When it comes to marketing, companies spend a lot of time and money on the acquisition of new customers. And they should—after all, growth is the key to success.
But once a business has been up and running a while, there’s no escaping the effects of customer churn on the bottom line. Retention and loyalty campaigns can go a long way toward mitigating the problem. But once a customer has jumped ship, there’s no reason to be fatalistic. A customer won once can be won again—often more easily than new customers.
According to metrics, you’ve got a 5-20% probability of converting new prospects; when you sell to past customers, the conversion probability rate jumps to 40%.
There are good reasons for this:
- Past customers have already expressed a need for your service or product, so they aren’t “cold” prospects
- Past customers are already familiar with your company, so you can skip the brand awareness and get right to the pitch—saving valuable time and money
- Past customers leave behind a wealth of information on everything from buying behavior to demographic details—making it far easier to craft offers and messages targeted specifically for them
But before you go off reselling to everyone who’s ever severed the connection with your brand, there are a few things you must consider to make the most of your marketing dollars. Here are a few key things to consider when building your win-back strategy.
1. Why did they leave?
When deciding whether or not to pursue a lost customer, it’s important to look into how the customer was lost in the first place. How was the relationship broken – were you at fault, or was it something out of your control? For instance, trying to mend a relationship that suffered because of poor service on your part can be challenging—and a drain on your marketing budget. A customer who left because of price, however, is more likely to come back if given the right incentive. So be sure to look into the “why” to help decide whether working to repair the relationship is really worth your time and money.
2. What kind of customers were they?
Reactivation should be a part of your everyday marketing strategy, just like lead generation and prospect nurturing. The information you keep on customers is essential to understanding whether they are worth reactivating once lost. Along with demographic and contact info, keep records of customer feedback, buying behavior, complaint calls, reception to upgrade offers, etc. This information will be critical in helping you determine…
3. What kind of customers will they be?
When customers leave, your customer data can be used to build a picture of the kind of customer they might be again—and help determine whether they’re worth reactivating. Depending on the reason for leaving, a customer who made repeat purchases and left a lot of positive feedback is likely a worthier candidate than one who bought once and ran.
By examining the customer’s previous behavior and setting realistic goals for future behavior, you will be able to decide which communication tactics will be most effective, and whether or not they are worth your marketing efforts.
4. How should you pitch them now?
It’s important to establish a communication plan for your lost customers. Do some additional research to update your information on the customer before making your next pitch. Maybe they’ve moved or gotten married; maybe their buying preferences have changed; or maybe they’re showing an interest in a different product or service. Profiling your customers can help you determine their current buying traits and communicate with them more effectively down the road.
Need more tips to reduce customer churn? Download Streamworks’ Lifecycle Marketing Workbook and learn how to nurture, upsell and retain customers across all your marketing platforms!
Editor’s note: this blog post was originally published in August 2015 and has been updated to include additional information.