As a small business owner, your customers are among your most valuable assets. With marketing becoming more targeted and data-dependent, the costs of acquiring new customers is high. It's increasingly more productive and cost-effective to sell to existing customers than it is to cultivate and sell to a new audience.
Depending on the industry, American businesses experience annual churn rates anywhere from the low single digits to above 50 percent. That means some businesses are losing half their customers each and every year. Rather than focusing on making up those losses by finding new customers, here are some tactics business owners can use to identify and reengage lapsed ones.
Before you carry out any reengagement programs, it's vital to understand the extent of the problem. There are simplistic ways to do this, such as simply tracking the date since each customer's last purchase. However, this method has some shortcomings. It might identify a customer that infrequently makes large purchases as lapsed, while ignoring a customer that used to make frequent small purchases but hasn't made a purchase in several weeks.
RFM Analysis (recency, frequency, monetary) takes into account the time elapsed since a customer's last purchase, how frequently they purchase and the total monetary value of their purchases. Using RFM analysis, you can segment your customer base and target those on the lowest tiers for reengagement campaigns.
To carry out any sort of successful reengagement campaign, you'll need plenty of customer information. This starts with a PoS system that automatically collects and keeps track of customer name, purchase history and contact information. Effective systems can even automate the initial engagement process by emailing or texting customers shortly after their purchase with relevant deals.
With customers that have made a conscious decision to delete your app, unsubscribe from your newsletter or cancel their loyalty membership, conduct exit surveys to get a sense of where you went wrong. For every one customer that complains, there are 26 unhappy ones that remain silent. If you don't ask, you'll never find out why they left or how you can fix their problems.
If the information you collect from surveys show a pattern of customers leaving for the same issue, then address the problem and highlight the fact that you've made the change. Whether it's a more intuitive website, new product selections or any of another dozen possibilities, send targeted messages to lapsed users informing them that you've addressed these common problems.
The great thing about SMS reengagement campaigns is that you know customers are going to view your offer. SMS messages have a 99 percent open rate, with a 90 percent chance of getting opened in the first 30 minutes after being sent.
Overall, SMS campaigns have engagement rates up to eight times higher than email and boast conversion rates above 8 percent. You don't have room to go into much detail with SMS campaigns, but they're an incredible way to send targeted deals and get customers to take immediate action.
Just because SMS marketing is so effective doesn't mean there's no place for email. Email campaigns allow you to send more tailored messages that go beyond promoting deals to really develop more of a connection to your users and address their concerns.
The key to successful email reengagement campaigns is persistence. The average length of time between when lapsed customers receive the first win-back email and when they read another message is 57 days. There will be a lot of touch points to hit, and it may take some time to get through them, but a well-crafted email win back campaign can yield concrete results that help you retain customers and grow your bottom line.