5 simple ways to revolutionize customer loyalty through email marketing

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5 simple ways to revolutionize customer loyalty through email marketing

Publisher’s overview.
Recognizing your customer’s individual needs during key stages of the relationship is merely half the battle; having the ability to act on them in a timely and personal fashion is critical to converting first time buyers into loyal customers. No marketing medium today, is as effective and efficient at empowering marketers with the ability to connect with customers on a real one-to-one level more than email marketing. Targeted and highly personal, when done properly, email marketing affords business owners all the right tools to build strong relationships and stay top-of-mind with their customers. This explains why small and medium size business owners in all verticals are turning to email marketing in droves to cultivate loyal long-term relationships with their customers. However, as many SMBs know too well, increasing customer loyalty through email marketing is easier said than done. This insightful white paper aims to change all that – giving marketers a simple roadmap on key email marketing tactics that can quickly build strong relationships with customers. And for marketers willing to invest the effort to implement these best practices to cultivate loyalty, the future looks bright indeed.

5 simple ways to revolutionize customer loyalty

Contents
Introduction The main ingredients: Relevance = trust + value Top loyalty building tactics: The virtual handshake The give & take The relationship The tango After the honeymoon Conclusion About Campaigner page 3 page 3

page page page page page page

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page 11

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5 simple ways to revolutionize customer loyalty

Introduction
Customer loyalty remains the crucial ‘X-factor’ for eMarketers driven by the fact that it costs anywhere upwards of 6 times more to acquire a new customer than to engage an existing one. That will never change. So the quicker marketers get the loyalty formula right, the quicker they’ll get profitable. Cultivating long-term relationships with customers is no different than cultivating personal relationships in life. Loyalty develops over time and the main ingredients that establish it are simple – trust and value: the trust customers have in your products & services and the value your email messages carry for those customers. Sounds great, but how do marketers establish these two critical components with customers to win their loyalty and enjoy long-term profitability?

The increasing popularity of email marketing
B-to-C 40% B-to-B

42.4% 40.0% 35.6% 29.1%

30%

20%
13.6% 10.9%

18.2%

10%
1.9% 1.7%

6.8%

0% The impact of email is declining significantly The impact of email is slowly declining The impact of email isn’t noticeably changing The impact of email is increasing slowly The impact of email is increasing significantly

© 2006 MarketingSherpa Inc.

One word: Relevance!
The more relevance infused into your email communications, the faster you’ll be able to build trustworthy relationships, and send value-based messages that keep customers coming back for more. Without a doubt, there’s no better discipline to generate loyalty than email marketing. Done right, it has an immediacy that empowers business owners to achieve super strong bonds with their customers. And that’s why – as the graph illustrates – SMBs to Fortune 500 companies are turning to email marketing to take their business to the next level.

The main ingredients: Relevance = trust + value
One irrelevant communication can end a valuable buyer/seller relationship diligently built up over time. Therefore, marketers must be sure every email message they send is valuable enough for recipients to open and read. Bear in mind, not only do repeat customers spend more and generate larger transactions; but many will pay higher prices in exchange for a long-term relationship that promotes real value and trust – components they can’t enjoy anywhere else. That’s why meeting the customer’s expectations is a great starting point but merely just a start point – exceeding the customer’s expectations (send after send) is the key to driving your long-term success. Be aware that marketers who infuse relevance into their communications consistently outperform the competition. So forget about archaic buzz words like market share, successful eMarketers today all think in terms of customer share. Here are five simple email marketing tactics that do just that – revolutionize customer loyalty.

A recent Email Marketing study found that 42 percent of small businesses were using email marketing by the end of 2005 to increase customer retention and revenue. Spending by those small businesses on email marketing was estimated at $2.2 billion.

Despite the extra costs, engaging your audience in more relevant communications increases net profits by an average of 18 times more than broadcast mailings; yet 89 percent of marketers today still send low-value broadcast mailings – JupitarResearch Executive Survey.

