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Benefits of a Digital Relationship With Customers

As your target market continues to adopt the Internet as a communications medium, you soon will notice you have two relationships with your customers: analog and digital.

Analog relationships involve print communications, such as direct mail, to talk to customers. If you have an ongoing customer communications program, you may be sending a monthly or quarterly newsletter to keep your customers informed of news and events relevant to the products you sell.

Digital relationships involve digital communications, such as e-mail and Web sites, to talk to your customers. If you have a digital customer communications program, you may be sending HTML newsletters attached to e-mail messages, which may borrow content from your print newsletters.

Which relationship is better for you and your customers – analog or digital? The fact is, digital relationships can go much further than analog relationships, and can be far less expensive.

As your organization integrates the Internet into more communications, you’ll discover digital relationships are like gold when compared to analog relationships.

E-Customer Relationships Cost Less

Probably the most compelling reason to move your customers toward digital relationships with your organization is cost. In the beginning, the cost savings may not be significant. Your digital customer communications program may even cost more. But as you build your database of electronic customers, you soon discover that the economies of scale are extreme. The incremental cost of adding one more customer to a digital program is almost nothing. Add that same person to an analog program and you immediately pay printing and postage.

For example, if you use an e-mail service provider to send e-mail to customers, you may pay anywhere from 2 cents to 15 cents a record, depending on volume. If you send out a print newsletter, you will pay anywhere from 30 cents to $1. That’s a potential savings of 85 percent to 90 percent in distribution costs.

Customer Contact Is More Meaningful

If you have millions or hundreds of thousands of customers, you can afford to segment and target your print communications to make your messages more relevant to individuals. But this segmentation tends to be fairly broad and if you have smaller customer databases, segmentation of messages is not often viable.

With e-customer relationships, your ability to put the right message in front of the right person at the right time is greatly extended because you don’t have printing economies of scale to worry about. You can segment your customers into as many groups as you wish. Database-driven e-mail is far easier to execute than database-driven direct mail.

In addition to extending your ability to target your customer database, e-customer relationships allow you to greatly extend the value of your program content. With print communications, you are limited to words and pictures. With electronic communications, you can deliver applications that allow customers to interact on a one-to-one basis with information. A simple example would be one where customers see how many miles they’ve earned vs. being able to check the status of miles, cash in on miles and update their accounts.

Return on Investment Becomes Clearer

One of the biggest strengths of the Internet as a communications medium is its ability to provide results tracking. When you communicate with customers using e-mail, HTML newsletters and Web sites, you can learn in real time exactly how customers use your program.

You can quickly learn what is of most interest and what isn’t. You can see how many people take direct action on offers. Now you can begin to calculate ROI more clearly because you have a stronger understanding of exactly how your customers are interacting with your program.

In many cases, the Internet delivers the ability to have customer relationships where they couldn’t exist before.

O’Neill Wetsuits, for example, sells wetsuit products and accessories in independent retail outlets. Communicating with customers in the past would have meant sending mail, which would have been far to expensive for O’Neill to justify based on its margins. With the Internet, however, the company can opt in customers to an electronic program that is far less expensive. Opt ins can be driven from the Web site and the substantial advertising the company purchases in magazines. Now, O’Neill can communicate directly with customers to determine satisfaction and receive input on product upgrades.

Building an E-Relationship Program

As with any customer program, the perceived value of the program will determine how successful it is. With an electronic program, the perceived value is even more critical because you must ask your customers to opt in to receiving your electronic communication. If you simply ask for permission to use a customer’s e-mail address, your opt-in rate will be far below its potential. If you clearly communicate the value of your electronic communications, your opt-in rate can reach 80 percent to 90 percent of customers who use the Internet to communicate with you.

Once you discover the incredible value of an electronic customer relationship program, you’ll find yourself looking for any opportunity to opt in customers. Any contact with a customer should market the electronic customer communication program. And, hopefully, the perceived value of the electronic program is even higher than the perception of the print program.

Fortunately, electronic customer relationship programs can start with simple content and communications objectives. But as you gain more experience with them, you’ll discover unique ways to add value to your customer relationships that will make the program even stronger. As your program benefits grow, not only will you build stronger customer relationships, your opt-in rate will increase as well, creating a win-win situation for you and your customers.

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