Guest Poster: Heral Patel, AnnexCore – Email Marketing Experts
Increasing LTR is a means of increasing customer lifetime value (CLV)—that holy grail of business metrics which is often overlooked by businesses. Also commonly referred as LCV (lifetime customer value) or LTV (user lifetime value), CLV is a great way to analyze your customer acquisition strategy and estimate marketing costs.
What is LTR anyway?
Long-term revenue is the projected revenue a customer generates during the entire future business relationship with them. One simplified way to think about it is to consider the average worth of a particular customer to your business over the long run. Of course, this is easier for businesses that have been around longer, but newer businesses can also make predictions by using certain other financial equations and other tools. The typical LTR equation looks something like this:
(Average Value of a Sale) (Number of Repeat Transactions) (Average Retention Time in Months or Years for a Typical Customer) = LTR
Keep in mind that there are multiple ways to calculate a CLV, but covering all of them would be an overload for this post. Likewise, there exist many resources and opinions for calculating LTR; ultimately, you will have to find the best fit for your company. Following are some email marketing basics, along with the methods for increasing LTR via email marketing.
How to set up email marketing:
Businesses everywhere are realizing the power of email marketing to achieve their goals. Email marketing holds a near endless variety of ways to sell products online, and email marketing has been leading the pack as a means of customer outreach. It’s a cost-effective method to improve relationships with current and potential customers.
Email marketing offers the benefit of sending relevant messages to the right person at the right time, and without the heavy cost that so many other methods often carry. Direct Marketing Association’s 2011-2012 edition Power of Direct Marketing impact study showed that its email marketing brings in in $40.56 for every $1 spent. That’s powerful.
Email marketing is a marketing technique that should be utilized to stay competitive, and it’s easy to do. There are many guides online that can show you how to start your first email marketing campaign. Using a platform such as MailChimp, you can set up a campaign within 30 minutes. Nexternal clients can also take advantage of Nexternal’s integration with MailChimp, described here.
1. Set up email reminders
Products purchased on a regular basis (such as coffee blends, motor oil, vitamins, toothbrushes, wine, etc.) offer a unique opportunity. If you use an eCommerce platform such as Nexternal, it’s easy to track which customers buy which products regularly purchased. For example, automotive eCommerce stores might go through their sales data and find that customers generally repurchase oil every 4-6 months. This offers a great opportunity to send a reminder email to a customer 4 months after their prior oil purchase.
When you have a product that is repeatedly purchased by any customer, it’s a great chance to utilize email marketing to get them to repurchase, specifically from your company. With Nexternal’s customer filter, you can segment according to purchasing trends and set up an autoresponder with a service like MailChimp. This will allow you to send a customer reminder a short time before you expect them to refill or reorder that specific item, if they are not already enrolled in a subscription program. This campaign will help your company maintain valuable mental real estate so that when the time comes, they’ll purchase from you again!
Contrary to popular belief, the majority of customers forget where they purchased a product from initially. This often leads to customers purchasing on a whim, maybe as they happen to pass a similar store or company and allow themselves to be ‘reminded’ at that time. Alternatively, by simply taking advantage of the extremely low cost of sending an email reminder, you can remind your customer that the time to restock is coming up. Good timing earns you a better chance of capturing their business.
2. Set up emails to follow-up & up-sell
Following up with customers regarding their recent purchase is a great way to build good will, and to potentially generate extra sales through up-selling. For example, automotive eCommerce sites could also send a thank you email to customers who recently purchased a performance part for their vehicle, and within that email include installation instructions along with promotions for tools used during the installation. Nexternal customers can put this information right into the auto-generated order confirmation emails, or they can set up a more targeted second email to send through MailChimp to obtain the best marketing metrics when doing so.
Another example would be when a dental product retailer sells an ultra-soft toothbrush, for instance, they could send a follow-up email 2-3 days later with some helpful dental tips and a promotion for a moisturizing oral spray, or single use toothbrushes for on-the-go. The key factor in follow-up and up-sell email marketing is sending something that is relevant, and at the right time.
3. Segment the email list
By segmenting, we mean targeting a portion of your mailing list that has similar characteristics. Utilizing segmentation, you can provide relevant messages and separate yourself from all the mass marketers out there who say everything to everybody, whether relevant or not. Unlike traditional marketing methods such as television advertisements, newspaper ads and radio, digital marketing offers you the chance to segment audiences and offer more targeted messages.
So, if you’re trying to increase the LTR from your customers, it is essential to know your best-performing segments. Of the legions of customers you have, there is always a set (or sets) of customers who are more loyal, purchase more regularly and spread the word more than other customers.
There are many ways to look at segmentation, but if you’re just starting off, use common attributes such as purchase frequency, value, marketing campaign, or demographics. After you figure out at least 3 customer segments, the best thing to do is to compare the revenue and profit generated from each.
Again, these are 3 simple and practical ideas that will increase the LTR from your customers.
It is with techniques like these that you wield the power to generate more sales from the customers you already have, thereby increasing the CLV for each. For further help on setting up your email marketing or maximizing your Nexternal MailChimp integration, check out AnnexCore’s Email Marketing Beginners Guide.
AnnexCore is a comprehensive internet marketing agency. We combine techniques like email marketing, search engine optimization (SEO) and search engine marketing (SEM) in order to increase traffic and profit for your website. Our team has helped companies of all sizes and all various business industries to develop effective email marketing strategies. We did this by strategically analyzing and developing an understanding of their customers, building lists and segmenting them accordingly, and creating strategies that increased their sales. Our comprehensive and integrated internet marketing strategies deliver results by increasing traffic, increasing conversions, sales, and overall return on investment (ROI). AnnexCore Email Marketing