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:
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:
It's then important to split your database/s into two sections, so that you can target the messages you send accordingly:
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:
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:
Give options and set expectations:
Keep it personal with "triggered" communications:
Maintain your lists: