By Jim Wehmann, vice president, global marketing, Digital River
In any direct marketing business, it is a foundational problem when previous buyers stop engaging with the retailer or brand. Sometimes referred to as the “leaky bucket” problem in direct marketing, customer attrition impacts all areas of the business. For example, it impairs the overall value of the “house file” and puts added pressure on new customer acquisition. Lapsed customers for e-mail programs are no different.
Here are five strategies for dealing with and reactivating lapsed customers:
1. Define lapsed customers.
One mistake e-mail marketers often make is to not create rules that define lapsed customers. You don’t want to let attrition happen without recognizing it and dealing with it quickly. Different businesses will have different definitions. Even within a business, different rules or definitions may apply. For example, e-mail accounts from lead-generation programs that generate triggered e-mails might be considered lapsed with no response or interaction after the initial 30- or 60-day contact stream. At the same time, someone who has been a good customer and purchased for several years may not be considered a lapsed customer after months of unopened email.
2. Track and report their performance.
Once you define lapsed customers, you’ll want to gain as much visibility and measurement of their performance as possible. In addition to tracking and reporting the typical e-mail metrics—delivered e-mail, contacts, opens, click throughs, orders, sales value, etc. —you’ll also want to measure reactivation rates and even lifetime value of a reactivated customer. It will help you not only understand the potential value of these names, but also measure and understand the impact of various strategies and tactics that were deployed.
3. Segment the lapsed customer list and target messages appropriately.
As described above, there are different profiles of lapsed customers. Some had been long-term, customers, while others are new prospects that never converted. Some have been lapsed for years, others stopped buying or engaging recently. Each of these groups needs to be spoken to differently, with different frequency, through targeted mailings.
4. Vary the “We want you back” messaging and optimize through testing.
There are many ways to say you want the customer to renew its relationship with your brand. Frequently, marketers acknowledge that “We haven’t heard from you in a while” and then follow it up with a special offer or update on significant new developments since the customer lapsed. It’s important to vary and test the messaging to give yourself the best chance of hitting the theme that will drive a customer back to you.
5. Stream test the contact frequency.
Determine the optimal contact frequency of lapsed customers by testing different frequency options. Be careful to measure the impact on reactivation rates vs. undeliverable e-mail and other operational metrics.
In summary, there are several key ways to reactivate lapsed customers. Given the cost of finding and acquiring new customers today, reactivating lapsed customers may be the best way to grow a profitable house file. Remember: define, segment, test, and target.
Jim Wehmann is vice president of global marketing at Digital River. For information, visit www.digitalriver.com.