The Sum of the Parts, Part 6: Reactivation Emails

Author:

Rob Galkoff

Source:

Welcome to the sixth article in our series “The Sum of the Parts,” in which consultant Rob Galkoff discusses the elements critical to successful email marketing.
 
How much does it cost you to recruit a new customer? Let’s say $50, as it’s a nice easy number. Do you ever put a value on the cost of losing a client?
 
Let’s step back a minute and consider the implications. We recruit 1,000 customers at a cost of $50,000. Their average order value (AOV) is $100, so turnover is $100,000. Our cost of goods sold (COGS) is $50,000. In effect we’ve broken even, but there might be other costs of running the business, which means the activity has made a loss. We know, however, that we’ll make this money back on second and subsequent promotions.
 
In the olden days we might have relied on mailing our catalog every month or so in order to obtain those subsequent orders. On average, our house file might have responded at 10%. We were probably pleased with this—but what about the other 90%?
 
Over a period of 10 mailings, perhaps we saw 50% of customers buying within the year. That’s not bad, but all the same it meant that half of our customers decided not to buy.
 
We talked about segmentation in the previous article (“Using the Data You Have”) and how it’s possible to slice and dice your database as much as you want. If you’re sending out catalogs it’s expensive to make print changes to try different promotions, but once you start thinking about email, the possibilities multiply to dazzling effect.
 
Email allows you to make as many changes as we want. We know many customers decide, for whatever reason, not to respond to marketing. It could be because ...
 
Click here to read the full article.