regulation (GDPR) is a European Union regulation that replaces the Data Protection Directive 95/46/EC. GDPR is intended to harmonize the patchwork of data privacy laws across its member states and to protect all EU residents from privacy and data breaches. It outlines specific rights and freedoms due to EU residents in relation to the processing of their personal data.

If the controller has the necessary consent, the actual sending of the email is not impacted by GDPR. However, GDPR can affect the returned message event data since that data indirectly or directly identifies an EU data subject. For example, if you are passing metadata such as a unique identifier in the transmission, this metadata would appear in the returned message event data.

Financial services companies that operate solely in the US may not directly be required to comply with GDPR, but a US company would have to comply with GDPR if they want to do direct business in the EU. Most large companies have already made that decision. Smaller companies that are located in the US will have to consider whether they would want to take the risk of GDPR enforcement and whether they want to ever expand direct services into the EU. Noncompliance with GDPR could cause issues in a merger or acquisition transaction if the purchasing entity requires GDPR compliance.

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Suppression ListsCAN-SPAM

Also known as the Controlling the Assault of Non-Solicited Pornography And Marketing Act of 2003, CAN-SPAM is an attempt by the U.S. Congress to protect consumers from unwanted marketing emails. While enforcement of the law is difficult and its effectiveness has been debated, its provisions offer useful guidance for treating consumers appropriately and maintaining a healthy online reputation.

Key provisions of CAN-SPAM include: Don’t use false or misleading header information.

Don’t use deceptive subject lines. Identify the message as an ad.

Tell recipients where you’re located.

Tell recipients how to opt out of receiving future email from you.

Honor opt-out requests promptly.

Monitor what others are doing on your behalf.

The CAN-SPAM Act requires commercial email senders to maintain a list of consumers who do not wish to receive their emails. These businesses must provide a functioning opt-out mechanism by which email recipients can unsubscribe their email addresses from future email messages. The unsubscribed email addresses are placed into a suppression list that is used to

“suppress” future messages to that address. This list also includes bad domains, traps and role accounts.

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Beyond Permission: Preference-Aware Messaging

While permission is a key issue for email marketing, it may be less relevant for other types of notifications and transactional messages that are essential to financial services products, like:

Current balance alerts

Password notifications

Welcome emails

Monthly statement emails

Policy updates

Trading alerts

In cases like these, a user’s messaging preferences are often set by default to receive email. Instead of triggering the spam reports and damaged IP reputations that unwanted marketing emails can bring, the context and relevance of these emails are more likely to provide welcome value for the recipient.

Let your customers be your guide. Your engagement metrics (both positive and negative) will tell you whether they truly find your content relevant to their needs and whether your practices are aligned with their preferences. Handled carefully, preference-aware messaging can be a win-win for your business, your customers and your deliverability rates alike.

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Guidelines for Preference-Aware Messaging

Monitor Metrics Such as opens, click-throughs, and changes in communication preference settings to make sure you’re giving customers what they really want.

Increase Messaging Intelligence Implement customer-adaptive messaging capabilities to fine-tune your emails by variables such as timing and frequency according to your customers’ preferences and other factors.

Make Emails Worth ReceivingWork to optimize your messages by every means possible, including more relevant content, subject lines and targeting.

Keep Data CleanSend a confirmation or welcome email to make sure that addresses are deliverable and you’ve correctly captured customer preferences before repeatedly mailing them. Purge unknown users and non-responsive addresses.

Get Permission AnywayEven if you know your customers will welcome your messages, you should make sure to capture their complete preference profile (including what they prefer you not do, such as data sharing) and act on them in every action you take.

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Frequency

It’s important to ask your customers, through the sign-up process or a preferences center, how often they want to receive emails from you. While respecting their wishes, you should also be aware of the right frequency strategies for different types of emails.

Marketing emails are typically looking for an action —a click, a purchase, a registration for a new service. Higher frequency can increase these conversions, but after a point customers may feel harassed or start tuning them out. Start slowly and monitor unsubscribe rates closely as you increase frequency. The last thing you want to do is damage your list through overuse.

Engagement emails such as newsletters should be sent at regular intervals so customers know when to expect them. Again, sending them too often can cause burnout — quality is more important than quantity.

For account alerts, activity notifications, and other customer service messages, let customers set their own preference for real-time, daily, weekly, or other messaging schedules.

You should also pay attention to the aggregate frequency of all the emails of any type each customer receives to ensure that your brand isn’t showing up in their inbox more often than they might want it to.

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Relevance

The more relevant your emails are, the more likely they’ll be welcomed by consumers. Of course, relevance is in the eye of the recipient — but a few guidelines can help you hit the sweet spot.

