5 tactics to increase customer retention with email and SMS marketing
Jun 14, 2022
Published by: Jimmy Kim
Generating new customers for your business is one of the most exciting parts of marketing. As marketers, we love turning on a set of ads and watching the traffic and sales roll in.
But we quickly realize that a complete dependence on paid advertising for conversions isn’t sustainable—especially for businesses looking to grow quickly.
The average customer acquisition cost (CAC) varies depending on the industry. But even a low CAC will run over $33 per customer, with the high end pushing well past $130 per customer acquired using ads.
And with CAC increasing rapidly across all industries, teams will need to focus more and more on retaining existing customers through nurture strategies.
The best path to increased customer retention is with a strategic combination of email and SMS marketing.
Why customer retention and not (just) acquisition?
Don’t get me wrong, customer acquisition is a SUPER important part of any marketing strategy, but when you put all your eggs into one basket, things can get out of whack very quickly.
What’s important is what you do after that person becomes a customer. The goal should be to turn them into happy, loyal, repeat customers.
After all, return customers are 350% more profitable than new customers.
So acquisition isn’t the end of things — it’s just the beginning and that’s where customer retention comes in to make your business sustainable.
But retention is a hard beast to get right without the right tools and strategies.
Since email working in tandem with SMS marketing has both the lowest cost and highest ROI of any other marketing channel, it’s the best and one of the most future-proof strategies around.
5 ways to keep customers coming back using email and SMS
1. Segment your contact lists based on interest
Have you ever tried to get a kid to eat their vegetables or get your partner to do the dishes? It wasn’t easy, was it?
That’s because your “audience” had no interest in the product you’re pushing. And really, the same goes for your list.
The people on your list don’t all have the same interests and trying to promote something to those who have no interest in what you’re selling is just a waste of time.
Once you acquire someone as a customer, the first thing you want your list to do is segment them based on their interest. In doing so, you’re able to start personalizing your email to them right away.
This is the cornerstone of customer retention with both email and SMS.
Thankfully, segmenting the SMS part of your list is very similar to segmenting your email lists. You can set up SMS segments around their interests and based on their purchasing behavior.
If you’re using two-step email-to-SMS opt-in forms, you can tag interests from both channels according to the data (interest) provided by the user or the criteria on which you’re building “interests” (ex: product page URL on opt-in).
After you’ve segmented by interest, you can use automated post-purchase funnels to generate product recommendations based on what they just purchased.
And with automation tools, this entire process is just rinse-and-repeats and personalized to each person.
If you can mix your marketing automation tool with website tracking like Lucky Orange, you have an unstoppable personalization arsenal at your hands.
For example, suppose you see that your customers who purchase a specific item do so from mobile. In that case, you can leverage Lucky Orange to understand what landing page on your site has the most mobile traffic and serve and SMS opt-in to add a new contact to your Sendlane segment-of-choice. Now you know that you have a qualified lead on your hands and can nurture them to conversion through personalized automation.
2. Build excitement around your product launches
Got a new product coming out soon? Then it’s time to tell your contacts all about it. But those launches should be more than “Hey, here’s our new product!”
Campaigns for product launches should build up anticipation ahead of launch day, keeping your customers in the loop and excited for when you launch.
You can layer email and SMS together to help you build up this excitement. Ahead of your product launch, you can tease that something new is coming, like how Havenly does it.
This email can go out a couple of weeks before the launch to build up anticipation. You should also send out SMS messages so that they get alerts right through text.
On top of that, due to SMS having the ability to initiate a direct conversation with a subscriber, you can create one-on-one conversations about upcoming launches and take customer connection to a whole new level.
You can string together 2-3 emails and 2-4 SMS messages for your campaign launch. Then, on the day of the launch, let everyone know your product is ready for the world.
All the effort you put in ahead of time will make it much easier to have your product get some traction.
3. Incorporate a loyalty program into your marketing automation
If you want to build customer loyalty (a.k.a repeat customers), then a loyalty or rewards program coupled with email marketing is one of the best tactics.
That isn’t just a nice-sounding statement.
