Today, I will focus on one “play” in the CRM playbook that could use some refinement for many CRM marketers: to win back customers.
At its core, Customer Relationship Management (CRM) seeks to maximize lifetime value from past, present, and potential future customers. Requirements for most CRM programs include the ability to target individuals on a one-to-one basis and measure campaign performance via relevant metrics for the brand. The playbook consists of programs and strategies supporting acquisition, engagement, and retention with a focus on the lifecycle management of the customer.
To win back customers consists of a brand attempting, through one or more contacts, to reactivate lost customers or customers at risk of attrition. Offers and calls to action for these campaigns are usually very strong, costing the brand substantial markdown dollars and occasionally brand value. The price of the campaign may be measured in successfully reactivated customers.
For most brands, win back is initiated when the target customer has not engaged within a designated period (for example: six or twelve months of no trackable activity). Whereas this approach may be effective, an additional opportunity exists to enhance the program with data and advanced analytics. The reward for investing business intelligence resources into win-back programs is three-fold:
Eliminate false customers
Isolated transactions associated with gift purchases or program enrollment without engagement (no opens and/or clicks) are likely not customers requiring win back as they have never meaningfully engaged with the brand.
Eliminate highly promotional / low-frequency customers
If the customer only shops when they’re being reactivated or responding to negative net margin offers, it may be worth evaluating how to win them back. These types of customers are often the driving force behind eroding top-line sales, margin rate, and equity for the brand. It may be best to part ways with these customers and reserve marketing dollars for higher-value targets.
Eliminate engaged customers
Sort of a misnomer, given the nature of the program and the goal to win back customers. However, valuable, low-frequency seasonal customers that are mistaken for inactive are likely to exist. Before engaging customers who may just be out of their usual buying cycle, it is important to incorporate a churn analysis that assesses frequency and spend levels.
Who to include in your outreach win back campaign
Now that we’ve discussed which customers to eliminate, we will address techniques to identify which customers to include in your campaign’s outreach. These techniques include:
Customer churn analysis
Look beyond general inactivity to better understand customer engagement patterns. This includes analyzing the recency of the last brand engagement, average frequency (number of visits), and spend over time for each existing customer. Confusing attrition with seasonality and/or consolidated spend is possible. Failure to accurately identify churn will result in unproductive marketing investment.
Third-party life events / triggers
Look for relevant times within the customers’ lifecycle to re-engage. This is actually effective with active customers as well as inactive ones. Monitor your CRM for life events with a program like DataWatch™ or similar to identify moments when the customer is more prone to engage with your brand vs. competition.
Predictive analytics
Leverage first-party transactional data, and third-party demographic and psychographic data to optimize your efforts and win back customers. Machine learning can maximize understanding of which customers are more likely to re-engage, spend, and return on investment. Once you have built the model, determine which business rules to apply to your universe of inactive customers (duration of inactivity, etc.) and optimize your targeting strategy and spend accordingly.
Through the investment of business intelligence resources and the optimizations outlined above, proactive and profitable re-engagement of lost customers without erosion of brand value is right around the corner.
Do you want to win back customers? Serve them right when and where they need your services and products the most? Then connect with us! At Speedeon, we fuel our clients’ business growth through top data strategies. Let’s chat.
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