Do you want to know the key to having a long-term profitable business? It’s not having more customers. It’s not having more traffic either. It’s repeat customers.
The reason why repeat customers matter is simple: they are worth more than one-time customers.
To increase the number of repeat customers, you need to focus on retention.
Email marketing offers an especially effective way to increase customer retention: post-purchase email automation.
Post-purchase email automation represent customer journeys sent after a customer has made a purchase with the goal of increasing engagement and loyalty.
In this post, you will see how you can use post-purchase email automation to increase your customer retention and grow the profitability of your e-commerce store.
Segment your customer list
Not all customers are alike. Even if all of them have one thing in common – the fact they bought from you – that doesn’t mean you should treat them the same way. If you treat all your customers the same way, you are likely to send them irrelevant emails, making them less interested in becoming loyal customers.
In order to improve your customer relationships, you need to segment your customer list based on their different demographic, behavioral, and geographic attributes. Segmentation will allow you to send better targeted and more relevant emails.
Unless the geography or demographics of your customers affect your e-commerce sales, one of the best ways to segment your customer list is by using engagement and transactional attributes, based on their past behavior.
The goal of segmenting your customer list by engagement is to separate the customers who are still active on your list (i.e. opening and clicking on your emails) with those who haven’t clicked on any recent marketing messages. Engaged customers have shown a positive behavior towards your brand, which makes them more likely to purchase from you. As a result, you can send purchase-focused emails to your engaged customers. Unengaged customers, on the other hand, need better nurturing and less purchase-focused emails so you can win them back before you can ask for a purchase.
There are four main attributes you can use to segment your email list based on their engagement, whether a customer has:
- Received an email
- Opened an email or series of emails
- Opened and clicked an email or series of emails
- Converted from one of your emails
While engagement lets you see how people react to your emails, transactional behavior helps you see how people shop in your store.
There are many ways you can slice your customer list based on their transactional behavior:
- Recent purchases (that can be a week, a month, a quarter, or even a full year)
- Number of purchases
- Amount of dollars spent
- Average number of products added to cart
- Category purchased
- Price range of the purchases made
- Time range between purchases
Transactional segmentation can help you find products or categories that your customers are most likely to find interesting so you can upsell or cross-sell them relevant products. You can also send your customers emails with more relevant prices; a customer with a lower average order value may prefer to receive emails with more affordable products.
A simple segmentation tactic: warm vs. cold customers
A basic way to segment your list is to separate “warm” customers from the “cold” ones. Warm customers are those who engage with your email marketing messages and have visited your site recently. Cold customers, on the contrary, are those who are not engaging with your emails and haven’t visited or purchased in a long time.
To segment your cold customers from the warm ones, you are going to take the list of the previously mentioned attributes and pick one or two. Pick a specific threshold, like customers who have clicked an email in the past 30 days and who have purchased more than $30 in the past 90 days. Then, create one segment for the cold customers (i.e. those whose behavior match either of the two selected attributes), and another one for the warm ones (i.e. those who match both behaviors).
Create campaigns for each segment
Once you have created your segments, you can create campaigns for each segment based on the attributes used.
Follow-up campaigns: A campaign consisting of emails aimed at nurturing the next purchase. Common emails sent in this kind of campaigns include:
- Asking for feedback about the shopping experience.
- Checking in with customers to see if there’s anything your customer needs or has a problem with.
- Recommendations of helpful resources to learn how to use the product bought, among other helpful topics.
- Links to your return policy, contact form, etc.
Reactivation campaigns: A campaign focused on turning unengaged or inactive customers back into active customers. This is where you can use the “warm vs. cold” segmentation shown before. The emails usually sent in this campaigns include:
- Sharing relevant information about the product bought.
- Sending entertaining and inspiring content, like user-generated content, blog posts, etc.
- Recommendations of best-selling or related products from the one bought before.
When sending a post-purchase email campaign, you need to be careful about offering discounts to active customers who are willing to pay full price. Offers like free shipping, better return terms, and loyalty rewards can work better than offering full-blown discounts.
However, if you are going to send discounts to your customers, analyze how much profit you are going to lose by offering the discount and how many purchases you would need to get your money back. You can then test it on a small sample.
Also, remember to focus on your “hero customers”; those that represent the 20% that make 80% of your revenue. Instead of losing money on discounting to lower-value customers, focus on driving the most revenue from customers who are more likely to make a purchase from you.
Crate and Barrel, the furniture and home decor online retailer, sends a follow-up email a few days after a customer makes a purchase, incentivizing the next one.
Ulta, the cosmetics retailer, sends an email asking for feedback a few days after a customer makes a purchase.
Analyze the results
There’s no email marketing without analyzing the results of your campaigns.
Start by comparing your engagement metrics, such as open rate and CTR, and your revenue metrics, such as AOV, the number of sales, and ROI, with the average numbers from the non post-purchases email campaigns as well as with the previous campaigns you have sent. Also, compare the results of each post-purchase campaign you currently send.
Then, analyze which segments bring the best results. Compare both engagement and transactional metrics and see which segment converts best.
Finally, test new post-purchase email automation campaigns. This includes:
- Making the campaigns longer or shorter.
- Using different copy in each of the emails sent or on those that have the lower performance.
- Using different images.
- Changing the timing, like sending more emails in less time or less in more time.
Warren Buffet, CEO of Berkshire Hathaway and legendary investor, said once: “Any business that has delighted customers has a sales force out there that you don’t have to pay. You don’t see them, but they are talking to people all the time.”
Keeping your current customers happy and interested in your content is the sales force your company needs to grow without spending any money on customer acquisition.
The strategies in this post have demonstrated how you can discover happy customers, how you can make them more likely to buy from you, and how you can analyze the results from your campaigns.