E-Mail Marketing To Increase Customer Profitability

E-Mail Marketing To Increase Customer Profitability

Customers are one of the most valuable assets of a company and having a profitable customer is the most desired goal of any company or organization.  It is becoming evident that just having a large number of customers doesn’t guarantee profitability. Quality always had an advantage over quantity, so what you need is not only customers but profitable customers. Before understanding how email marketing can be used to increase customer profitability we need to understand these two terms.

E-mail marketing is a form of direct marketing which uses electronic mail as a means of communicating commercial or fund-raising messages to an audience. In its broadest sense, every e-mail sent to a potential or current customer could be considered e-mail marketing. Email marketing has a number of advantages like you can calculate the exact return on investment, E-mail marketing allows you to reach millions of customers who have opted to get these emails, it is highly economical and it allows marketers to reach out to consumers with personalized, relevant, dynamic messages. Customer profitability (CP) is the difference between the revenues earned from and the costs associated with the customer relationship in a specified period. Although CP is nothing more than the result of applying the business concept of profit to a customer relationship, measuring the profitability of a firm’s customers or customer groups can often deliver useful business insights.

After understanding these terms, now let us move towards using email marketing to increase customer profitability. Companies deploy various methods and techniques to acquire customers, but it is a fact that all of those customers are not profitable. The revenue company spends on advertisements is its cost to get those customers, the investments made by those customers are the return the company gets in turn. All the customers are not big investors, and in the end only those pay off who are the big investors. It is a well known fact that out of total customers, only 20% are the profitable customers. Once a customer is acquired using traditional or unconventional advertising techniques, the challenge is to keep them engaged and loyal. This is where email marketing helps.  

Email is considered to be one of the most personal mediums of communication. Forbes Magazine reveals that over 55% marketers in the U.S think email is the mainstream and the most effective tool for promoting products and services. Moreover, the magazine states that marketers successively increase the number of email marketing campaigns. Internet Retailer reported that, “73% of catalogers, virtual merchants, chain retailers, and consumer brand manufacturers taking part in Internet Retailer's latest monthly survey - this one on email marketing - spend 5% of their marketing budget or less on email marketing.” They have added that 11.1% of online merchants count claim that email campaigns drive more than 25% of total sales and 18.7% of all retailers think email generates 1% to 2.5% of sales. Jupiter Communications says, "The quick response rate for email marketing programs is creating a huge surge in demand for outsourced volume email solutions." Most of the campaigns begin showing results within 48 hours; whereas traditional marketing methods show results in no less than six to eight weeks. Email marketing is regarded as a mainstream tool for promoting business or enhancing sales in any corner of the world. About 90% email marketing can generate results within 48 hours. ROI of email marketing is over $583 billion which is considered bigger than Microsoft’s market value. Total revenue from email marketing is sufficient to compensate the US National Debt.

Along with all the advantages, Email marketing is a double edges sword, targeting wrong customers, or targeting a customer with wrong content may get you labeled as scam. So it’s important to get permission from customer or user before sending him emails. This can be done by giving him incentives, as customers always respond to incentives while making marginal decisions.