Retention Email Marketing: How & Why It Works

Most business owners have heard that it takes around 5-7 times more spending to gain a new customer than it does to retain an old one, which means that increasing your customer retention by a small margin can lead to much higher profits with a more predictable revenue stream. One of the best ways to engage your customers more with your product and build stronger relationships with them is to have a solid retention email marketing campaign in place.

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The importance of customer segmentation

Before retention emails, it was enough for marketers to send generic emails in mass volumes, but today's landscape is filled with so much competition that this is no longer adequate. With so many companies trying to steal clients from you, a single bad experience can lose you a customer permanently.

There is no one-size-fits-all approach to this; you have to get to know your customers, understand what they like and want, and learn how they behave so that you can personalize their experience and provide real value.

How to segment your customers

The more data points you have, the better. Some good things to keep track of in e-commerce include:

• Purchase history (both the item choice and the purchase value)
• Cart abandonment rate
• Time spent on site
• When and where they drop off
• Lifetime value

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What to include in retention emails

You should have a combination of promotional and informative content so that you are trying to provide value and answer questions alongside selling products.

In e-commerce, discounts and exclusive offers work extremely well so long as you understand the segmentations. Consider these strategies for better retention:

• Discounts Find customers who have purchased a few products from you already, and then offer them a 10%-15% discount on similar products.
• Upselling Have a customer that just purchased a set of golf clubs from you? Send them an email with some complementary products, such as golf balls, tees, or even shirts.
• Cross-selling If you notice a customer abandoned their cart, send them an email informing them of similar products to what was in their cart. Maybe even attach a discount.

Any of these strategies can help build brand loyalty and keep your customers coming back for more.

How to time your retention emails

For example, let's say you are a fashion e-commerce brand. You won't want to promote summer swimwear to your customers in the middle of winter when they aren't interested, but sending your emails in the middle of summer might already be too late and you might have lost sales to other brands that timed it better than you. Instead, you should anticipate your customers' needs—in this case, swimwear for the approaching summer—and target them the moment they start thinking about summer, such as early spring.

Once you've got a few hits, you can start pushing a little harder with other summer clothing items, such as sundresses or hats.

Seasonal offers

Don't forget about seasonal offers aside from summer! For example, tech brands should start promoting their Black Friday deals a month or two in advance to start building the hype and urging customers to save up for your premium deals.

Year-round products

Certain industries aren't necessarily bound by these seasonal rules, but there are still many factors that can determine the optimal timing for retention emails!

For example, if you are a premium coffee brand, you can use customer data to identify the average time it takes for your customers to finish their supply and repurchase from you, then target them with emails as you get closer to the time, reminding them to refresh their supply instead of finishing it unaware and settling for the store-bought generics.

The best part is that there are many services that can automate this process with the data you provide so that you never have to worry about missing an opportunity.

The future of retention email marketing

Many of the processes handled by people will eventually become automated and managed by AI. Especially with the state of the global economy and record-high interest rates, more and more businesses are realizing the benefit of retaining existing customers instead of spending extra money for the chance to obtain new ones.

How AI will benefit merchants

In time, automation will be able to streamline the entire process from customer segmentation to retention email marketing, making it far more efficient. It'll be able to refine the data you provide in order to create much more specific segments, which will lead to better personalization and the ability to provide your customers exactly what they want at the price they're willing to pay, enhancing your customer retention.

Is retention email marketing worth it for smaller businesses?

While it's important for businesses to spend some of their resources on acquiring new customers, this isn't always the best approach among smaller companies without a large pool of disposable funds. However, they should never neglect putting in the effort to retain their existing customers.

Email marketing is more cost-effective and makes the process of convincing repeat customers to make additional purchases far easier than acquiring new ones. Additionally, promoting your business as a brand that advocates for community and relationships with their customers makes it far more likely that they'll advocate for you and convince their friends, family, and followers to check you out.