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5 simple ways to revolutionize customer loyalty

Top loyalty building tactics:
1 – The virtual handshake Building customer loyalty through email marketing is all about the list. That’s because a detailed, well-maintained list yields trust and higher response. Without a healthy list nurtured over time, marketers will be forced into the costly alternative of renting one, knowing little or nothing about the opt-in profiles or campaign preference information of the people on it. So what can a marketer do to avoid getting caught up in this scenario? Easy, build your own opt-in subscriber list quick by obtaining that all-important ‘virtual handshake’. Easier said than done. Although you’d think the concept of permission to email mandatory; laying the proper groundwork for a trust-based relationship by obtaining the customer’s permission is actually an afterthought for many marketers. Strange as it sounds, many companies fail miserable at this practice and, in doing so, end a potential profitable relationship before it begins. To grow an internal database quick, start by simplifying the registration process, making it super easy for browsers to opt-in today, to be able to fully leverage that customer’s motivation for subscribing tomorrow. Prominently position and strategically place opt-in requests at critical customer touch points on your site. Also, be sure to incorporate a double opt-in mechanism into the registration process, followed by timely ‘welcome messaging’ as a highly effective tactic to further build trust with your customers. And, like any relationship online or off, always provide the subscriber with a high level of transparency during the registration process. Best practices dictate to give the subscriber clear opt-out instructions and unsubscribe links, reiterate your organization’s privacy policy, provide an easy access preference page where the subscriber can check their own options, an email address for feedback or sender contact, and a telephone contact number (email is fast but a telephone number is faster). In short, give the subscriber more control during the registration process, and you’ll not only meet their expectations, but exceed them. 61 percent of B2C marketers and 51 percent of B2B marketers used a check box of their registration form to grow their opt-in subscriber lists – MarketingSherpa, December 2004. Next, get to know your new opt-in better by collecting the right information. Why? The more marketers know about their customer, the more they can tap into their purchasing trends and tendencies. Don’t fool yourself, customers are in it for the benefits and will gladly serve up personal data in order get information on products and services that meet their specific needs. So be sure to customize your forms with care and precision.This ensures that you’ll obtain the right data today, to give customers what they want (relevant and valuable messages) tomorrow. At the beginning keep your forms simple – basic data attributes (title, name, home address, city, state). And never overestimate the subscriber’s patience to give up personal information. On average, a prospect will spend anywhere between 2-5 minutes providing personal data on a site; while less than 10 percent will spend more than 10 minutes. Hence, always be prudent – use the 2-5 minute rule for forms/surveys as your ‘customer patience’ benchmark, and never ask a subscriber anything you wouldn’t answer yourself. Best practices produce the best results so don’t go overboard. Build up data over time as the relationship grows stronger, and you’ll be able to fully leverage the customer’s motivation for subscribing before you know it.

A recent study of US internet users perceptions about the amount of personally identifiable information asked at Web sites, found that 52 percent of respondents felt they were asked too much information. Conversely, only 1 percent of the respondents felt they were not asked enough information when they registered.

Example: BlueDial.com – a premier online seller of genuine designer and highest quality watches with over 10,000 models in stock – has successfully leveraged opt-in list building tasks to triple their list size and extend their reach. BlueDial.com uses a combination of basic list builder tools and easy templates to simplify the online registration process to grow and manage their internal lists. These simple tactics have already yielded a 200 percent increase – up tens of thousands from the initial start point. As the chart that follows illustrates, adopting a ‘double opt-in’ strategy can significantly boost open rates.

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5 simple ways to revolutionize customer loyalty

Marketers using double opt-in get higher results

Double Opt-in 2005 Average 25%

In this new online era, marketers in all industry verticals are implementing a barrage of loyalty programs aimed to jump start their acquisition and retention efforts. To date, nearly all Canadians (97 percent) participate in at least one loyalty program (including airlines programs) – PanelTrack Loyalty Card Study 2005 from ACNielsen.

