As new technology is introduced, the way people market their businesses continually changes. Part of cultivating a thriving small business is learning which marketing channels to utilize and which customers to target.
While businesses often focus their efforts on trying to attract new customers, statistics show that it is more financially beneficial to focus marketing efforts on customer retention.
Statistics provided by Frederick Reichheld of Bain & Company show that businesses who increase customer retention rates by just five percent will usually see an increase in profits by 25 percent to 95 percent.
Loyal and established customers generally spend 67 percent more than new customers and therefore can more positively impact a company’s profit margins (2014 report from BIA/Kelsey and Manta). Even though all business engage in some form of marketing, the ways businesses choose to market and maintain their audiences drastically varies.
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In a world dominated by TV, print, and Onternet marketing, businesses often overlook one of the most successful and subsequently inexpensive marketing channels: Email Marketing. According to a survey conducted by Infusionsoft to a panel of more than 1,000 small businesses in the United States in 2016, only 20 percent of them were using any email marketing service provider, and 45 percent did not even maintain a customer email list.
The businesses that do send emails as part of the retention strategy, thus, have an advantage. Combining email marketing with customer retention campaigns can be a great and cost-effective solution to growing a business.
Why Businesses Should Choose Email Marketing
With the proliferation of smartphones in the USA, the consultancy firm Pew Research Center reports that an estimated 64 percent of American adults own a smartphone; therefore, email is accessible virtually anywhere. Email also ranks as the third most used feature on a mobile device, solidifying its relevance in people’s everyday lives.
Unlike most marketing campaigns, email marketing has virtually no overhead costs and therefore can produce greater results while minimizing the financial burden. The success of email marketing campaigns has given rise to companies that help create and execute email campaigns at a low cost. For example, MailChimp, an email marketing service, provides a plan called Forever Free that lets businesses send up to 12,000 emails a month to 2,000 different subscribers.
Additional features and services can also be added for as little as $10/month. These companies often provide email templates and compile data about a business’s email campaigns, which is advantageous to determine what types of email campaigns are performing well. However, it is not required to use a service and some business owners prefer to execute email marketing campaigns and track their success without the help of a third party contributor. Whether using an email service or creating a campaign completely in-house the costs of running an email campaign are extremely low.
Unlike direct mail campaigns, which must account for the cost of promotional material and postage, a standard postcard costing $0.34, email campaigns can avoid much of these cost by providing content exclusively online. On average every $1 spent on a marketing campaign generates $44.25 return on investment according to statistics published by EmailExpert in 2014.
Email marketing campaigns are a good solution for companies trying to minimize their churn rate, the percentage of customers who end their relationship with a company in a given period of time. While marketing is a tool for attracting new customers, businesses should also focus their efforts on maintaining relationships with loyal customers.
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How to Create an Email Marketing Campaign
Conducting a successful email marketing campaign is contingent on several factors. These factors include personalizing emails, targeting specific demographics, and emailing frequency. While advertisers may be hesitant to include personal information about their consumers in marketing emails, researchers have found that emails which contain a degree of personal information, such as the consumer’s name in the subject bar, can lead to a higher click-through rate.
According to a study done by graduate students at Stanford University, recipients were 20 percent more likely to open emails in which their name appeared in the subject line. Personalized emails also contributed to a 31 percent increase in sales leads and a 17 percent reduction in customers unsubscribing from the email list. Personal information can often serve to grab the customer’s attention and lead him to engage with the email and by extension your business. An email’s subject line is the first step to engaging with customers. If the subject line is poorly crafted or generic then the email will likely be overlooked and remain unopened.
An unopened email is a missed opportunity for a business to engage with its current and potential customers. In addition to grabbing the customer’s attention, the subject line should accurately depict the actual contents of the email. If the subject line and the email’s content do not match the customer will likely click off or delete the email before reading its contents. In addition, email campaigns should be focused and take into account customers’ varying demographics and interests.
A campaign that is designed to target a certain subset of a business’s customer base may not be applicable to everyone on the mailing list. Therefore, design different email campaigns that target different sections of the customer base. Lyris Annual Email Optimizer Report states that 31 percent of email marketers do not consistently segment their email list or target their email marketing efforts. Emailing segmentation has shown to increase email open rates by 39 percent while also lowering unsubscribe rates by 28 percent. A campaign will not be successful if it does not reach the right audience.
When to Send Marketing Emails
Finally, use email campaigns to reach out and engage with your customers whether that is sending out reminders, notifying them of deals, asking them to review your business on Yelp, or sending them an email on their birthday. Each customer is unique; therefore, businesses should utilize tailored email marketing campaigns to connect with different individuals and segments who use their services and buy their products, thus demonstrating the value they place on each customer.
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Email is a way for businesses to stay connected with and maintain a loyal customer base. As more businesses take advantage of email campaigns, set your campaign apart by creating relevant, original, and attention grabbing content that is sure to appeal to your customers. Email is the last free, effective and underutilized marketing channel. The question isn'y just why use it, but rather why has any business not used it yet.