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Last week I shared five email remarketing strategies that will help you increase your average revenue per user.

This week I’m going to share seven examples of email remarketing campaigns that will help you increase your average customer lifespan and decrease your churn rate.

Remember: LTV is an important metric because it guides what you can spend on acquiring customers. All things equal, a higher LTV justifies higher acquisition spend, which in turn gives you an advantage over your competition.

It is also an extremely important metric for analyzing how profitable your business can be and how well you are improving your user retention over time.

Why should you aim to increase your average customer lifespan and decrease your churn rate?

Imagine you signed up 100 customers today that each paid $200 per year. Imagine that the average lifespan of your customers was 1 year. Assuming they all paid up front, today, you’d make $20,000 this year.

Customer lifespan is important because If you double your customer lifespan you double your revenues. Imagine you got the same 100 customers to stick around for a second year: all else being equal you’d make $40,000 from the same group.

When considering lifespan we also need to consider churn. In the above example we’re assuming the churn rate is 0% – i.e. all 100 customers stay for both years.

Instead, imagine if your churn rate increased to and 10% of your customers left after the first year. You’d only make $38,000 over the two years. Likewise, if your churn rate was 20% you’d only make $36,000.

Although oversimplified, this example shows that keeping your churn rate as low as possible will have a dramatic impact on your revenue!

Part 2/3: Increasing the lifespan of your customers and decreasing your churn rate

The great news is that many of the email remarketing strategies used to increase customer lifetime may also decrease your churn rate. The examples in this post will help you:

  1. Ensure customers come back, and
  2. Keep your customers for as long as possible.

Here we go!

1. Remind your customers of product(s) or features you KNOW they want

I think we can all agree that talking to people about things they are actually interested in beats generic messaging every time.

By knowing what customers want you can setup automated campaigns that target opportunities for a repeat sale and drive your average customer lifespan higher. Two examples that I’ve seen work well are:

1. Wish list sales. Send emails to customers when items on their wish list are on sale or are about to go out of stock. If you wanted to be super aggressive you could put the item on ‘sale’ when an individual customer meets a certain set of criteria to entice them to return. Here’s a killer example from ModCloth:

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2. Out of stock notifications. When a product is out of stock ensure you collect customers’ email addresses so you can alert them when the product returns. Ensure you actually follow up (most stores don’t) otherwise you’re just letting opportunities go to waste.

Why these campaigns work:

  1. You are targeting customers with products they’ve already acknowledged they want. They have given you just about the most explicit indication they can that they are keen to buy from you. Capitalize on this.
  2. There is a sense of urgency that is built into both campaigns. Urgency is a huge motivator. Love Groupon or hate Groupon the pressure created by ‘daily deals’ was a key factor in their meteoric growth and evidence that urgency works.

For YOU to do: Review places where you can observe or collect explicit indicators of intent. Track these behaviours and use them to drive repeat sales and increase the lifespan of your customers.

2. Remind customers why YOU are awesome

You should send weekly / monthly summary emails that remind customers of the benefits you are delivering them. If you can put a dollar value on the money you’ve helped them make or a tangible value on the time you’ve saved them your customers will lap this up.

Here’s an example of this strategy in action from Brennan at Planscope. He sends a simply weekly digest to his customers each week that looks like this:

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Reminding customers of the value of your product is a great way to keep them around longer. If someone is paying you $X per month to help them generate $XXX dollars per month you should point it out – they’d be crazy to leave you, after all!

For YOU to do: Send a reminder weekly or monthly to each of your users that says “Hey valued customer, by working with [insert your company here] this month you’ve made an extra $X”.

3. Anywhere you can sell a product repeatedly: encourage the customer to buy again

A lot of products can be bought more than once. Take collared work shirts, beauty goods or razors, for example.

Subscription e-commerce businesses have shown the potential of the repeat purchase.

Just because you’re not a subscription e-commerce business doesn’t mean you have to miss out. Tracking purchase patterns and using this information to create repeat sales is extremely powerful. As a store owner you have a lot of knowledge on what your customers are buying and when they’re buying it. Use this to your advantage.

Going back to men’s collared office shirts: if your data shows that a percentage of shoppers that return to buy a couple of shirts from your store every 6-12 months then you can bet there are a large segment of customers who don’t return simply because they forget, walk past another store in the street or come across another online store first. Setup an email 6-12 months after a customer purchases a men’s work shirt that lets them know it’s time to update their wardrobe and that your new range of shirts will keep them looking sharp. This will encourage a larger percentage of repeat purchases right out of the box.

These sorts of campaigns work because:

  1. They remind the customer about your store. For many it’s easy to forget where you previously purchases a product and even easier to forget to check back for product updates. By reminding customers of the value you’ve previously provided, you can encourage them to become customers over the long term.
  2. They’re not necessarily intrusive. I love when email marketing is actually helpful as well as an effective sales driver. For examples, being told I need to order new shirts isn’t actually a bad thing!

For YOU to do: Look for patterns or metrics you can drive home with your customers. If some people are coming back to buy product X again then implement an email that pre-empts this and email it to everyone who buys product X.

4. Educate your customers to keep them in the game

Marketing by sharing is always a winner. To date I’ve talked about drip email campaigns to help you convert prospective leads into new users or new users into active users.

