Everyone has heard that it is cheaper to keep existing customers than to get new ones. Anyone who has run a business knows it’s easier said than accomplished. What exactly keeps customers coming back? What can we do to make them not return?
This blog post will cover:
- Why customer lifetime value is important
- Best practices for retaining your customers using email marketing
- Templates, copy, and creativity that keep your customers coming back for more
Let’s get started…
What is the Customer’s Lifetime Value?
It’s crucial to understand what the Customer Lifetime Value (CLV) is before we move on. You’ve probably heard the term or acronym, but you may not know what it means, why it is important, or how to calculate.
According to Shopify, the lifetime value of your customer or the customer lifetime value (CLV) represents the amount of money that a client is expected to spend on your business or your products during their lifetime.
The following equation can be used to calculate the lifetime value of a customer:
CLV = Average Order Value x Number of Purchases per Customer Per Year x Average Annual Sales Length of Customer Relationship (in Years)
The CLV is a key metric for business owners to monitor because it allows them to determine how much they should spend on acquiring new clients and retaining current ones. As we mentioned above, it is much more cost-effective for businesses to keep their current customers rather than develop new ones. This is why emphasizing customer loyalty is crucial to growing your business.
Email Sequences to Improve CLV
Email marketing is a cost-effective way to keep your customers coming back and happy. Email marketing is essential to a successful retention strategy. We at Power Digital are huge supporters of email marketing automation as a way to achieve customer retention goals. You will see improvements in CLV metrics as soon as you implement the five email sequences listed below.
Replenishment Sequence
The key to increasing repeat purchases is product replenishment campaigns. The campaigns are tailored to the user’s last purchase and how long they take to finish that product. This sequence is best suited for brands in the CPG, Food, Skincare & Makeup, CBD, and Food space. Send timely reminders to subscribers who have run out of products.
Email Cadence Recommendation:
Email 1: Seven days before the product is due to run out
- Goal: Remind the users that the product is almost empty and make them think about it.
- Include the following content: Influencer images of the product being used, blogs about how to use a specific product, etc.
Email 2: Three days before the product is due to run out
- The main goal is to remind users that their product will run out in a few days. As time is running out, create a sense that something must be done.
- Include the following content: Dynamic timer to increase urgency
Email 3: Date that the product is due to run out
- The main goal is to Remove barriers to the purchase of a replacement product by offering a discount for BUY NOW now that an end-user has run out.
- Include the following content: A discount to ensure a purchase
After-Purchase Sequence
This series will allow you to thank your customers for their purchases, get feedback on your products, and send them valuable information that can help them make the most of their purchases.
This series begins with a “thank-you” email. Send this email immediately after the purchase to give your customer peace of mind. It is best to include an overview of the order (either as a product picture or a line item) so that customers can review their order.
Then, give them information about how to use your product best to make the most of their experience. You can give them step-by-step directions, point them to your FAQs, or provide a link to a supporting blog post. You can also give them a way to contact you if they have additional questions.
Send them an email after they have used your product and ask for a review. It is important to use testimonials and social proof to convert new customers. However, it can be not easy to get your customers to write a review. Give your customers an incentive to leave feedback. Even small incentives like free shipping and a 5% discount can make a big difference.
Win Back Sequence
Win-back campaigns are designed to re-engage lapsed clients. You will know what timeframe works best for you and your audience. If your product is not seasonal, then it’s likely that you want to reach customers who haven’t engaged with your brand in the past 4 to 6 months.
Use a catchy subject line to entice customers back. First impressions are important – you want your customers to open the email! Showcase what’s new (products or blogs), highlight updates to your company (think of recent press releases or new branding), offer a discount, and showcase the new features on your website. Create a sense of urgency by creatively combining your discounts. Limited-time offers seem to be the best option for these campaigns.
Upsell / Cross-Sell Sequence
This sequence makes sense if you sell multiple products, especially multiple complementary ones. The cross-sell/upsell sequence aims to encourage existing customers to purchase other products and services or to upgrade to a more expensive product or service.
Two keys are needed to create a successful upsell/cross-sell sequence.
- Cross-selling the best product to the customer based on their most recent purchase using affinity data or dynamic personalization.
- Cross-selling is best done when the customer is most satisfied with their purchase.
Let’s take a look at that. You must strategically cross-sell to your customers. Cross-selling is easier if you only sell two products.
What is our advice? Take a look at the data on the backend of the e-commerce site and geek out a bit. Cross-selling is when you find that customers who purchase Product X also tend to buy Product Y. You may see that customers who purchase Product X will continue to buy it (but in different colors or materials). This affinity behavior varies from business to business, but once you dig into the data, it will become very apparent.
Final point: When it comes to #2, make sure you send your cross-sell messages at the time your customer is most satisfied with your product or service. This varies from business to business, but you should have an idea. It may be after they have tried on the product and ordered more. Food businesses may see a spike in sales after customers have incorporated the product into their diet.
