An e-mail program that includes sending messages triggered by customer actions, such as links clicked and shopping cart abandonment, can instead generate higher-value orders because the e-mails you send are based on the specific behaviors of individual customers. You likely won't need to sweeten the deal as frequently with incentives that cut into your profit margin and reduce LCV.
8-Step Action Plan to Implement LCV-Based E-mail
Improve the lifetime value of your customers with the following steps:
- Determine your LCV segments. Remember, this is highly proprietary to your company, not something that you can benchmark using industry averages or statistics.
- Determine goals for each LCV segment. As noted above, these can be moving customers toward higher-margin products and services, converting free users to paid, reducing costs, and the like.
- Analyze the current impact of e-mail on each segment. Track metrics such as click and conversion rates to see if e-mail activity relates to customer value.
Note: Be careful about using the open rate, the percentage of users who open the e-mail message in a set time period, because it is notoriously inaccurate. Users who read only part of an e-mail, don't download images or read e-mail on hand-held devices might not have their opens recorded, giving you an artificially low open rate.
If you really do want to use the open rate, use it only to compare segments with each other rather than an absolute or target rate, or to compare it over time within a specific segment to see if it rises or falls.
- Determine how e-mail can help achieve the goals you outline in step two. The initiatives outlined above for a financial institution aiming to cut costs by moving more low-LCV customers into online banking also can apply to retailers who want to reduce postage and increase on-time bill payments by making it easier for customers to pay their bills or file service requests online.
- Test the program thoroughly in each segment. Use a limited random sample, study results and watch carefully for customer sentiment. Be ready to refine your goals and strategies. And, if one initiative fails, learn from it and move on.
- Acquire and implement the tools you will need to measure your progress and results. Solicit management input before, during and after testing, and throughout implementation, to assure buy-in.
- Roll out initiatives across your segments.
- Monitor LCV continuously, assessing whether enough customers are moving up within their segments, or from one segment to the next, to justify your time and expense.
Retooling E-mail for LCV
Leveraging e-mail to build LCV requires you to rethink how and why you e-mail your customers, and possibly remake your program from top to bottom. However, this retooling strengthens your e-mail program and, ultimately, your bottom line by driving higher customer engagement and value from each of your LCV segments.
Loren McDonald is vice president of industry relations for Silverpop, an Atlanta-based e-mail marketing services and solutions firm. McDonald has 24 years of experience in marketing, consulting and strategic planning. He can be reached at (678) 247-0500.