Email Marketing Rocks at Retention, and Now’s the Time to Retain
You’d have to be completely out of the loop to not constantly hear of the recession. But that doesn’t mean you have to be like Chicken Little panicked that the sky is falling either. The trick for you as the email marketer is to see the opportunity. You already know email marketing provides a better ROI than any other medium. You probably already have your company’s support to keep your program going, even as other marketing channels are cut back. So you’re in a good place (I hope). But it can be even better with the right outlook.
Consider retention. Email marketing isn’t the best way to acquire customers, but it rocks at customer retention when done right. Think about it: Customers are spending less because of the economy, right? But if you retain them, by keeping your relationship with them strong even when they’re not buying, where will they spend their money when the economy improves? With you, of course!
It’s also cheaper to retain a customer: According to a report by Frederick Reichheld of Bain & Company*, acquiring a new customer can cost 6 to 7 times more than retaining an existing customer. The report demonstrates that marketers who increased their customer retention rates by as little as 5% saw increases in their email marketing ROI, with profits ranging from a still significant 5% to a massive 95%.
How do you retain customers using email marketing? Think about whatever can continue and even strengthen your relationship with them:
· Email newsletters with useful information
· Special discounts for being a subscriber
· Discounts from partners
· And always, being respectful by being relevant and not over-messaging
Think of the customer as an asset you want to maintain, not a resource you want to deplete, and you’ll be on the right track.
Also, as an email marketing company, we don’t want to completely dismiss email as a customer acquisition tool. Email marketing can work for customer acquisition just as well. It’s just a bit harder because it’s already difficult to get into the email inbox in the first place, and to get opened in the second place. For helpful tips on the latter, see our whitepaper.
*Note that we searched the Internet for the actual report, but all we could find were multiple sources quoting it. As an email marketing company committed to educating you, the email marketer, via our blog and newsletter, we feel strongly about verifying sources and apologize that in this case we weren’t able to. But based on the number of credible Web sites and blogs we found that cited it, we feel confident including the numbers here in our email marketing blog.
Tags: customer acquisition tool, customer retention, Email marketing, Email marketing company, Email marketing ROI
April 20th, 2009 at 4:09 pm
Rest easy, dudes. Your data is totally accurate.
The best source is Reichheld’s 2001 book The Loyalty Effect. He has recently become more known for writing The Ultimate Question, but frankly I think the Loyalty Effect (and its follow-up Loyalty Rules) are ultimately the more powerful and long-lasting for his reputation.
It is hard to overstate the power of his work. In my humble opinion (and I know a few things about this) this is in the top 5 strategy books of the last half-century. It certainly belongs up there with Competitive Strategy by Michael Porter, and ahead of popular books like Blue Ocean Strategy. He (and his teammates at Bain) just absolutely prove beyond a shadow of a scintilla of a doubt that customer retention is the best profit model going–better even than being the low cost producer. He shows it in industry after industry.
The early work he did in this area was done jointly with some very solid Harvard Business School faculty, notably Len Schlesnger (who went on to be a Big Cheese at The Limited), and Jim Heskett and Earl Sasser, total kings of the faculty at HBS.
Very solid stuff. Rest easy, you didn’t misquote. But it is a damn shame that such a powerful book has come to be noted as an “unconfirmed report.” It is way better than that. Check it out. Buy it. Quote more from it.
Charles H. Green
Author, Trust-based Selling
co-author The Trusted Advisor