Marketing 101 tells us that it costs less to engage an existing customer than to acquire a new one. Lawrence Friedman’s The Channel Advantage puts it this way: "The cost of acquiring new customers is typically three to six times that of retaining existing ones."

The conundrum is that while new buyers contribute to sales growth, the process of acquisition is costly. New customers must be found, contacted and familiarized with your products and services, and these costs eat away at your profitability. But old customers are like the gift that keeps on giving.

The Value of Old Customers

To illustrate the value of existing customers, following are some facts from studies of old-customer reactivation in the high tech, financial services and consumer electronics industries.

  • Old customers (no purchases over the last two years) were reminded of their existing relationship and presented with an attractive offer to which they responded by making a purchase.
  • Contacting old customers through email campaigns resulted in a 20 percent reactivation rate.
  • Results yielded a reduction in customer acquisition costs by 50 percent, in addition to providing a quick source of revenue.
  • The value of old customers should be considered when establishing objectives for email marketing campaigns.

Email Marketing Objectives

Email marketing campaigns usually have two objectives: direct response and developing relationships for customer retention. While customer retention is a major objective for B2B marketers, customer acquisition is frequently the objective of B2C retailing campaigns.

Research shows that customer retention is the most frequent objective for email marketers (eMarketer 2005). Millward Brown found that retaining customers and increasing loyalty was a major objective for 63 percent of the marketers surveyed (2005). A Marketing Profs survey shows the retention/acquisition split was 60 percent versus 41 percent, respectively (2005).

Customer Retention Vs. Acquisition

A major benefit of customer relationship campaigns is that they foster customer retention, which in turn results in increased profits for your business. Existing customers are known to spend more per sale, buy more frequently, refer other customers and cost less per sale. So priority one is to keep your existing customers happy.

However, every business needs to acquire new customers, and the emphasis on increasing revenue can sometimes relegate customer satisfaction objectives to the back burner.

Savvy marketers won’t make this mistake. Email is a cost-effective way to keep in touch with existing customers, increasing their level of satisfaction. This can be accomplished with messages that transmit useful and timely information that is appreciated and can potentially trigger future sales. Following are some tips for a customer retention campaign.

1. Personalize Your Messages

It is very important to use personalization, customizing your messages as much as possible. You already know a lot about your customers based on past behavior. Use that information to send customized content focused on relevant customer interests. A good analytics program can help you segment customers based on past behavior; then you can target messages to customers based on demonstrated interests.

Don’t push products, but send informational articles about past product purchases or product updates. You might provide a relevant product link that they can choose to click to or not. Your objective is to make customers feel special and that you understand their needs. If your message is particularly informative and topical, recipients might even forward it to friends and family, expanding your reach.

2. Always Follow Up on Orders

When customers do make a purchase, don’t fail to send a thank you message by autoresponder. You can also follow up on how satisfactory the transaction was. Personalize the message by stating the date of purchase and the place of purchase (website or physical address). If applicable, use a sales representative's name. Then, ask them questions about the product – Did it meet their expectations? If not, why not and what can be done to make it right? Ask questions about the service -- Was delivery timely? Was packaging secure? If they contacted Customer Service, was the exchange satisfactory?

Solicit the kind of information that shows you care and that can help you better meet their needs in the future. Most people love to give feedback, especially when they think your process can be improved.

3. Do Some Up-Sells and Cross-Sells

When prospects respond to your offer in a marketing campaign, you can later send up-sell and cross-sell messages. The customer who inquires about a desktop computer can be sent information on a more expensive model like a laptop. Doesn’t hurt; they can consider spending more or order the plain wrap.

You can send customers information on products related to current purchases. Using past data, cross-sell with products that cater to their interests. This is why customer relationship campaigns are worthwhile, they can provide in-depth information about your customers and prospects for use in future campaigns.

For instance, a customer who buys stationary items can be sent attractive offers for related stationery supplies. If it’s skin lotion, send them information on skin care with links to new products. Use the information you gather from your customer relationship campaigns to increase sales and perhaps gain referrals. Recipients will appreciate your emails because they are highly relevant to their interests and needs.

4. Use Transactional and Service Messages

Transactional and service email messages can be created and delivered within a fairly short time. Some can be created weeks or months ahead, such as your service updates and renewals.

When you confirm an order promptly, your transactional message creates customer satisfaction. When you notify your customers of an approaching sale over specific dates, this also creates customer satisfaction, particularly when the sale items are relevant to customer needs. Your customers are delighted to receive this information, and you are creating customer loyalty that results in future sales. B2B customers will value the reminders to replenish their supplies and view these communications as a convenience. You’ll be killing two birds with one stone by creating loyalty and increasing revenue. Another tactic is to email customers periodically just to say hello, asking to be of service. You’ll learn more about your audience, while maintaining a dialog and keeping your products and services fresh in their mind.

Loyal Customers Bring Repeat Business

Satisfy your current customers and new ones will follow. Be creative in keeping your current customers happy. If you do not have an email customer satisfaction program in place, start one now. Your efforts will pay off with repeat business, referrals -- and most importantly -- satisfied, loyal customers.

Discuss this article in the Small Business Ideas forum.


March 5, 2007





Claudia A. Bruemmer is the former Managing Editor of ClickZ (1998-2001), where she achieved the editorial success that resulted in the first sale of ClickZ to Internet.com (Jupitermedia) for $16 million. Currently a writer and editor for Bruce Clay, Inc., Bruemmer writes web page content and Internet Marketing business articles. She can be reached at cbruemmer@bruceclay.com





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