Customer acquisition costs vary by industry, but no matter what business you're in, it's cheaper to retain your existing customers than attract new ones. Based on a variety of sources, retaining customers is anywhere from four to ten times cheaper.
Lapsed users, customers that used to purchase from you and now don't, represent a massive marketing opportunity. You most likely have significantly more information about them, and you know they have at least some interest in your brand, so they should be much easier to target. Try these five proven methods to add value, live up to promises and bring wayward customers back into the fold.
There are a number of different ways to segment your customer base. One method, RFM (Recency, Frequency, Monetary) analysis, breaks customers into categories based on the time since their last purchase, the typical length between purchases and the total dollar value they've spent. This can help you create different campaigns for the most severely lapsed users versus those that have been away just slightly longer than normal.
Beyond that, you should be collecting information throughout the lead nurturing process, at the point of sale and from exit surveys to get the richest possible array of information on your customers. Ideally, you get to the point where you've gone beyond segmentation and are delivering a personalized experience for each individual user. According to a survey by Econsultancy, successful personalization efforts deliver a 19 percent boost in revenue.
Offer Targeted Deals
One of the simplest ways to win back lapsed users is by offering special deals personalized to their purchase history. A one-time discount can get them back in the door and remembering what they love about your brand. Make sure to present the discount in dollar terms, as these perform two times better than percentage-off deals.
Even if your initial email doesn't succeed, don't despair. A total of 45 percent of win-back email recipients read subsequent messages even though only 24 percent of those read the original email. Persistence pays off.
SMS deals can also be an effective way to target lapsed users. The open rate for SMS deals is 98 percent, and 90 percent are read within five seconds of receipt. That's an incredible level of engagement. There are many companies and services that can help you craft the most effective SMS promotion for your needs.
Respond To Customer Complaints
Some customers leave your business slowly over time due to a variety of factors, but other departures can be due to specific instances of bad service. For this reason, it's critical to respond quickly and effectively to complaints. The quick part is especially important, as 33 percent of customers would recommend a brand that offers a quick solution versus just 17 percent for a slow one.
Make sure to dig underneath the surface. For every one customer complaint you get, there are 26 unhappy but silent customers. Targeted surveys can be a great way to bring this discontent to the surface and figure out what issues your company needs to address.
Automate Retention Tasks
There are plenty of tools that can save time and money on reengagement campaigns by automating the basic tasks. For instance, many PoS systems can automatically store customer information and send them deals after a purchase to get them coming back to the store. In addition, you can automate customer surveys, win-back emails and segmentation tasks so that no lapsed users slip through the cracks.
Keep On Testing
Just like any other part of your marketing efforts, reengagement campaigns should be subjected to rigorous testing so that you can figure out what works and what doesn't. Test subject lines, deal types and send times on win-back emails to see what leads to the highest open and conversion rates. Test different methods of segmentation to see when lapsed customers should be moved into different buckets.
Every business is unique, so the only way to really understand your customers' behavior is by running these tests. Consider each test an investment in delivering higher rates of engagement and revenue growth in the future.