20%

15%

10%

5%

0%

2% 8%

7% 14% 20% 22% 23% 23% 22% 15%

9% 10% 18% 9%

<10%

10-19% 20-29% 30-39% 40-49% 50-59%

60%+

Now for the take… anyone who has studied Marketing 101 understands that it costs significantly less to engage an existing customer than to acquire a new one. Therefore, marketers must go beyond traditional channels and prove to customers that their organization is trustworthy. If not, they risk quickly losing that relationship to a competitor. So live up to the promises you’ve made to your subscriber or risk eroding that customer’s trust fast. This means always respect the subscriber’s opt-in preferences you’ve worked so hard to mine. If a subscriber initially subscribed to receive a newsletter once a month, refrain from sending discount hard-sell offers once a week. Next, monitor your email frequency, content and types of communications you send. Don’t overburden the recipient by sending too much or not enough email. Simply put, respect the subscriber’s wishes and you’ll provide the value subscribers are looking for. Last but not least, to better manage those relationships, always keep your internal opt-in list of subscribers clean, by consistently removing all inactive addresses from your list. For marketers this may amount to half your opt-ins. But don’t fret! In email marketing, the quality of names not the quantity produces the best results. Minimally remove addresses in the database that have not generated any clicks or opens over the past year, and diligently work the existing names to build long-term relationships from there.

Source: MarketingSherpa, Email Marketing Benchmark Survey, October 2005 Methodology: The survey was fielded on Wednesday, October 7, 2005 to selected MarketingSherpa lists. It was closed on Wednesday, October 12, 2005 with 1,927 qualified responses.

2 – The give & take Strong loyal relationships are all about give and take. Let us start with the give, incentives. Incentives quickly encourage subscribers to give up personal data to get information on products and services that meet their specific needs. In light of the above, get creative... run a contest to win a free gift with sign-up; a premium for completing a survey, or a free trial/download – any carrot a marketer feels will add value to the relationship and keep customers coming back for more. And done right, nothing can keep customers coming back more than a well-implemented loyalty program. That being said, marketers must be careful to ensure their loyalty programs do not breed customers more loyal to the rewards than the brand. To avoid this follow the golden rule and stay away from the perils of rewarding indiscriminately – the days of offering bribes and extravagant freebies to buy the customer’s loyalty just doesn’t cut it anymore. Glean customer difference and then reward those differences and you’ll flourish.

According to the 2006 Email Marketing Benchmark Guide from MarketingSherpa, open rates are highest in the first 30 days after a recipient joins your list – an aggregate of 58 percent open rate. A mere two months after joining, the open rate falls 13 percentage points to an aggregate of 45 percentage points.

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Example: Take-and-bake pizza chain Papa Murphy’s Pizza wanted to find out about Canadian pizza eating habits, and whether Canadians were willing to try a Papa Murphy’s pizza before taking the big step of expanding into Canada. Armed with an internal list of only 1,400 Canadian names, an iPod® draw incentive and a ‘forward-toa-friend’ feature, the pizza chain sent out a short and sweet survey invitation looking to receive 600 responses (a 42% response rate). Of the initial 1,400 emails sent, 422 completed the survey (an excellent result) but still shy of their initial goal. However, responses continued to climb and two days later the take-and-bake pizza king received the 600 completed surveys they were initially looking for. By the end of the contest, they received 1,666 completed surveys – a 119 percent conversion rate! As the graph shows, offering incentives works! Elements that affect US internet users likeliness to respond
B-to-C Tactics ‘Working well’ B-to-B Tactics ‘Working well’

3 – The relationship Diligently collecting data is great, but having the ability to leverage it to ensure the most relevant campaigns are sent to the optimal target audience is crucial for marketers intent on taking their business to the next level. Start by analyzing the data you’ve mined to segment your audience into separate groups who share common profiles and preferences. For instance, cull your subscribers by gender, geography, birthday, purchase behavior and other demographic attributes. This task will allow you to better hone the effectiveness of your communications to ensure subsequent dialogues are increasingly more targeted and more relevant (the primary reason why subscribers initially opt-in). The better a marketer can tailor the customer’s email experience to relate more closely to them, the quicker they’ll establish customer trust and communications subscribers want to receive. That is why any form of segmentation to better target communications is proven to build stronger longer-lasting relationships with customers and boost email campaign results. And sending the right message, to the right person at just the right time will not only manage the customer’s expectations but consistently exceed them.

