Improving customer retention with email marketing
- Email marketing should be a core component of any customer retention strategy because of the cost-effective outreach it enables, the personalization options it provides, and the high engagement and open rates associated with branded email.
- Email is a cost-effective marketing channel that gives your brand flexibility in engaging existing customers and keeping them loyal.
- When businesses overemphasize customer acquisition and overlook customer retention via email and other channels, they put their existing relationships at risk while forgetting that customer acquisition opportunities aren’t infinite.
Converting leads into paying customers is a huge achievement for any business. It’s also the first step in turning that relationship into a reliable source of revenue. But your sales and marketing teams’ work is far from over once you’ve acquired a customer.
If you want to maximize your value from that relationship — and chart a course for sustainable business growth — your business needs to develop a successful customer retention strategy. Research suggests that a 5% increase in customer retention rates can improve a company’s revenue by 25% — a significant ROI figure for your sales and marketing spend, and one that should encourage greater investments in customer retention efforts.
Any successful customer retention strategy will utilize email marketing. It enables you to have a greater reach with your marketing efforts for little cost. Plus, you’re able to personalize your messages in order to receive high open rates and engagement. About 80% of all businesses believe that email marketing improves their customer retention efforts, underscoring how this strategy can deliver value to many companies.
Read on for some insights into the benefits of using email to support customer retention. Plus tips for steering this strategy toward success.
The importance of improving customer retention
Customer retention offers several crucial benefits for your business. Especially when it comes to long-term growth. In particular, improved customer retention can help you achieve the following:
- Improved customer experience and customer satisfaction: When you dedicate sales and marketing efforts to your existing customer base, those customers feel noticed and valued. They also feel they’ve received better customer service.
- Increased value for your customer acquisition efforts: By improving customer retention, you increase the average lifetime value (LTV) of your customers, which results in more revenue generated per customer acquired.
- More efficient use of your marketing and sales budget: Because customer retention offers a higher ROI than customer acquisition, you can adjust your marketing mix to increase the overall revenue generated from your sales and marketing efforts.
- The ability to grow and maintain ROI: By understanding the value of customer retention — and building strategies to support these efforts — your sales and marketing teams can improve their efforts to expand your customer base while reducing customer churn, thus increasing the company’s growth trajectory.
Benefits of using email marketing to improve customer retention
The case for emphasizing customer retention is easy to make. Here are the benefits of investing in strategies that improve customer retention for your brand:
- Retaining existing customers is always cheaper than acquiring new ones. Although new customer acquisition is important if you want to grow your business, acquisition shouldn’t come at the expense of high turnover rates. Whenever you lose a customer, you end up spending a significant amount of money to replace that customer when retention efforts might prove to be more cost-effective.
- Retained customers offer greater referral potential, which helps grow your customer base. By retaining customers and increasing customer loyalty, you can invest in a dedicated base of customers who may offer additional value as advocates who drive referrals for your business.
- Loyal customers offer greater lifetime value. The longer customers stay with your business, the greater their overall LTV. This improves the ROI of your acquisition efforts and stabilizes your company’s revenue streams.
- Customer retention is a reflection of customer satisfaction. When you’ve got low turnover rates, it means you’re succeeding in all phases: acquiring the right customers, delivering a great customer experience, and building brand loyalty.
Tips for building an email marketing strategy focused on customer retention
This cost-effective marketing strategy can give your brand flexibility in how it engages your existing customer base. It will also help to keep those existing customers loyal. A strong email marketing campaign will do the following:
- Leverage customer segmentation to improve email relevance and open rates. The value of segmentation is even greater when you have strong customer data to properly segment these audiences. This is where the data generated through CallRail’s conversation data can be helpful.
- Provide customers with access to exclusive offers or promotions. You can create a sense of personalization just by delivering relevant offers exclusive to these email campaigns.
- Use drip campaigns to nurture customers and strengthen your relationships. Better yet, leverage customer segmentation when choosing whom to target with these drip campaigns. Use automated delivery to optimize your customers’ receipt of these emails.
- Remarket to customers who haven’t made a purchase recently. Lapsed customers aren’t necessarily customers you’ve lost forever. Use email to reconnect and bring back a customer who has drifted further away from your business.
- Analyze and test data to identify new ways to understand what is resonating with your audience and the messaging that isn’t making a positive impact. With these insights in hand, you can continue to refine your customer retention efforts.
- Deliver continued value through insider tips, business updates, and other content that leverages your in-house expertise. Email engagement is at its highest when customers view your content as offering value every time. Don’t waste your efforts on fluff emails. Demonstrate your expertise with customer-centric marketing that offers valuable information, even to customers who aren’t actively making a purchase.
How to measure the effectiveness of your email marketing plan
Let’s say you’ve decided to use email marketing to serve your customer retention efforts. How do you know that investment is working? Here are some options for measuring your success:
- Analyze your brand’s churn rate over time. You can compare churn rates for various email marketing segments to determine if certain strategies are more effective than others.
- Calculate referrals coming from existing customers. If you have a referral marketing program in place, you can calculate the ROI from that program to see how many referrals have converted.
- Use dynamic number insertion and email-only offers to track campaign participation and engagement.
- Track changes in your customers’ average LTV. These changes will be evident only over a longer period of time. They will illustrate your customer retention improvements and success in driving more sales from these customers.
Don’t take your current customers for granted
When businesses overemphasize customer acquisition and overlook customer retention efforts, they put their existing relationships at risk. Acquiring a new customer can be 5-25 times more expensive than retaining an existing one. On top of that, it’s important to keep in mind that new prospects aren’t infinite.
Most businesses depend on consistent relationships with dedicated customers who become repeat buyers and deliver a high lifetime value to the brand, so invest in email marketing and other strategies to keep those customers in your corner.
Find out how CallRail supports customer retention through email marketing by utilizing Call Tracking and Form Tracking. You have the ability to ensure your email retention efforts are working — sign up for a free trial today.