21 Jan What’s the true cost of an unsubscribe?

Remember that loyal customers spend more AND they bring their friends back with them. Therefore the true cost of an unsubscribe is not just future spend from that customer, but also potential spend from many others. 

Email marketing remains one of the most effective ways to communicate directly with your customers. So when a customer hits the dreaded unsubscribe button it can create quite an impact on your brand. 

Look beyond KPIs

Once an unsubscribe is received, the initial thought is the negative impact on communication KPIs – one less customer to send marketing comms to. A negative opt out % on a communications report. This, however, is the least of a marketers’ worries.

Of course, your brand won’t be for everyone. Sometimes losing a customer is not actually a bad thing, we referred to this in our recent article ‘why are your customers unsubscribing?’ If they are not engaged and have no intention of shopping with you in the future – you will actually be saving money in the long-term.

But what about the customers who were once loyal, the ones who shopped frequently with you, the ones who were engaged with your brand? When these customers unsubscribe, you need to know why to prevent anymore from doing the same.

What’s the impact on customer lifetime value (CLV)?

Customer data will give you an indication of the customer’s lifetime value, by looking at previous spend and behavioural patterns, you’ll be able to get an indication of the future business you’ve likely lost.

For example – a customer gets their hair cut at the same barbers every month, spending on average $40 each visit. They have spent around $960 at the salon in the last 2 years. As a loyal customer, you can predict a similar spend of $960 within the next 2 years. If this customer were to leave, the barbers have lost this potential future revenue.  

Bear in mind this is the impact of just one customer. Let’s imagine the same barber has 250 loyal customers per month, and loses 5% of those customers – this could result in a loss of $12000 in just two years. Imagine the cost of this to a much larger retail business.

Prevent your customers from unsubscribing

Don’t send generic messages to your entire customer base. The messages within your marketing communications are core to your marketing strategy. You need to dedicate time to consider the best ways that you can continue the conversation with your customers, based on their individual behaviour. If you’re sending relevant, personalised messages to each of your customers, they won’t be as likely to unsubscribe. 

Summary

Prevent future unsubscribes by targeting your customers with relevant, timely, personalised messages.

Take a look at your last few communication reports to understand how many customers have unsubscribed, then assess those customers’ previous purchase behaviour to predict the revenue you have missed out on. This is important as you’ll have a clearer idea of the impact of poor communications on your bottom line.

Invest time into your communications strategy, don’t treat your customers the same. This approach will help you reduce the amount of unsubscribes you receive and increase your future revenue through customer retention. 

Customology are customer lifecycle and retention specialists. We can help you segment your customers and design an effective communications strategy. Contact a Customologist on 1300 264 549 or hi@customology.com.au for further information.

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