May 2006
E-newsletters take center stage in customer retention

Business-to-business (B2B) marketers are finding that publishing client e-newsletters is the most effective strategy for building stronger customer relationships, enhancing brand loyalty and driving repeat sales. In fact, according to a new study by research firm MarketingSherpa, e-newsletters are now the number one initiative for B2B marketers.

The value of strengthening client relationships has never been greater. In the book The Loyalty Effect: The Hidden Force Behind Growth, Profits, and Lasting Value, author Frederick F. Reichheld reports that customer defections (or churn rates) decrease drastically when customers stay connected to the brand. He says as little as a 5% reduction in customer churn can positively impact net profits by as much as 20%. In the banking industry, the positive impact on profits has been estimated to be even greater.

GartnerG2, an industry research company, says this about customer retention: "Banks today are almost exclusively focused on organic growth. New customers are five times more expensive to acquire than retaining current customers ... loyal customers spend more on higher margin products and are more likely to refer additional customers."

E-newsletters and brand loyalty

Why are e-newsletters the vehicle of choice in building this critical brand loyalty?

Unlike most other marketing vehicles, e-newsletters are customer initiated. Because readers choose to receive the information (opt in), they tend to view it as a customer service rather than a solicitation. The more effective newsletters also aim to instruct more than to promote. They provide thought leadership on timely issues and serve to enhance the sender's standing as a valued business partner. This is a welcome change in the eyes of the business community. Jupiter Research found that 81% of business executives subscribe to e-newsletters to acquire this kind of timely business intelligence.

 For banks looking to maintain a solid relationship with CFOs, the e-newsletter's informational style and electronic format may be the ideal choice.

"CFOs are very unlikely to respond to traditional advertising ... they appreciate succinct reports and executive level research," says Caroline Smith, Director of Marketing for CFO Magazine, in an interview published by MarketingSherpa. "Those who can deliver this kind of relevant information, in a concise and direct format, will be the most likely to get the attention of today's CFOs and gain a shot at earning their business."

Ms. Smith's research also indicates that materials which are easy to forward by e-mail are particularly useful to the CFO, as sharing information with colleagues via e-mail has become a common practice.

The pass-along readership of e-newsletters is noteworthy. E-mail forwarding is an increasingly common practice and in the business world is a powerful tool in reaching your hidden market. Most e-newsletters today feature prominent invitations for forwarding content to friends and colleagues and provide a convenient one-click icon to facilitate forwarding. Pass-along readership is also one of the easiest and most inexpensive ways to increase your newsletter's reader base.

Snapshot and detailed reporting

E-newsletters can give you both snapshot and detailed reporting on the overall success of each of your campaigns. Unlike traditional paper newsletters, an e-mail newsletter's readership can be accurately monitored. Your e-mail service provider can offer real-time data on who opened your newsletter and when, and if they took action such as clicking on internal links or landing pages to get more in-depth information.

If you provide your readers with choices in content, you can also acquire valuable marketing intelligence by monitoring their selections and adapting future topic offerings accordingly. Recent studies indicate that readers who are given more control over content are typically less concerned with how frequently they receive it. Such relevant content consistently outperforms in both open and click-through rates, regardless of how often it is delivered.