Customer Retention through Email Marketing

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Research shows that it is between 5 and 7 times more expensive to gain a new customer than to retain an existing customer. For many companies, repeat customers are responsible for more sales than new clients. Most customers who have experienced a product or service are likely to make a repeat purchase at a later date.

Gone are the days when marketers were purely focussed on gaining new customers. Today, especially in light of the effects of the global recession, building loyal customer relationships and keeping customers is more important than ever. Companies that do this well are able to influence their customer through innovative and promising channels, like email marketing. In fact, one third of all Email Marketing messages that are sent worldwide are retention emails, focussed on building loyalty amongst an existing client base and staying top of mind to keep them coming back. The reason for this is simple:

"The number of active email individuals will grow from 145 million in 2009 to 153 million in 2014… Marketers tell us that they enjoy an ROI (return on investment) that is two to three times higher with email than it is with any other form of direct marketing. And these costs will see more and more customer communication/relationship/retention communications moving to email." [Source: Forrester Research, US Email Marketing Forecast 2009-2014]

The main goal of retention email marketing is clear: regular communications that make your customer voluntarily take themselves "off the market" and only buy from you. An effective way of creating this connection is to reach out to your existing customer database and listen closely to their responses. Watching your campaign reports or conducting surveys can help you understand the relevance your email marketing messages with your existing customers and help you learn how to hold their attention.

Role of Email Marketing in Customer Retention

Retaining existing customers by developing meaningful and appropriate relationships with them through cost effective channels is the best way to save on additional marketing expenditure. Email Marketing works well for this because:

  • Email marketing continues to be among the most inexpensive and effective ways to reach a large customer base
  • Email marketing allows you to stay in regular contact with a client base and keep your business top of mind
  • Emails can serve different purposes like adherence programs, up-sell offers, surveys, service messaging, a win-back offer or at the very least, an apology
  • Since E-mail newsletters are customer initiated (because they need to opt-in to your database) and are more oriented to educate the customer than selling, one can see a drastic improvement in the value that a customer holds for the company
  • No quantity of good advertising and marketing can address a lack of attention to customer communication and relationships, but email marketing offers an easy way to address this in a very personal and targeted manner

Retention vs. Promotions

Retention emails are about building loyalty, Promotion Emails are about driving sales. Think of your Email Marketing in terms of two very important but very different aims:

  • Retention emails
  • Promotional email

It's then important to split your database/s into two sections, so that you can target the messages you send accordingly:

  • Existing & Previous Clients
  • New Leads and Prospects

Retention Emails

Instead of promotional email designed only to encourage the recipient to take action (buy something, sign-up for something, etc.), retention emails usually take the form of regular emails (newsletters). A newsletter may carry some subtle promotional messages or advertisements, but the main aim will be developing a long-term relationship with the readers. It should provide the readers with value, which means more than just a sales message. It should contain information which informs, entertains or otherwise benefits the readers.

The trick to retention is loyalty. To build loyalty, try to answer the question "What have you done for me lately?" If you can answer that question in your clients' minds each time you communicate with them via email you will be well on your way to building a strong, trusting relationship. Even if a client hasn’t purchased from you in a while you might be able to tell them something like this in your email newsletter:

  • This month all of our staff went on training in XYZ in order to be able to offer you a better service in future
  • This month we renegotiated our supply agreements in order to be able to bring you better bulk discount in future
  • This year we aim to reduce our running costs by 20% in order to keep our price increases below inflation

Promotion Emails

Direct email involves sending a promotional message in the form of an email. It might be an announcement of a special offer or the introduction of a new product or service you are offering. Just as you might have a list of customer or prospect postal addresses to send your promotions to, so you can collect a list of existing or previous customers' email addresses for your retention newsletter.

Advertising in other people's emails is another way to handle promotional emailing. Instead of producing your own newsletter, you can find newsletters published by others and pay them to put your advertisement in the emails they send their subscribers. There are, in fact, many email newsletters that are created for just this purpose - to sell advertising space to others.

Guidelines for improving relationships through retention emails

Use email newsletters to communicate regularly with customers:

  • Make them relevant, valuable, regular and targeted to your customers' needs
  • Design your emails so they are easy to read and provide information clearly
  • Know the type of device on which your recipients receive and read your emails and design accordingly
  • Send on a regular schedule so messages are expected
  • Keep subject lines short; less than 50 characters is ideal
  • Use a consistent ‘from address’. Open rates are higher when recipients recognise the sender

Give options and set expectations:

  • Kick off the relationship with a welcome letter where you tell clients what to expect from future emails
  • Look to provide customers only information they need or would like to receive
  • Find out when and how frequently they would like to receive it
  • Tell them how frequently they’ll hear from you and stick to your promise
  • Organise clients into different lists according to their needs

Keep it personal with "triggered" communications:

  • Send date-based triggers to remind customers of action needed to continue providing uninterrupted service.
  • Recommend products or information that may meet their needs
  • Recognize milestone dates, such as birthdays or anniversaries and thank them for time as your customer

Interact:

  • Whenever possible, encourage your customers to interact with you by clicking a link in answer to a question
  • Use a read more link if your articles are long, monitoring clicks in this link is a good way to gauge interest in your article topics
  • Listen to feedback in replies and use it

Maintain your lists:

  • Remove hard bounces and inactive emails
  • If a customer hasn’t opened an email in a certain amount of time, send them an email asking if they would like to continue receiving your communications
  • Always, always, always remove and respect unsubscribe requests or complaints


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