Best Use of Email for Ecommerce: Acquisition or Retention?
In this post, we’ll explore the purpose of the email for ecommerce within your marketing mix, namely – is email most effective for new customer acquisition or for remarketing to existing customers.
We’ll start by tackling the acquisition front.
When most people think about email marketing and customer acquisition, they immediately think, “you mean, buying or renting email lists?”
It’s easy to see why people think this, after all, the direct response marketing industry prior to the web relied heavily on direct mail – which necessitates purchasing of segmented lists of prospects.
While this may be a viable strategy for very specific industries (if the email spam laws in your country allow list purchases) that have a high order value per new customer, we find this strategy to be terrible for ecommerce merchants in general.
Instead, customer acquisition using email tend to follow this structure:
- Store website
- Sweepstakes/Giveaway sites
- Free eBook
- Video Course
- Buyer’s Guide
- Free Shipping Coupon
There’s certainly opportunity to grow your email list through active acquisition efforts, and get new customers. If done correctly, you can see a positive ROI for your efforts.
That being said, in our experience, the most powerful function of email marketing for ecommerce shops is as a customer retention channel. We’ll talk about the various functions email serves in retention below.
You are probably already familiar with the fact that the cost of acquiring a new customer is multiple times higher than the cost of retaining an existing customer (4-6x is a commonly cited statistic).
Luckily, as an ecommerce merchant, you can effectively use email marketing as a fabulous channel for retaining your existing customers and extending their lifetime value by remarketing to them.
Here are multiple ways email marketing can be used for retention purposes:
[su_tabs style=”default” active=”1″ vertical=”yes” class=””][su_tab title=”Communicating new promotions”]This is the form of ecommerce email marketing most people are familiar with. The email “newsletters” sent involve various discounts, offers, and promotions surrounding a store’s products, categories, or entire website.[/su_tab] [su_tab title=”Alerting customers of new products added to your site”]New product alerts is another good way to use email communication to continue to drive value for your existing customers.[/su_tab] [su_tab title=”Welcoming new customers”]
A post-purchase welcome series is a sequence of emails that onboards your new customers to your email list. This is a series we recommend all ecommerce stores have because of it’s role in serving multiple purposes:
- It reaffirms your customer’s new purchase
- It could potentially garner a quick repurchase. Many of the stores we’ve analyzed in the past have a high distribution of repurchases during the first few days post-purchase.
- It sets your subscriber’s expectations
- It gives your new customers multiple avenues to engage with your brand, helping indirectly to boost your visibility via social media for example.
[su_tab title=”Asking for reviews and feedback from customers”]Product reviews on your website help sell your products. Using email, you can significantly increase the number of reviews you get by requesting them from your customers post-purchase.[/su_tab]
[su_tab title=”Up-selling/Cross-selling related products”]Depending on your product mix, you can identify particular products that are good candidates for cross/up-sales. You can then trigger automated emails a certain number of days after purchase to suggest specific product recommendations to your customers based on their latest order.[/su_tab]
[su_tab title=”Reminding customers to re-order consumable items”]Any consumable products will benefit from a product re-order trigger that is timed to hit your customers at the estimated time to re-order.[/su_tab]
[su_tab title=”Reminding customers of abandoned carts”]A cart abandonment email is a staple of any ecommerce email marketing program. These tend to convert well since it’s based on a strong buying behavior of placing items into a shopping cart.[/su_tab]
[su_tab title=”Targeting customers based on their browsing behavior on your website”]Several email service providers give you the capability to target emails to subscribers based on certain URL visits on your website. If an existing email subscriber clicks on one of your previous messages, his/her page views will be tracked, and you can then hit them with specific emails based on pages viewed. Common ways to utilize this data is by targeting categories, sub-categories, or even top-selling product pages visited.[/su_tab]
[su_tab title=”Driving brand engagement with your social media properties”]If you want to build up your brand’s presence on other platforms such as social media, you can utilize email to drive engagement with these channels.[/su_tab]
[su_tab title=”Making special offers to your elite VIP customers”]Segmenting out and giving special attention to your VIP customers will help you increase revenues from these “whales”. Additionally, since your top customers tend to also be your most likely brand advocates, you can recruit them in helping you get the word out about your store.[/su_tab]
Given the multiple ways of utilizing email marketing for retention purposes, we see the email channel for ecommerce as mostly a retention marketing channel. Anywhere from 10%-30% of total revenues can come from the email channel depending on your brand, email initiatives, and repurchase rates.