According to a 2007 report by Internet Retailer, 49.6% of online merchants maintain that email marketing performs better than other forms of marketing, including paid search, search engine optimization, direct mail, and affiliate marketing. Don’t be too quick to abandon all your online marketing efforts in favor of email, however. Email is capable of high returns - no doubt - but superior email marketing performance usually happens when email is sent after initial customer acquisition to build a steady stream of repeat business.
Repeat customers are a lot more profitable than first time buyers (6-7 times more profitable, according to the Harvard Business Review) because they have already learned enough about your business to feel comfortable parting with their money, so you need fewer marketing impressions to elicit action. Repeat customers are also easier to target with specific messages focused on their interests and behaviors related to the buying cycle. Targeted messaging increases conversion rates because consumers are more likely to respond to personalized marketing messages.
Here are some other ways that email marketing can increase ROI by driving repeat business:
- More profitable repeat purchases. The average repeat customer spends 67% more than customer who don’t repeat. (Bain and Co.)
- Decrease in operating costs. For example, customers who are familiar with your business might not have to call tech support as often.
- Increase in referrals. Referrals don’t need as many marketing impressions to elicit action, and email is easy to forward. (Ever catch someone copying a newspaper ad to send to a friend?) After 10 purchases, the average repeat customer has referred up to 7 people (Bain and Co.)
- Price premiums. Loyal customers aren’t as willing to switch to the competition solely due to small differences in price.
When you embark on an email campaign, keep your repeat customers in mind, and on a separate list, so you can target your email marketing messages and reap the high returns offered through repeat business.
John Arnold is the Regional Development Director for Constant Contact and author of the book Email Marketing for Dummies.