Check box on our registration/order forms Free trials/downloads

85% 83% 73% 77% 63% 68% 65% 66% 62% 66% 62% 63% 67% 44% 61% 53% 33% 59% 53% 52% 57% 47% 40% 54% 0% 20% 40% 60% 80% 100%

Customer service call-ins

Newsletter offer

According to JupitarReseach, less than a third of marketers are using click-through data for segmentation purposes to send targeted and relevant communications. Now that you’ve targeted the right person, imagine if you had the capability to display specific content that mirrored the interests of recipients in a particular segment? Dynamic content allows savvy marketers to achieve just that – not only build sustainable relationships with customers by sending similar content to multiple segments of their audience, but with different, more personal, offerings. This means real people sending relevant one-to-one email to real people. So be sure to use any trigger that helps infuse relevance into a communication to keep the customer interested in what you have to say. And always be certain to make sure your tone of voice and style elements match the respective audience cluster you’re talking to. This will allow you to send relevant messages customers look forward to receiving in their inbox.

Trade events

Asking offline in stores, printed order forms, catalogs Sweepstakes/contest

Sales alert or product announcement offer Telemarketing

Premium/free-gift with-sign-up Co-registration (check box on other sites’ reg. forms) Email appends (appending offline addresses into email)

Source: MarketingSherpa, Email Marketing Benchmark Survey, October 2005 Methodology: The survey was fielded on Wednesday, October 7, 2005 to selected MarketingSherpa lists. It was closed on Wednesday, October 12, 2005 with 1,927 qualified responses.

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5 simple ways to revolutionize customer loyalty

Translated, refine content based on the subscriber’s shopping activities, product interests, or even reading habits to keep h/she coming back for more. And a customer who perceives a marketer is attuned to their specific interests quickly becomes a loyal customer – a win-win scenario if ever there was one. On one hand the customer gets to enjoy value-based email communications they want to receive on products and services they are interested in; and on the other, the marketer gets to enjoy higher delivery rates, response metrics and a healthier ROI. Customer disloyalty stunts corporate performance by 25 to 50 percent a year. Additionally, the number one factor that drives customer disloyalty is irrelevant email communications – The Loyalty Effect. Example: West49 – a multi-banner specialty retailer of apparel, footwear and accessories related to skateboarding, snowboarding and surfing – is using a few simple segmentation and personalization tactics to deliver more targeted communications, build loyalty, drive customers to stores and increase company-wide revenue. West49 uses the information about a contact’s gender collected at registration to create two segments: one that contains only males and another that contains only females. The retailer has also used locationbased segmentation to push interest in new store openings; membership level segmentation to distinguish between different of membership and rewards. Due to the segmentation tasks implemented above, West49 was better able to personalize and tailor their dialogues with customers by: – Sending the group of guys the latest skater jeans, while the girls see styles like the latest skinny jeans Sending campaigns only to members located in a specific area Sending campaigns that ensure only members who pay a premium for an All-Access Pass receive special promotions that are not available to general members

Dynamic content drives a dynamic ROI

Strong ROI – worth doing Some ROI but not worth trouble No lift measured

Dynamic and segmented content

71%

15%

13%

Behavioral (looked at specific product info, etc.)

70%

15%

15%

User details (age of record, activity, etc.)

61%

24%

15%

Demographic data (age, gender, etc.)

50%

26%

24%

Name 50% 18% 32%

Lead source (where did the lead come from?)

49%

24%

27%

We send an email to users who abandoned their shopping carts Product profiling (age of product, etc.)

43%

29%

29%

37%

37%

27%

0%

20%

40%

60%

80%

100%

Source: MarketingSherpa, Email Marketing Benchmark Survey, October 2005 Methodology: The survey was fielded on Wednesday, October 7, 2005 to selected MarketingSherpa Lists. It was closed on Wednesday, October 12, 2005 with 1,927 qualified responses.

– –

4 – The tango Like different musical styles that evolve together, being able to access data you’ve collected via different channels (postal mail, email campaigns, Web site landing pages) and Customer Relationship Management (CRM) is crucial for marketers vying to stay a step ahead of the customer in today’s congested space. By integrating data, marketers can easily access valuable information to initiate, manage and promote highly relevant lead nurturing email campaigns to better anticipate the customer’s next move. For this reason, more and more top performing companies across all industry verticals are recognizing the high value

This simple tactic has resulted in a 15 percent increase in response rates and doubled store sales for loyalty program members! As the chart shows, an overwhelming percentage of marketers found dynamic content to be a strong ROI generator.

