The Harvard Business Review states that it’s between five and twenty-five times cheaper to retain a current customer than it is to acquire new customers. Therefore, it’s in your best interest to keep your customers happy, and if they start to look elsewhere, it’s imperative you do everything in your power to get them back. Unfortunately, it’s inevitable that some customers might not be long-term patrons. But the good news is you don’t have to let them walk away without a fight. Through the use of personalized marketing and effective direct mail circulation strategy, you can woo lapsed customers back before they become dedicated supporters of a competing brand.
Identify Why Customers Are Inactive
It’s important to take note of customers who haven’t made purchases in a while. But it’s even more important to understand why people are making that choice.
It’s true that some businesses are geared around one-time purchases or extended repurchase periods. If you sell refrigerators, you’re not going to be wondering why former customers haven’t purchased another refrigerator within six months of their previous transaction. However, many companies and industries do lend themselves to repeat business, and if those second and third transactions aren’t taking place, you have some questions to answer.
Look at the marketing tactics you’ve employed over the time period that’s occurred since these customers last placed an order. Have you taken these consumers for granted? Have you failed to market to them on an individual level? Have you bombarded them to the point they’re burned out on your company? There are many reasons why a customer might not buy from a given company. Do your research — and make sure you truly understand your audience and why they might be tempted to consider other options.
Use Direct Mail
Direct mail has a higher response rate than marketing methods such as email marketing or pay-per-click advertising. It costs more than these tactics, but there’s a bigger return at the end of the day if you take the plunge. Besides, when it comes to enticing lapsed customers to come back, it’s an opportune time to pull out all the stops.
If used correctly, direct mail is a powerful tool. The costs associated with direct mail are comparable to those of paid search, and since direct mail is a media that should be used for highly interested and engaged prospects and customers, marketers will be investing their advertising budget wisely. This timing factor varies between industries, but needless to say, you’ll want to reach out to your lapsed customers when it will most benefit them to hear from you.
You’ll also need to understand how you want to use direct mail, and once again, understand why this may be the best approach. A hand-crafted, personalized letter might not be as effective as a simple postcard containing a promo code. Understanding why people have become lapsed customers in the first place will help you to identify ways you can appeal to them in order to get them back. Use this information as you craft your direct mail approach with lapsed consumers.
Tailor Your Approach
Effectively marketing to a customer base means constantly re-familiarizing yourself with the preferences and habits of your audience. While it might seem difficult to learn about a group of people who haven’t been customers in a fairly lengthy time, you don’t have to re-invent the wheel to appeal to lapsed customers.
Many lapsed customers will share key attributes with your ideal customers. But what might differ is how they respond to your messages. This is where the importance of primary research and overlays as possible sources for learning can pay off. Frequent, multi-buyers may respond to nearly all of your direct mail pieces because the messaging works for them. Lapsed customers may be motivated to purchase for different reasons, and without tailoring your message to their specific motivation, you are missing out on their loyalty. The more you learn about your current, active and lapsed, customers, the better you’ll be able to market to all members of your audience, no matter how recently they’ve made a purchase.
Another crucial aspect of re-engaging lapsed customers is sending your marketing messages in the preferred medium of each individual customer. A/B testing can help you zero in on the way lapsed customers enjoy hearing from you. Doing this will also prevent you from making assumptions based on what you think people want to hear. Carrying out frequent testing will make sure your approach is data-driven and, more importantly, effective.
Combine Transaction History and Intent Data
Once upon a time, a customer’s order was the only actionable way a company could keep in touch with that individual. Once the consumer disappeared, there was no easy way to tell if the lapse was because of the customer’s life situation, the inability of the company to market properly or some other unknown quantity.
Fortunately, times have changed. Today, companies can better understand their customers by looking at their website traffic. Linking website activity with the purchase history of a lapsed customer can show a company exactly where each customer is on the sales funnel today. This enables the business to better understand the path taken by the former customer; it also gives the company the opportunity to send a customized direct mail piece that speaks directly to that customer and his or her situation.
It’s important to note that a lapsed customer isn’t automatically a good fit for future direct mail circulation. It takes the right combination of previous purchases and current activity. By using intent data — the evidence of website activity that indicates a purchase may take place in the near future — you can focus your energies on the customers who have shown interest based on their activity on your website.
Reward Your Customers
Loyalty is a big sticking point for many modern consumers. They don’t want a one-size-fits-all approach, nor should you give them one. If you really want to entice a former customer to come back, a simple “We Miss You!” message isn’t going to cut it.
Look at the purchases made by each customer in the past, along with their recent website activity. Create the ultimate reward that will motivate that individual consumer to come back and make a purchase. If a lapsed customer looked at a specific item on your site more than once, send a postcard featuring the category or group the item is in, and include a promo code that gives the recipient a discount on their purchase from that group.
Your goal here is threefold. You want to re-activate the former customer, but at the same time, you want to put forth a better recruitment effort than the competition. Additionally, you want to show that you know these individuals better than anyone else (without being creepy); that personal touch is what will truly reach the modern customer.
Keep Re-Activations Separate
Just as no two former customers are identical, the population of lapsed customers is not quite the same as your active customer base. Therefore, it makes sense to treat these two segments as separate entities, at least for awhile
If a lapsed customer comes back and makes a purchase, it’s a great sign that your strategy is working. But it doesn’t mean your work is complete. Throwing these re-activated customers back into your house file only ensures that those consumers will get lost in the shuffle once again. The difference is, they might not come back after being burned a second time.
Continued nurturing of re-engaged customers will help those individuals feel valued, which in turn makes them more loyal to your brand. The extra effort you employ to get those customers to give you a second chance will pay off in spades as long as you keep the focus on individualized direct mail pieces with true value. Those success stories will then become your benchmark for your recruitment of other lapsed customers, something that would be impossible if re-activated customers were immediately lumped in with the rest of your customer base.
Win Over Your Customers Again
You may be tempted to see former customers as a negative commodity, a reminder of something your company did wrong in the past. However, with the right touch, those lapsed customers can be a valuable revenue stream for your organization. Identifying the potential reasons why customers may have disappeared and fully understanding your buyer persona can help you figure out which customers you might want to target. Similarly, using intent data in conjunction with prior purchases can help you refine your direct mail circulation efforts so that you only invest time and money in the best prospects for re-activation. Most importantly, a personalized and rewarding approach will give you your best possible chance at convincing lapsed customers to give you another shot.