Data shows that even if a well-implemented loyalty program increases retention by only 5%, it could boost revenue from 25-95%.
So loyalty programs are the way to go and can only be facilitated optimally with email and SMS.
Why? Because email is so effective — especially with loyalty programs. Just look at the success Starbucks has had with its loyalty program. They relied heavily on email marketing to get it off the ground.
But nowadays, SMS also has a big role in getting people to join your program and keep them coming back for more.
As part of a welcome funnel or even post-purchase, you can use SMS to invite people to join your loyalty program the way Leesa does. You can incentivize the sign-up with a discount to get the yes.
4. Increase AOV with cross-selling and upsell messages
Getting customers to go from awareness to purchase is a feat all on its own. But once they’ve made that initial purchase, getting them to buy again becomes SO much easier!
After purchase, you can send out cross-sell or upsell messages to help turn one sale into a returning, repeat customer.
This is why segmentation is so important because knowing what someone has bought and their interests makes it easier to personalize these sorts of messages.
You can see how Natural Club uses a cross-sell SMS after an initial purchase to personalize the post-purchase experience. And using an incentivizing offer like this — where the discount (in this case 25% off) is offered to help give someone a better reason to make the purchase — no doubt helps with conversions.
These automated funnels work with email marketing too. You can see Athletic Greens using email to upsell their product to their customer to help keep them around while increasing average order value.
5. Send three retention-based email and SMS messages
Since we’re talking about customer retention emails, let’s lean into the types of heavy-hitter emails that keep customers coming back.
There are three you should definitely have in your wheelhouse, and all of them can be automated.
Welcome messages
After someone either signs up for your email list or purchases something from you, it’s important to consider how you’re going to make your first inbox impression.
These are two separate paths for the customer journey, but both require something simple:
A welcome email (preferably more than one).
There are so many ways to create a welcome sequence, but here are a few tips to get you started:
Include at least three emails and SMS actions in the sequence
Send both the first email and SMS message immediately after signing up or purchasing
Offer a discount in at least one email and SMS
Share your core values as a brand
Transition from this automation to another sequence when they’ve reached the end
These are a few ideas to build your initial templates and you can refine them over time as you learn more about your website traffic and customers.
Post-purchase messages
After someone purchases a product from you, is that the end? Do you hope they remember you and come back again later?
I mean, you could, but you shouldn’t. Besides, we’re forgetful people, and it’s easy to lose track of all. the. things.
Post-purchase emails and SMS help you continue the conversation and there are a few ways to do that. One great way is to use these messages to educate your customers.
As with the example above, you can see that after the customer bought a specific product, they got a simple but educational email about how to best use that product and when. That’s a brilliant idea since it helps give customers an even better experience with the product and, therefore, your brand:
Here are a few other ideas for what your post-purchase emails can contain:
Shipping and delivery information are two musts in the transactional department
How to use products/benefits of use
Personalized product recommendations
Feedback requests
These messages and emails can help you exceed customer expectations while learning where you could be dropping the ball.
Since these are automated, you can continually gather insights now and in the years ahead to stay ahead of the curve.
Rewards and exclusive offers
Lastly, we have rewards and VIP offer emails.
You can integrate your emails with your loyalty rewards program of choice to seamlessly manage to keep your best customers informed about their rewards and to keep them coming back for more.
TOMs shoes does it. Starbucks does it.
Sephora and thousands of other B2C and DTC brands do it too. And it’s not just email. You can give exclusive offers to SMS contacts for an extra customer retention boost.
You can automate or manually create quite a few email and SMS types like:
Show them their rewards points and what they can get for them
Happy Birthday emails and texts
Happy Anniversary marking the year from their first purchase or sign up
Alerts to upcoming promos
VIP sales
These are just to name a few. Some you can automate, others you can plan and send as regular campaigns to your reward program members.
Either way, there’s a lot you can do to use these two channels to generate sales from return customers who already love your brand.
Customer retention isn’t something you want to push to the backburner. These contacts are precious assets to your business and should be viewed as such.
When you take care of them, they take care of you.
