E-mail: 5 Ways to Build Lifetime Customer Relationships
Once you have built an opt-in e-mail subscriber database, the next steps are where the work really begins. First, you must ensure a steady flow of additional valid e-mail addresses to make up for those that dissolve over time. Second, you need to communicate frequently with customers in relevant ways in order to build long-term relationships. But how do you measure the value of your opt-in e-mail addresses and ensure that you deliver relevant communications?
Capture New Customer E-mail Addresses
You can use e-mails to build relationships with your customers only if you have a valid permission-based e-mail address for each customer in your database. Ask any marketer whose company has a large customer marketing database how many valid e-mail addresses there are in the database. Most marketers don't know that number offhand; they have to look it up. And when they do, the answer they find is probably wrong. Why? Because today 30 percent of the e-mail addresses become obsolete during any given year. You are holding on to a leaky bucket that will soon run dry unless you keep filling it up with newly acquired e-mail addresses. How can you do that?
The best way to keep the bucket full is to incentivize your staff to get customer e-mail addresses with every contact. When customers buy something in a store or over the phone, the point-of-sale system should be set up to receive e-mail addresses that go right into the database. When e-mail addresses are entered, the database sends an e-mail to the customer getting her to "click here" to validate the address and affirm her permission for you to use it. When she does this, the staff member who entered the e-mail should get some sort of a reward or bonus. Once you set up a system like this, your database will become rich with valid permission-based e-mails.
Determine the Value of Your Valid E-mails
Rewarding employees for capturing customer e-mail addresses is a hard sell to management unless you know what an e-mail address in your database is worth. What is it worth? The value is based on the profits that you can make from using the address to boost retention and increase sales. You can use your database to determine that value. Make up a lifetime value chart, which might look something like the sample displayed at the bottom of the page.
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.
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 email@example.com.