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How eCommerce Merchants Can Increase A Customer’s Lifetime Value With AutoResponders

Jimmy Rodriguez is CTO and co-founder of 3DCart, developer of an e-commerce suite for businesses of all sizes. 3dcart just rolled out 3dcart 4.0 and with it we offered all merchants autoresponders free of charge. As an authority on e-commerce best practices, Jimmy combines more than 8 years as an e-commerce developer and web programmer with SEO, social marketing and business intelligence

Customer acquisition efforts are time-consuming. Online merchants spend hours upon hours exploring every possible channel to gain new customers – PPC, content marketing, social ads, banners, affiliate marketing etc. Acquiring new customers isn’t getting easier and as most eCommerce merchants know the process isn’t getting cheaper either.

Basic economics tells us that in order to be profitable, the amount of money spent on acquiring a customer (investment) must be less than the customer’s value (return). If I spend $100 to find a customer, the customer has to purchase $100 at my store just so I break even. The equation is simple, but some merchants feel they only are able to affect the investment as the return is in the hands of the customer. They attempt to lower their customer acquisition cost (CAC) by choosing inexpensive methods like bidding on lower value keywords that have a lower cost per click. More often than not, those methods are also less effective and result in much lower conversion rates – leaving them in the same mathematical dilemma as before.

Don’t be discouraged. CAC investments are well-worth the expense if the lifetime value of the acquired customer is raised or simply put, your return will be greater if the acquired customer purchases from your store multiple times. If I spend $100 to gain a customer and that customer purchases $50 dollars worth of merchandise (an even lower amount than the previous example) and continues to do so every 2 months, I have a 500% return on my investment! When you turn one-time customers into loyal shoppers, your advertising dollars go farther, you increase your campaign ROI and you can double your bottom line with no additional work.

How to raise the lifetime value of your online customers:

The key to offline sales remains true with online sales: following up with a client is just as important as the initial pitch. In eCommerce following-up with an existing customer, or “back-end selling” is just as important as attracting the customer in the first place. Instead of scrambling to find new customer after new customer, connect with shoppers who you already know want your merchandise & trust your brand – your existing customers.

Following up with existing customers with email marketing frees merchants from the lead generation rat race. According to research conducted by the Direct Marketing Association, email marketing was expected to generate an ROI of $42.08 for every dollar spent on it in 2010. Email marketing allows eCommerce merchants to maximize on their existing community and create a network of loyal shoppers and with auto-responders merchants can can set the efforts on auto-pilot.

What is an “auto responder?”

An autoresponder campaign is a series of messages programmed to send out automatically based on a predetermined schedule. Unlike traditional newsletters, autoresponder’s send out a finite number of emails as a part of a campaign.

Autoresponders make email marketing as easy as “set and forget.” Think of autoresponders as your personal email secretary. While you focus on growing business (and filling all of your new orders), your autorespond secretary is busy emailing personalized messages to customers, increasing conversions, and gaining loyal shoppers.

Setting up a successful Autoresponder Campaign:

Post-Sale Welcome Autoresponders

When a customer completes their first purchase from your site, welcome the user by expressing appreciation for their business and introducing your company with a sentence or two.

A post-sale message should focus on building trust and establishing a relationship, rather than trying to upsell. When wording your message, be personal & authentic and avoid cliches. Friendly ‘welcome’ messages excite customers & encourage return visits!

Post-Sale Follow-up Autoresponders

A typical autoresponder follow-up campaign sends a customer 2-4 emails over a period of 2-4 weeks post-purchase, but frequency varies depending on your audience’s profile.

Consider offering “welcome back” return discount or suggest products based on the customer’s past orders. The more personal & incentivized the message, the higher the conversion rate!

Activity-based Autoresponders

Set up multiple autoresponder campaigns for specific customer activities. For example, you can create separate message campaigns based on:

  • The type of customers : wholesalers versus retailers
  • Customers who purchase more than the average order amount. (Say Thank you!)
  • Customers who purchased a specific product from your store to offer add-ons, up-sells and new models.

Activity-based autoresponders allow eCommerce merchants to create highly targeted messaging. The more specialized the message is to the user, the more effective the email.

Read more about autoresponders on 3dcart’s blog.

Image Credit: larskflem

2 Comments to "How eCommerce Merchants Can Increase A Customer’s Lifetime Value With AutoResponders"

  1. Reply
    Shilo Jones
    July 13, 2011 at 12:49 AM

    Jimmy, great post and a great new capability in 3dCart. I am super excited to see the innovations you and the rest of the team at 3dCart continue bringing to the world of e-commerce. Keep up the good work.

    A couple of comments:

    I’d encourage folks to look at ROI slightly differently by factoring in profit rather than just revenue. The simplified calc would be Campaign Profit / Campaign Cost.

    Jim Novo writes an excellent post on this at his Web Site (link below) and for those of you that don’t know who Jim Novo is, definitely spend a weekend or two digging through his archives and you’ll come away a much more knowledgeable marketer.

    Also, great to see all of the Post-Sale Autoresponder capabilities, because the most important driver of repeat purchase behavior is recency. The more recent the purchase the more likely someone will respond. I’ve seen all too often that new customers go ignored until the next promotion on the calendar before a merchant will contact them missing an incredibly valuable interest window in their customer’s mind.

    Here’s the link to the ROI calc, Jim also lays out a simple, straightforward way to think about LTV in the same post.

    http://www.jimnovo.com/ROI-Calculation.htm

  2. Reply
    Samuel
    January 28, 2013 at 7:28 AM

    This is my first time when I started using 3dcart. Impressed with handy features and this is the reason why I am still using it. 3dcart became more useful when I integrated Live2Support for real time customer chat. Recently Live2Support released live chat plu-in with 3dcart.
    http://www.live2support.com/addon-3dcart-live-chat-software-integration.php

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