Target the Right Audience. Use past purchases, traffic logs, on-site search, and other data to learn what your customers are most interested in, and tailor their content and offers accordingly.

Don’t Be Too Broad. While some messages may be relevant for your entire list, most won’t be. Avoid the temptation to blanket the world with a single email in the name of efficiency; sending multiple waves of more targeted messages will be much more effective — and better for your list and your reputation.

Send Valuable Promotions. Who doesn’t love a good offer? Don’t just tell customers about your latest products; make it worth their while with additional reward points, free trials or exclusive rates.

Use a Good Subject Line. Remember that many customers won’t see more than the first few words — especially on mobile. Put the most relevant and targeted terms up-front, and make the value to the customer immediately clear.

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Branding

Branding is one of the most important elements of your email strategy, helping you shape the way customers view your products and your company.

To ensure brand integrity, it’s essential that every aspect of your messaging — visual identity, voice, value proposition — is consistent and compelling.

A common pitfall is to use different systems or third-party providers for automated transactional emails, marketing emails, and other types of messages. This can lead the look and feel of the messages customers receive to vary widely, creating a confusing brand experience.

By managing all messages through a single system, you can build a stronger connection with your customers and make each email they receive feel part of a coherent and valuable relationship.

As part of your branding strategy, it’s a good idea to use your brand name in the “from” field that shows up in the recipient’s inbox. Some marketers use an individual’s name with the belief that it will seem more personal, but this can also make it seem like spam. Instead, use a name customers will expect to see, then stick with it consistently across all emails to build recognition and trust.

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Technical RequirementsPolicy Requirements

In addition to the best practices above, there are several technical capabilities that can play a crucial role in deliverability. These include:

IP/Domain Acquisition

Valid Reverse DNS

Role Accounts

Authentication

Feedback Loops

Spamhaus

ISPs accept email from senders at different rates. Before you start sending email from a new IP, make sure you comply with as many published ISP acceptance policies and recommendations as possible.

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[ TECHNICAL REQUIREMENTS ]

IP/ Domain Acquisition

Most financial institutions or products that send email to customers will want to set up multiple web domains and IP addresses for different purposes — sometimes over 100 for the largest senders.

Acquiring these is a simple matter; you can begin at the following sites:

IP Addresses: Arin.net

The American Registry for Internet Numbers

Domain Name Registration Provider: networksolutions.com

Godaddy.com

It takes about 24 – 72 hours to propagate a new domain name.

As you acquire new IP addresses, you should be aware of the concept of IP warm-up. To combat spammers, ISPs and email providers temporarily block or limit the amount of email a new IP address can send, allowing higher volume only gradually as the sender’s reputation is proven. If you try to send millions of messages on your first day with a new IP address, you’ll quickly be blacklisted.

Becoming a high volume sender (millions per day to the big ISPs) is possible, but it takes time. One recommendation is to avoid sending more than 10,000 messages per day to the major ISPs (Yahoo!, Gmail, Hotmail, AOL, etc.), or more than 1,000 messages per day to smaller ISPs, and don’t increase volume by more than 2x per day. Watch your failure metrics carefully, and revert to a lower volume if you start seeing an increase in temporary and permanent failures.

Bring Your Own IP Address (BYOIP):Alternatively, SparkPost’s Bring Your Own IP (BYOIP) feature allows large volume senders to bring over their own /24 CIDR block, a contiguous block of 256 IP addresses, and allows SparkPost to route messages through them. This eliminates the worry around warming up new IPs, managing reputation, and communicating changes to end customers. For financial services companies, this feature minimizes the risk and potential disruptions associated with introducing new IP addresses that can greatly impact the user experience.

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[ TECHNICAL REQUIREMENTS ]

Role AccountsValid Reverse DNS

Computer networks use the Domain Name System (DNS) to determine the IP address associated with a domain name — for example, resolving host1.domain.com to 192.1.2.4. Reverse DNS Lookup works similarly, but in the opposite direction, resolving an IP address to its designated domain name — so the IP address 192.1.2.4 turns back into host1.domain.com.

To ensure the integrity and operability of DNS data and servers, every Internet host is required to have a reverse DNS entry. In practical terms, mail servers with no reverse DNS will have a hard time getting mail to certain large ISPs.

A role account is an email address which serves a particular function, not an individual person, for example abuse@, sales@, or info@.

Every ISP, email service provider (ESP), and web host — including self-hosted senders of commercial email — is required to have two particular role accounts in order to promptly identify spam and abuse related problems on their network: postmaster@domain and abuse@domain.

Networks that do not tolerate spammers monitor their abuse@ email closely and take prompt action to stop any problems that arise.

