Keep Your Customers With E-Mail Marketing

Why E-Mail Marketing Should Be a Big Part of Customer Retention Efforts

It’s a recognized fact that obtaining a new customer costs five times more than retaining an existing one. However, just because a customer makes a single purchase, a continued relationship is not a sure thing. The value of customer loyalty and repeat business is too compelling to ignore — especially in the soft insurance market.

Statistics show that it takes six to seven contacts before a prospect is turned into a customer. All that contact can be expensive and time-consuming. That’s where e-mail marketing becomes critical.

E-mail marketing can solidify existing relationships, initiate new ones, and convert one-time visitors, buyers and members into repeat business and long-term customers or contributors.

According to recently conducted sales and marketing research, there are five reasons businesses lose customers:

1. Customer moves (4 percent);
2. Customer is introduced or referred to another company (5 percent);
3. Competition wins customer by use of promotions, marketing etc. (9 percent);
4. Customer is dissatisfied with product or service (15 percent);
5. No customer contact and relationship strategy (67 percent);

E-mail marketing needs to be an integral part of a customer retention strategy, especially for agencies with low levels of customer contact. E-mail newsletters provide an opportunity to keep customers informed about company activity, markets served, companies represented, as well as new products. Click-throughs from an e-mail newsletter can drive the reader to a Web site, an online quotation form, news sources, the Insurance Information Institute, and much more.

The benefits derived from most types of marketing and advertising are difficult to measure. E-mail marketing, however, allows a person to measure the number of messages sent, e-mails opened, click-through rates and destinations. Data also can also indicate who opened an e-mail, which links in the e-mail motivated the most clicks and, more specifically, who clicked on each link.

All of that useful information can help send highly targeted campaigns to the individuals most likely to respond to an offer, thus improving future results — a marketer can simply contact only those individuals who demonstrated the most interest in the services. That means an e-mail is not just a marketing tactic, it’s also an effective sales tool.

With technology, it’s relatively easy to send professional looking e-mail messages to a large list of recipients.

“For minimal cost, our offices can now communicate with all of our customers and prospects, professionally and consistently,” said Salvador Ayala, CEO of Uniko Holdings Inc. based in Corona, Calif. “When you consider the cost of first class postage, e-mail marketing represents amazing savings … and you also have access to the results.”

E-mail marketing is a powerful marketing tool; it is easy, affordable, direct, actionable and highly effective. When e-mail is added to a marketing mix, less time, money and resources need to be spent than with traditional marketing vehicles (e.g. direct mail or print advertising) And, e-mail marketing allows a person to communicate quickly; time-sensitive information is disseminated in minutes, not days or weeks. Results of the marketing efforts can be seen instantly.

E-mail marketing is at its most effective when used in communications to an existing customer list as a means of customer retention. Consider research from Bain and Co., which shows a 5 percent increase in retention yields profit increases of 25 percent to 100 percent. Not only does that positively impact the bottom line, the same study indicated that repeat customers spend, on average, 67 percent more than new customers.

According to Steve Brooks of Steve Brooks Insurance Services in Westlake Village, Calif., “Our investment in e-mail marketing represents only a fraction of the costs of our other marketing efforts. It brings in a phenomenal ROI (return on investment).”

Further ROI validation comes from the Direct Marketing Association’s most recent e-mail marketing study, which projects that e-mail marketing will generate an ROI of $45.65 to every dollar spent in 2008. In examining the ROI of other direct marketing channels, the DMA proved that e-mail outperforms them all.

E-mail marketing can stretch a tight marketing budget. Used in bulk, it can cost fractions of a penny per e-mail, with response rates the same or even greater than direct mail that costs up to 20 times as much.

E-mail marketing is the most effective way to increase sales, drive traffic and develop loyalty. Unlike direct mail, there is virtually no production, materials or postage expense. So, with e-mail, a marketer can easily and affordably create more communications that are valued by customers, and communications can support and enhance a brand in a way that differentiates an agency from the competition.

In short, e-mail is an easy and inexpensive way of establishing early and long lasting relationships with prospects and customers. The benefits of these relationships are far reaching. When an agency informs and educates prospects and customers, they begin to perceive the agency as capable of addressing their needs and may look to the agent as an expert. That develops trust and opens the door to two-way communication.

Using the information gained from prospects and customers, the agent will be able to better serve the customer’s ongoing needs, hone the unique selling proposition and slowly close the door on competitors.

According to research by e-marketer, good e-mail marketing wins over consumers:

• Well-executed permission e-mail marketing campaigns can have a positive impact on consumers’ attitudes towards companies.
• Sixty-seven percent of U.S. consumers said they liked companies that did a good job with permission e-mail marketing.
• Fifty-eight percent of consumers said they opened those companies’ e-mails, while 53 percent said that such e-mails affected their personal buying decisions.

Spam admittedly has reduced some of the effectiveness of e-mail marketing. As corporations and Internet service providers work to control unsolicited e-mail spam entering their systems, they may inadvertently filter out legitimate messages. That type of error is known as a “false positive,” and the result is that some e-mails sent to people who have requested them don’t reach their destinations.

But put that in perspective. Good e-mail communication will still be opened by more than 40 percent of the people it’s sent to. Given typical response rates to traditional marketing tactics, that’s as much as 40 times better than the percentage of people who read newspaper ads, respond to direct mail or return unsolicited phone calls.

E-mail marketing allows agents to cost effectively communicate with an entire customer and prospect base over and over again. And thanks to the inherently democratic nature of e-mail (i.e. the big boys don’t get any more space in the inbox than other companies), e-mail marketing provides an opportunity to compete with and outperform much larger competitors for the attention of readers.

E-mail marketing offers agency owners an opportunity to reach out to customers and prospects, and increase customer retention in ways that were simply not possible a few years ago. There’s no doubt it should be a big part of customer relationship efforts.