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This chart tracks the lifetime of 1 million specific subscribers during their three years with your company. It cost you $17 to acquire each subscriber. There are other subscribers or customers who arrived before or came since, but they do not show up on this chart. As you can see, only half of the subscribers are still reachable in the third year—and many of them never bought anything. But from the ones who did, there were significant profits.
The lifetime value chart tells you that each opt-in, permission-based e-mail address is worth about $85, which means that your database is worth about $85 million. It will be worth that, however, only if you use it to contact your customers and build long-term profitable relationships. But where to start?
Create Dynamic Transaction E-mails
A transaction e-mail (e.g., "Your order was just shipped") is the ideal conversational message to build a relationship with your customers. These e-mails have very high open rates (often as high as 90 percent) compared with promotional e-mails (which are hovering at 15 percent). Since they are opened and read, these messages are the place to put suggestions for future purchases—suggestions that are related to the particular customer and to what she has previously bought.
In many companies, transaction e-mails are sent from the shipping department, which is not equipped to use HTML or to reply to customer e-mails. Get busy. Make sure that all your transactional e-mails go through your e-mail marketing team or your e-mail service provider before they are dispatched, so they can be in HTML and contain relevant, personalized offers and content.
Send Reminder E-mails as a Measure of Good Will
Have you taken a plane lately? If you look around, you will notice that many—perhaps half—of the passengers arrive with boarding passes already printed out on their home computers. What does that tell you? That the airline is sending e-mails to passengers before their flights, encouraging them to check in before getting to the airport. What is the advantage to the flier? He can pick his seat and does not have to wait in line for the boarding pass machines. He can go directly to security as soon as he gets to the airport—saving five, 10 or 15 minutes. It is a great idea that saves time for both travelers and the airline.
Airlines also save money, from paper costs to personnel costs, when passengers check in online from home. For example, US Airways offers 1,000 bonus miles through its Dividend Miles program to anyone who checks in online. The airlines would really like to see everyone start doing this routinely.
Sending travelers e-mails on the day of departure to get them to check in early is an excellent way of using your database to build relationships. Compare this with arriving at the airport only to find a 15-minute wait to get checked in.
Your company likely is not an airline. So how can you use your database to provide similar helpful reminders or goodwill messages? Did your customer send a gift to Sally Warren at this time last year? It may have been her birthday. Send your customer a reminder that a year ago she sent a present to Sally Warren. Remind her of what it was (she has forgotten). It will do no harm and could produce an immediate sale.
Encourage Product Reviews
Since the Internet arrived, we have discovered something important. We can send customers messages at practically no cost at all. For example, after any transaction, you can send an e-mail asking customers to rate the products or services they received. When they respond, you put these reviews in your database and on your Web site, under the product listing, and in each e-mail that mentions this particular product. What is the advantage of that? People read these reviews. More than 83 percent of respondents to a MarketingSherpa 2007 survey said they would trust user reviews over a critic.
So, in your database you know who bought what and when. Send them e-mails asking them to rate the product, service, or the ordering and delivery process. You will end up selling more products and building better customer relationships.
Opportunity Knocks
E-mail marketing, particularly in a recession, is a cost-effective way of reaching customers to keep their loyalty, attention and continued business. Devote some serious attention to how your e-mail programs are organized—and what you are doing with them. It can be highly profitable.
Arthur Middleton Hughes is the co-author of "Successful E-Mail Marketing Strategies: From Hunting to Farming." He is a senior strategist for Lexington, Mass.-based e-Dialog, which provides precision e-mail solutions for major corporations, and can be reached at ahughes@e-dialog.com.
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