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5 simple ways to revolutionize customer loyalty

of integration to sync-up their marketing and sales nurturing efforts to communicate with customers in more personalized oneto-one ways. From seamless campaign targeting, to maintaining consistent data between multiple locations, to better productivity overall – increased integration between metrics and reporting analytics, empowers marketers with the keen ability to send the right message, to the right person at just the right time. For email marketers looking to take their company to the next level, the better the customer data, the more personal and targeted the benefits, the more trustworthy and valuable the messages, the more significant the ROI.

effectiveness of in-house personnel, consistency of brand, timely flow of messaging and increased credibility in the eyes of a customer. There’s no better way to conveniently remind your customers about their relationship with your products and ultimately create a deeper tie than by utilizing automation capabilities. On average, it often takes anywhere from 10 to 14 contacts with a prospect to earn a sale. On the flip side, industry data confirms that a Sales Representative gives up on a lead after only two phone calls.

Touches in three different channels (direct mail, telesales, email campaigns) on average result in 1.277 times (27.7 percent) as many responses to a marketer’s offer.

Congratulations...
You’ve been able to integrate crucial data between your present email marketing application and CRM system. However, leveraging that data to deliver relevant, valuable and ultra-timely dialogue to customers at key touch points in the relationship cycle, is critical to optimizing your email marketing returns. Automating the targeted content in your email campaigns can easily help you achieve this. When used properly, automation affords you the flexibility to schedule and send recurring campaigns with ease when the customer’s interest is at its peak; conveniently reminding your audience about their strong relationship with your products and services when it matters the most. Automation makes all this happen – quickly handling complex and time consuming email tasks like lead nurturing sales touch programs, list management, deliverability issues such as bounces, unsubscribes, double-opt-in mechanisms and timely loyalty nurturing messages. This lets marketers focus on marketing and sales teams focus on securing the close – not bogged down in the endless cycles of one-shot email campaigns discarded after a single send. This improves the efficiency and

Example: Yukon Brewing – an awardwinning Canadian brewery – is relying on integration to increase Canadian, American and international exposure for their product lines of beers. Using their marketing application in parallel to their on and offline initiatives, Yukon Brewery has been able to quickly and effortlessly build and maintain the customer relationships achieved at recent events and promotions. To grow their existing but small opt-in list, the Brewery added an email request to every ballot, coupon or form filled out in each of their many incentive-driven promotional events. This was done either in person, or through various advertising methods such as radio, print, and various event co-sponsorships. This integration has significantly improved Yukon’s data collection efforts and grown their existing opt-in contact list allowing for more targeted relevant email campaign, better brand recognition and overall exposure and market share throughout Canada and the U.S. As the graph that follows illustrates, an overwhelming number of experienced organizations are relying on automation to drive their businesses performance.

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5 simple ways to revolutionize customer loyalty

Tactics experienced organizations are increasing
0 -2 years 5+ years 80%

70%

60%

50%

40%

30%

Use your imagination... When implementing a test program don’t be afraid to test subject lines, landing page imagery, creative, offers, ‘from’ name, personalized with a name, HTML versus text… the skies the limit. Even simple A/B split testing (one element vs. another to see which works best) can be used as a great diagnostic tool to gain a better understanding of your target audience; giving the customer what you ‘know’ they need, not what you ‘think’ they want. And by squeezing that ‘uncertainty’ factor out of the mix, you’ll be able to pursue better, more sound strategies – increasing your ability to send the right person, the right message, at just the right time to up the loyalty ante ten-fold! Through deligent testing, online retailers including TJ Maxx, Yankee Candle and Banana Republic found that customized products can increase spending per customer by an average of 10 percent. In some cases the results were higher than 50 percent.

