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When I send a newsletter it is addressed to "Dear Friend" why does it not take the name from my contact list and address it to "Dear John".

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You should replace "Friend" with a merge tag, so it pulls the person's name (in this case it would be %first_name% 😞

https://hc.weebly.com/hc/en-us/articles/217994977-Adding-Custom-Content-to-Emails-With-Merge-Tags

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