As anyone with experience in business knows, it’s much easier (and cheaper) to earn money from current clients than to acquire new ones. This means that in both the physical world and online, we need to not only compete for every new opportunity but also work hard to make sure that once we gain customers, they return and keep spending.
It probably won’t surprise you to learn that in this digital age, where customers can compare prices and availability of any products in just a couple of clicks, customer loyalty is at best, rather fickle.
While many real world businesses will pride themselves on their exceptional customer service and unrivalled product knowledge, your customers’ long-term memory might not be so good. Particularly if they are being courted with lower costs and perhaps a more convenient shopping experience online.
One area where online retailers are way ahead of their real world counterparts is in their use of retention marketing (often powered by email marketing).
When a customer makes a purchase online, they share their name, address, payment details, and email address. This lets the online store send a receipt and update them on delivery. It also enables the retailer to stay in touch with the customer through email marketing offers, encouraging repeat purchases and increasing something known as Customer Lifetime Value (CLV).
High acquisition costs and wafer-thin margins might mean an online retailer does not see a profit from the first couple of sales to an individual client. This is especially true when new customers are won through expensive acquisition marketing techniques like paid search. Make no mistake, CLV is very important online and it should also be very important in your real world business.
Email Marketing As a real world business you might think that an online technology like email marketing can only be used successfully by online brands. You’d be wrong. I have a long history in email marketing and one of the reasons I was initially attracted to the industry was the fact that I don’t believe there is a single business that could not benefit from email marketing.
I have personally overseen successful email marketing campaigns for products as diverse as high-spec computer software and frozen chicken nuggets and everything in-between.
Email marketing remains the most cost effective marketing tool available to entrepreneurs. Email marketing might not be as new and sexy as social media, but it certainly packs a much bigger punch. According to the Direct Marketing Association’s Statistical Fact Book in 2013, email marketing campaigns delivered a staggering 4,300% return on investment (or $42.08 for every dollar spent). Compare this to any other form of marketing available to your business and try not to get too depressed that you didn’t start email marketing earlier.
This abridged text is taken from the book Bricks & Mortar Oughta: What Real World Businesses Can Learn from the Internet available now in paperback, ebook and audiobook editions from Amazon, iTunes, Audible and all good bookshops.
Photo credit: Tom Magliery