20%

10%
72% 47% 70% 55% 61% 51% 71% 42% 76% 68% 79% 66% 75% 50%

0%

Pu b em lish ai ou ln r ew ow Se sl n nd et te em r to ail ‘a ou l Se r o ert n w s’ re d p n nt r lis om ed t /3 o rd tio Ad pa ns ve rty to rti lis s Se ts em e in ai 3r ev nd ln d au en ew pa to tt m sl rty rig a et ge te te rs re d ( C d) ac re ca tio at e m n C ca pa or re m at ig pa e ns co ig -re la n-s nd p gi w st in ec ith ra g ifi pa c pa tion ge rtn re s er la or tion ga s ni hip za s tio ns

Source: MarketingSherpa, Email Marketing Benchmark Survey, Oct. 2005 Methodology: The survey was fielded on Wednesday, Oct. 7, 2005 to selected MarketingSherpa lists. It was closed on Wednesday, Oct. 12, 2005 with 1,927 qualified responses.

5 – After the honeymoon The popular catch phrase: knowledge is power, information is gold may sound like eNirvana to many marketers. But the reality for marketers remains that in order to organically evolve your customer relationships long after the honeymoon is over you better have a sound testing program in place. Why? Diligent testing gives you the ability to not only meet the customer’s expectations but to exceed them. How? Testing takes the ‘uncertainty factor’ out of the equation. In doing so, it allows you to pursue sound email strategies, establish customer connections and cultivate stronger buyer/seller relationships.

Example: IslandSurf.com – the world’s largest online retailer on sandals, surf apparel and accessories – successfully tests their data mining tactics to solidify customer relationships and generate new revenue. The company constantly tests their customized forms to gather just the right information. And this testing subsequently enables IslandSurf.com to deliver the right message, to the right person at just the right time. By sending their customers targeted, trusted and relevant promotions, the eRetailer has quickly built strong relationships with their customers. As a result, IslandSurf now has the ability to get the same results by sending only one-tenth of the email. The graph that follows illustrates just how important testing is as a success component to an email marketing program.

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5 simple ways to revolutionize customer loyalty

Marketers rate the significance of email testing
Tested w/significant results Tested without significant results

A/B testing offers HTML vs text Landing pages Subject lines A/B testing creative ‘From’ name Long copy vs short Personalized w/name 0%

79% 68% 68% 67% 65% 63% 57% 56%
20% 40% 60%

24% 32% 33% 32% 35% 39% 43% 44%
80% 100%

Source: MarketingSherpa, Email Marketing Benchmark Survey, October 2005 Methodology: The survey was fielded on Wednesday, October 7, 2005 to selected MarketingSherpa Lists. It was closed on Wednesday, October 12, 2005 with 1,927 qualified responses.

Conclusion
Infusing relevance into your email communications to develop profitable long-lasting relationships is no longer a strategic afterthought; it’s a fundamental necessity to your longevity in today’s highly competitive marketplace. Granted, cultivating customer loyalty won’t come overnight. But the sooner marketers recognize that loyal long-term customers not new customers are the best sponsor of ongoing profits, the sooner they’ll be able to integrate a sound acquisition strategy with a disciplined retention strategy to drive and sustain profits over time. Implementing the tactics detailed in this white paper are a great way to get started. Use them wisely and prosper.

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About Campaigner
Campaigner’s software-as-a-service products enable organizations to have highly personalized one-to-one email dialogues with their customers, measure how they respond, and analyze those responses to interact in a more intelligent, automated way – resulting in more profitable relationships. Campaigner is partnered with industry leaders including Salesforce, Comcast and Yahoo! Its customers include companies such as Nokia, AT&T, PricewaterhouseCoopers, Nielsen Media Research, West49 and over 10,000 small and medium-sized businesses. Campaigner resources Campaigner offers a variety of educational materials for the public. Find recent articles, tips, online product and educational webinars, customer case studies, and more. To learn more about smart email marketing, visit: www.campaigner.com How to reach the Campaigner team Campaigner 685 Cathcart Street, Suite 300 Montreal, Quebec, H3B 1M7 Phone: 1.877.723.6245 – 1.514.282.0595 Fax: 514.282.1908 General inquiries: info@campaigner.com 1.877.723.6245 Sales: sales@campaigner.com 1.877.723.6245

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