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Email retention vs. acquisition: Where to focus your email efforts

The impulse to keep growing your email distribution lists is understandable. After all, it's a clear month-over-month metric to show your customer base is expanding. Acquisition of new customers, however, is not the sole way success in email marketing is measured.

As opposed to focusing primarily on gaining new subscribers, you need to work as much or more on retaining the customers you do have. After all, research shows it costs five times as much to acquire a new customer than to retain an existing one. At the same time, email marketing is the number one channel for retaining these current customers.

This is especially key as a first-time customer has a 32% chance to buy from you again while a second-time customer increases this to 53%. A ten-time customer? There's an 83% chance they'll continue to buy from you.

All emails are not created equal, and a one-size-fits-all approach will neither attract nor retain customers at a satisfactory rate. We'll look at some strategies below to increase the email retention of your customers.

Email retention strategies

No matter the size of your business, a robust email retention program is both essential and affordable. For example, a click-through rate of less than 15% is still substantially cheaper than using pay-per-click keywords. Plus, emails are easily customizable as well as being timely. And, as per Marketing Sherpa, it's the preferred way customers want companies to communicate with them.

The first key to successful customer retention is to segment your email lists. This can be done based on a variety of factors including geography, age, gender, profession, past purchases, buying habits, and more. The greater the granularity with which your lists are organized, the more effective your targeted marketing and email retention efforts will be.

1. Welcome messages

The first thing you need to do is effectively welcome new customers when they subscribe to your emails. As with most interpersonal interactions in life – either face-to-face or digital – the initial communication will have a lasting impact on the relationship being built. Welcome emails typically have an open rate of 50% which makes this first missive even more important.

In the case of welcome messages, simplicity and a personal tone combined with a low-key call to action will go a long way toward converting a new email subscriber into a repeat customer. For example, there's the email sent to new Kate Spade consumers:

• The use of the thank-you envelope graphic creates the feel of a personal note received by mail, a rarity for most people these days.

• In addition, the handwriting script font of the large "Thank You" also gives it a more personal feel.

• At the same time, there are links to all of Kate Spade's social media channels to promote multiple new connections with the new customer.

• Finally, the inclusion of a 15% discount on a future purchase encourages the recipient to buy again soon.

As with most successful customer retention emails and campaigns, this initial message from Kate Spade utilizes the soft sell: Welcome to the club, and here's a little extra something for being here. With the proliferation of online sales emails and campaigns, consumers are already experiencing information overload. Taking a step back when speaking to them will engender more goodwill as opposed to insisting they buy, buy, BUY RIGHT NOW!

Want to see even more types of welcome emails? Check out this article which looks at a wide range of these messages.

2. Loyalty programs

For example, let's say you own a chain of pizza restaurants. You might have a loyalty program where customers earn points for purchases which add up to free rewards as well as receiving periodic email offers. You've noticed the business is typically slower at all your locations on Wednesdays and Thursdays, so you send out an email blast to every customer with coupons for discounts on these nights.

Don't be surprised, however, if the results are less productive than you hoped for. After all, people's frequency and schedule of purchases are relatively predictable. Don't expect people to suddenly start coming in on nights you're slow if they have no history of doing that. Instead, give them an incentive to spend more money when they do come in or on the purchases they already make.

So, because you have each customer's order history thanks to your loyalty card program, you can more effectively segment your offers based on their buying habits:

• For customers who regularly come in on Friday night and buy one pizza, email them a coupon for 50% off a second pizza.

• For customers who always order online, send them a time-sensitive offer for free delivery.

• For customers who spend more than a targeted amount per month, offer double reward points for future purchases during a limited time span.

You're not doing yourself or your customers any good if you offer them deals based just on what you want: in this case, more business on slow nights. Instead, reward their loyalty with discounts to incentivize additional purchases when they're most likely to spend money. Nobody wants to receive an offer that doesn't apply to them, and even worse, it teaches them to pay less attention to future emails.

3. Customer reviews and feedback

Customers don't want to feel like a seller has lost all interest in them after a purchase has been made. Yet, that's too often the case in the quest to acquire new customers at the expense of existing ones. And, at the same time, customers want their opinions to be heard and feel like they count as part of the ongoing relationship they have with a business.

One of the most effective examples of requesting customer feedback comes from Amazon, the world's third-largest retailer. After every purchase, a customer receives an email soliciting their opinion on the product they've bought. There are multiple benefits achieved by doing this:

• The call to action drives customers back to the website without explicitly asking them to purchase something else.

• Customers feel like their opinions matter to both the seller and other customers.

• Additional information is made available to other customers interested in that product.

Once again, as we've seen in the other examples above, this is really a soft-sell approach to encourage people to engage with your site even more often. After all, who has ever gone to Amazon without clicking on at least 2-3 more product links to investigate additional items they might be interested in at some point in the future? Or, to put it another way, nobody can buy from you if they don’t go to your site, so anything which productively generates traffic will help increase sales.

4. Customer education

Finally, email subscribers will be more responsive if not every message from your company revolves around a call to action to visit its website. Because you want your customers to be around for the long haul, taking the time to educate them about the products and services they're interested in will also keep them engaged.

For example, Kareem Mayan's SocialWOD website tracked the daily CrossFit workouts of gym members without requiring the use of data entry. In addition to marketing this service to gym owners, he used a series of six drip emails to educate the ones who joined his email list about different methods to increase gym member retention rates.

These emails took only a few days to write and set up with autoresponders. While the open rate stayed around 50%, the click rate of all recipients increased by over 10% from the first to the sixth email, and the click rate of email openers increased by almost 25%.

From this experience, he reached several conclusions about the benefits of drip emails as they allow you to:

• Build an ongoing relationship with customers

• Teach your customers about the benefits of your product or service

• Display your credibility and expertise

• Demonstrate why customers should buy from you

If you're a craft beer brewer, educate your customers about the different types of beer and brewing processes. If you have a chain of furniture stores, show your customers how to care for the pieces they purchase. And if you sell high-end kitchen utensils, offer your customers weekly webinars about how to best utilize the appliances they’ve bought.

Trust us: This will lead to more ongoing purchases in the future.

Wrap up

All customers are unique, and that's the way they want to be treated. One of the reasons direct mail pieces traditionally have low response rates—0.5 to 2%—is that each recipient is receiving the exact same blanket message. After all, your customers want you to see them as more than "Current Household Resident."

Sure, it's possible to have equally low response rates if you're sending out generic email blasts to every customer you have. But, the more you drill down to segment your distribution lists and the offers you send out, you'll increase both your conversion rates and customer retention percentages.