Increase your Average Order Value by 20% with email

Problem: your costs are growing and your margin’s narrowing?

Your business is experiencing smaller margins and your cost of acquiring customers is growing. What can you do to make your customers more profitable?

It’s 6-7 times more expensive to find a new customer than to keep an existing one

Bain & Company

So, what can you do to change that? Start by focusing on the customers that you’ve already acquired and do what you can so they become regular customers and repeat buyers. You might even be able to increase your customer’s second average order value by 20%!

Opportunity: Let email help you make your customers more profitable

Your business’s bottom line gives you all the motivation you need to encourage your customers to return and make additional purchases. Each subsequent purchase will increase your margin as you’ll no longer need to outlay the costs associated with acquiring a new customer.

Today, we’ll go through how you can implement an effective email series for post-sale relationship building and a loyalty program that’ll help you get your customers to make repeat purchases.

Pareto’s Law in play

80% of your revenue comes from your 20% most engaged customers. What’s even more interesting is that just a 5% increase in retention can increase revenue by 125% and that 5% of your premium customers can generate up to 40% of your revenue!

KPI’s to monitor

Early repeat rate (ERR)

The ERR is a metric that tracks the percentage of new customers that made a second purchase by a certain fixed point in time (e.g. by the 60th day).

This allows us to monitor the behavior of different groups of customers over a similar timeframe in their customer lifecycles and to understand how our actions impact retention.

We could, for example, see if one version of our post-sale relationship building series resulted in more repeat purchases before the 60th day against another version.

If that’s the case, that might be an indicator that our new cultivation triggers for our post-sale series worked well and encouraged our customers to come back.

Repeat purchases are a key component of a Customer’s Lifetime Value (CLV), and changes in the ERR are often correlated to the changes in CLV.

We can make use of cultivation triggers to build brand loyalty and encourage customers to make repeat purchases. As soon as we see that our customers are showing signs that they might be disappearing, we’ll target them differently with variations of our promotions that might entice them to come back.

Winback Rate

The winback rate is the percentage of our customers who have been inactive for a given period who we “won back” and went on to make subsequent purchases.

It’s important because it will help us identify customers which have become inactive in a given time frame and it’ll let us know how effective we are in reactivating them into making repeat purchases.

When we notice that our customers are showing signs that they are starting to slip away, we can initiate triggers and touch points that’ll re-activate them. These might be different promotions that will target customers that didn’t respond to our standard communications.

Solution: post-sale relationship building and the loyalty program

We already know a great deal about our customer’s first purchase. This includes the order’s price, the product(s) and the date of the transaction.

This information can help us;

  • Position and segment our customers based on their transaction value
  • Predict a customer’s next purchase, based on: product category, brand, size and color
  • The date they might want to purchase something the next time

Ideally, though, we’d like to know a whole lot more about our customers. Their abandoned shopping cart history, which products they abandoned, how many they abandoned, when they abandoned them, their current interests, such as products, categories and the amount of time they spent on specific web pages. For customer retention purposes, we’d also like to know how much money they spent, the time elapsed since their last purchase and when they last visited our website.

Building your customer relationship

If you were to divide your customers into 3 groups: then you’d be able to find the average customer value for each of these groups and create an appropriate post-sale relationship building plan.

Creating a post-sales relationship building series can help you ensure that your customers get a message when they have a higher propensity to buy before they enter the churn zone.

A great way to encourage your customers into making additional purchases in a post-sale relationship building email series is to include a mix of personalized content. This could include the following: product recommendations, suggestions for them to restock products that might be running low, promotional discount codes and offers of free shipping when a customer spends a certain amount.

long-term customer relationship coffee house barista increase your average order value
Example: A process which can help you build a longer-term customer relationship with your customers after their first purchase.

The loyalty program

The loyalty program can prove to be an effective strategy in increasing your customer’s CLV and increasing the frequency of their purchases.

Research from Rosetta found that customers that are actively engaged with brands and their loyalty programs make 90% more frequent purchases, spend 60% more in each transaction and are five times more likely to choose the brand in the future.

One of our retail customers for whom we implemented a custom loyalty program using our workflows and Data Tables saw an increase in their ERR by 2% over a 30-day period and an increase in their customer’s Average Order Value (AOV) of 20% for their second purchase.

Email will get you from one-time to all-time

By implementing a post-sales relationship building email series or loyalty program, you’ll be well on your way to having those one-time customers become repeat buyers. You’ll increase your Early Repeat Rate and Average Order Value.  So, what are you waiting for? It’s time to turn that one-time customer into an all-time customer!

Written by
Marcin Chruszcz
Account Manager at ExpertSender
Email and marketing geek. Specializes in email deliverability, strategy and design. Basketball and MTB riding enthusiast.
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