Something that a lot of companies overlook is continuing to educate customers even after they have bought from you.

You should continue to provide relevant feature updates, tips and suggestions well after a customer begins paying. Don’t let the customer forget about you. Drive them to use new features and become more invested in your product. Provide meaningful content and you will reduce the likelihood that customers go inactive and abandon what you’re selling.

The same goes for customers who don’t immediately convert at the end of their 30 day free trial. SaaS companies will generally convert as many customers 3-4 months after they first sign up as they will at the end of the initial trial. If you go cold and simply ignore potential customers because they don’t convert immediately then you’re missing out on sales. The following example is from SERPs.com. They regularly email customers who abandon the sales funnel with educational updates every few weeks. By being genuinely useful they keep their product in their potential customers’ minds.

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For YOU to do: Setup a series of emails that go out to customers every few weeks after they begin paying for your product(s) (or abandon their free trial). Make these emails educational and write content that drives customers to get the most from your product. In turn they’ll stick around longer.

5. Extend the payment period

 

Converting customers who pay monthly into customers who pay annually is a great way to decrease churn, increase the lifespan of a customer and give yourself a cash flow boost.

The best example I’ve seen of this comes from the guys at WP Engine. Rand Fishkin, the founder of SEOMoz, wrote a blog post about an email he received from WP Engine asking him to upgrade to an annual plan.

Here’s the email they send:

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Rand upgraded and was blown away by the simplicity and effectiveness of the one click call to action.

To sweeten the deal, and make it a no brainer, WPEngine offer 2 months free (a 16% discount). If you sell a B2B product this tactic is golden because many businesses will absolutely lock in their expenses for the year, particularly if they are already a paying customer and you are giving them a discount as an incentive for doing so.

To do: Automatically email customers who have been paying for 8 months a discount if they upgrade to annual billing for the next year. This works equally well if you charge on other cycles as well, just offer them a discount on the longer period if the upgrade today. If you can make the call to action one click or, at the very least, take them straight to the account page where they only have to click once to upgrade.

6. Send them recommendations based on their actual behaviour

You should definitely be emailing customers product updates on a regular basis. Sending occasional updates to a customer based on their past browsing, usage or purchasing habits is a no-brainer and a great way to encourage repeat sales and increase customer lifespan. The trick is to ensure your emails feature product updates that are actually relevant to each individual customer.

Amazon are fantastic at this (they do have a bigger budget than most ;) and here’s an example directly from Amazon.com:

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You’ll notice that they reference my past interest in point-and-shoot cameras and use this to recommend new products specifically for me. These emails work best when:

  1. You aren’t just sending customers one-size-fits-all product updates. The more you know about the customer your customers, the better. Just because I bought some shoes for my girlfriend once doesn’t mean I need 22 updates on women’s shoes each year. You can collect information in all sorts of ways: browsing patterns, questions at checkout (“Is this a gift?” ) and demographic data from their account being just a few.
  2. You keep the emails short and optimize the frequency for your product(s). Under-doing it is more common than over-doing it but test the frequency until you are comfortable with your unsubscribe and return sales numbers. There will be an equilibrium.

To do: Gather as much information as you can about your customers and use this to segment or automate your product update emails. Trigger campaigns once every few days, every week or every two weeks after a customer purchases, depending how aggressive you want to be. Always aim to have clear calls to action that drive return sales.

7. Ensure your customers feel loved

Once in a while, why not just email your customers something nice – something that delivers the ‘wow’ factor.

Believe it or not, you can actually be reasonably scientific about this.

When discussing customer LTV you quickly realize that not all customer are made equal. By this I mean that there will be some segments of customers who are absolute gold: these are the people who will activate straight away, who will stick around for years and who will tell their friends about you. They’re the sort of people who stick around even when things go bad and even defend you.

Send these customers an email saying ‘We just wanted to say thanks‘ once in a while. You don’t even have to give them anything! Just a message that recognizes they’ve been with you a long time and that you realise they are special to your business. People are people at the end of the day and we all like to feel special.

Here’s an example campaign that Axciom put together for AT&T that uses customers’ first names to make them feel individual and to drive behaviour in a positive way. I think it’s a great example of an email that is effective, fun and delivers a little of the wow factor. THIS is the sort of campaign that makes customers feel like they are valuable to your business.

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Another approach is to target customers to whom you can offer an unexpected discount, upgrade or tip that will deliver a tangible benefit. Here’s a common email I’ve seen from telecom companies:

We have just released a new price plan that, based on your usage history, will save you money…

This won’t work in every industry but if you can proactively share something with the customer that delivers a real benefit immediately then you will win a lot of social capital and loyalty. This is important because with loyalty comes increased customer lifespan and lower churn rates!

To do: Determine who your own ‘golden customers’ are and setup an automated email that simply thanks them after a few months of using your product(s). If you can do one better and let them know of a feature or product add-on that gives them a direct saving, let them know and they’ll thank you with even more gusto.

Conclusion

When combined with the emails in part one, these seven practical tips should get you off the ground and provide some measurable increases in your average revenue per customer and your average customer lifespan.

Stay tuned for next week when I share some practical tips on how to segment users in ways that will compound the effectiveness of the emails we’ve discussed in parts one and two. I’ll also give you some usable tips on getting up and running with these campaigns!

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Until next week, happy emailing!

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