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[ TECHNICAL REQUIREMENTS ]

Authentication

Email authentication validates the identities of the parties who participate in transferring a message — the sender and/or recipient — and can be an important factor in deliverability. Early authentication schemes, such as DomainKeys, have been superseded in recent years, and today the industry has coalesced around DMARC as the standard protocol.

DMARCWidely adopted by ISPs, Domain-based Message Authentication, Reporting and Conformance (DMARC), is designed to guard against phishing, spam and other email abuses. When a message is delivered to a recipient, the destination server asks the sender for a public key to verify that the signature is correct and that the sender is who they claim to be. What’s important for commercial email senders to know is that if their email is not DMARC compliant, their deliverability can suffer significantly. Adopting DMARC is quickly becoming an essential requirement for high-volume email operations.

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[ TECHNICAL REQUIREMENTS ]

How DMARC Works The DMARC standard allows senders to employ either of two (or both) previously established authentication standards: Sender Policy Framework (SPF) and DomainKeys Identified Mail (DKIM). DMARC creates a dialog between senders and receivers, with senders providing guidance to receivers as to what to do if neither of the authentication methods passes. For instance, if a message fails DKIM, please junk or reject the message immediately. Additionally, DMARC provides a way for the email receiver to report back to the sender about messages that pass and/or fail DMARC evaluation.

SPFWith SPF, records are used to authorize the IP address of the outbound mail transfer agent (MTA) to help ISPs detect forged email. Creating your SPF record involves determining the domains and IP addresses used to send your emails, then publishing the SPF to DNS.

DKIM / DomainKeys Identified MailDKIM authentication allows the recipient of a message to confirm that a message originated with the sender’s domain and that the message content has not been forged. In effect, DKIM allows organizations to claim responsibility for messages they send and to thereby guarantee message contents.

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[ TECHNICAL REQUIREMENTS ]

Feedback Loops

When an email recipient clicks “This is spam” for a piece of email, this is considered a “complaint.” If your complaint rates are too high, an ISP may not deliver your email.

By setting up a feedback loop (FBL) with the ISPs that provide this service, you will receive a copy of each complaint generated when this happens, and the recipient will usually be unsubscribed from your list automatically.

As with a whitelist, an FBL means that you’re taking responsibility for your email practices. Monitoring FBLs benefits both mailers and ISPs, in that they help to manage mailing lists as well as providing early warnings of network security issues.

Major ISPs providing FBL include: Gmail

Hotmail

AOL

Yahoo!

Comcast

Cox

Road Runner

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[ TECHNICAL REQUIREMENTS ]

Spamhaus

The Spamhaus Project is an international nonprofit organization whose mission is to track the Internet’s spam operations and sources, to provide dependable real-time anti-spam protection for Internet networks and to identify and pursue spam gangs worldwide. Spamhaus maintains a number of real-time spam blocking databases, called Domain Name System-based Blackhole Lists (DNSBLs), responsible for keeping back the vast majority of spam sent out on the Internet.

These include the Spamhaus Block List (SBL), the Exploits Block List (XBL), the Policy Block List (PBL) and the Domain Block List (DBL). These tools are highly valuable for senders in maintaining good relations with ISPs, which are on the receiving side of the email world.

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Email Health

As the service sending over 37% of the world’s B2C email, our data footprint is unmatched. With SparkPost Signals, we’re taking the guesswork out of improving customer deliverability and breaking through the email noise with what counts — data. Signals is an analytics suite that we’ve introduced to help improve email ROI by diagnosing email health issues before they impact your bottom line. With Signals, you can leverage our market-leading email platform to benchmark your performance, increase open rates, boost inbox placement, and drive top line results. This sophisticated suite of

tools allows you to drill down into specific metrics at the sending domain, subaccount, IP pool, and campaign ID levels, detecting and mitigating potential delivery and engagement issues before they occur. With features like frequency optimization and real-time spam trap monitoring, you’re able to determine when and how often to send to recipients to reduce the risk of email fatigue and get visibility into list hygiene issues that might affect engagement.

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Improve your Email Deliverability for Maximum Business Results

SparkPost.com • 301 Howard St., Suite 1330 • San Francisco, CA 94105 • tel +1 415-578-5222 • toll free usa 877-887-3031 ©2019 Email-101-FiServe_19-05

Despite all of the technologies and tools available to today’s digital business, email is still the workhorse of the financial services industry. Email is indispensable to attracting, cross-selling, up-selling, servicing, and retaining customers. Applying the best practices in this e-book will help you achieve the highest possible inbox rates, drive a positive user experience and ultimately improve the impact that email has on your bottom line.

If you’d like to learn more about SparkPost, talk to an expert: (877) 887-3031