How to increase customer retention through email marketing
December 14, 2022
Are you neglecting your loyal customers?
Research shows that repeat customers generate 44% of revenue and 46% of orders, yet many brands make the mistake of putting all of their time and effort into new customer acquisition. With a difficult economy to navigate and many consumers favouring the subscription-based ecommerce model, it’s never been more important to nurture your existing customer base.
What is meant by customer retention?
Customer retention rate is a key metric for B2C and B2B businesses alike. When we use the phrase, we are referring to the rate at which customers stay with a business in a given period of time. In simpler terms, how often they purchase your products. In general, the more customers a business retains over time, the more profitable it will be in the long term.
Why is customer retention important?
Lower acquisition costs
The cost-per-acquisition is far lower for existing customers than brand-new ones. According to American Express, it’s 6 to 7 times more expensive to acquire a new customer than it is to retain an existing one. This is due to the additional marketing costs required to increase brand awareness and get new customers through the door, whether it be via Google Shopping, paid social media ads or other forms of advertising. The lower the number of repeat orders coming through, the more you end up spending to make up for it.
Leading nicely on from acquisition costs, customer loyalty means more revenue. Case studies have shown that just a 5% increase in customer retention can increase revenue anywhere between 25% and 95%, which is huge. This is because loyal customers are more likely to spend more money, and more often because they’ve already developed a relationship with the brand. They’ve already learned the value of a product, and found that it works for them, so they keep coming back.
If you have a high volume of customers buying from you again and again, this is an indication that you are doing something right. Keeping a close eye on your customer retention rate will help you to continuously improve your processes and user experience. It also gives you a database which you can use to gather opinions and experiences, whether it be through surveys or simple direct conversation.
It’s less work for you
If your strategy focuses solely on attracting new customers who purchase once then leave, not only will you spend more, you’ll work a lot harder too. Happy loyal customers are more likely to refer your online store to friends and family, as well as leave positive reviews online, meaning you aren’t solely responsible for generating new custom.
How to improve customer retention & build loyalty
Eight in ten businesses use email marketing for customer retention. This is because it provides a direct line of communication to your most loyal customers. The majority of us check our inboxes regularly, so it’s a great way to speak to your customers with a more personal approach.
Whilst it’s true that email can also be an effective tool for attracting new customers, the way you approach your strategy for existing customers should be very different. This customer base already knows, likes and trusts your brand. A customer who has recently made a purchase is at the bottom of the marketing funnel and needs a different type of content to prompt them to buy again.
1. Check in post-delivery
Many brands make the mistake of thinking their job is done once a shipment leaves the warehouse. But we’ve probably all experienced problems with delivery at some point, from delayed deliveries to items being damaged in transit.
Whilst these things are often out of our control, your customers may not see it that way, so it’s vital that you show them you care about their buying experience from start to finish. You may not even hear about these issues, which is why you should schedule an automated follow-up email a few days after delivery, asking about their shopping experience. This will provide vital feedback on things like courier performance, packaging quality and dispatch speed, and also shows your customers you care after payment has been received.
Either way, you’re building a positive relationship, or at the very least opening the door to allow customers to speak to you about any issues before they leave a negative review elsewhere.
2. Be strategic around repeat order dates
You aren’t going to recommend a product to someone if they bought it last week. Analyse purchase frequency data and use insights to decipher when customers are most likely to make a repeat purchase.
This is easier for industries like childcare or pet food, where items need to be replaced at a pretty regular pace. You can work out when your customers need to replenish and restock, and in the run up to that date, send a series of automated emails at different stages. See some examples below.
- Educational content around how to use the product, the best routine incorporating that specific product and how to get the most out of it
- Upselling a similar, more expensive product a few months after the initial purchase to get your customers thinking about what to buy when the time comes to replace
- Cross sell other related products – so if you’re a pet food brand and a customer recently bought dried dog food, you could promote dog treats and wet food
- Send a discount code when it’s close to re-purchase time, e.g offering 10% off the product previously bought
Remember to exclude people from this email series once they’ve made a purchase to avoid over-promoting products a customer has no intention of buying any time soon.
3. Create a loyalty programme
When we hear the phrase “loyalty programme”, coffee shop cards and stamps may come to mind. But loyalty programmes have entered the digital age, and can be a really effective means of generating repeat sales. Not only do they give customers incentives to buy, they also provide brands an abundance of data on their most loyal members. Purchase history and frequency, favourite products, rewards redeemed etc – these insights can be used to fine tune your marketing strategy and really drill down into what your customers want and need, and predict their buying habits accordingly.
How you approach a loyalty scheme is up to you. It could be points-based according to money spent, or a simple “stamp” each time a purchase is made, leading to a discount for every five stamps earned. Offering incentives not only creates engaging customer experiences, but can keep customers coming back in uncertain economic times, as they feel they are saving money or gaining something in return for their loyalty.
The bottom line: customer retention = increased profitability
If you’re struggling to keep customers coming back for more, or need an expert’s help to optimise your email marketing campaigns, you’re in the right place. When it comes to ecommerce strategy, our team has decades of experience handling everything from design to segmentation and retargeting.
Send us a message and we’ll be in touch.