Nothing is as disheartening as seeing customers unsubscribe or
stop using your service. But it's an inevitable part of business: Some of your
customers, for whatever reason, may decide to stop doing business with you.
An above-average churn rate, though, is an indicator that your
business has problems. An upward churn or attrition rate can cripple a business
and cause revenue to dwindle.
Average churn depends on your industry:
Source: Recurly
This article contains a step-by-step strategy that you can use
to win back lost customers through targeted content, whatever your industry.
It pays to pay attention
to customer retention.
Customer retention is critical for a growing business. Acquiring
a customer can cost five times as much as retaining one.
If you want to acquire a new customer, you must first identify
people who fit your ideal customer demographic, then run a marketing campaign
to convince that person to try your service or purchase your product. All that
costs time and money.
Say you run a ppc campaign. You have to design the ad, define
the targeting, and set aside a campaign budget. When a person clicks on the ad,
they are sent to a landing page, which you have to create. Once they are on
your email list, which you have to pay for, you send them links to content on
your blog, which someone has to write. At the end of the process, you're lucky
if one person in 100 decides to try your service or purchase your product.
Each stage in the customer acquisition process is a financial
investment. But you can skip most of it in the case of clients who have tried
your product or service. If you provide a good product, they have a degree of
trust in what you offer. As a result, it's easier to sell to that person again.
Lowering your churn rate 5% can increase profits anywhere from
25% to 95%, according to Small business trends. If you are looking to ramp
up profits, focusing on customer retention is a no-brainer.
The following five-step strategy will help you use targeted
content to win back lost customers.
1. Let data be your guide
The first commandment of winning back lost customers is to know
them. Have a clear picture of who your customers are and what their preferences
are.
Information you gather about your customers will help you
understand which customers are worth pursuing and what strategies will yield
the best results.
Start by segmenting your customers into groups. One
tried-and-tested method is the recency, frequency, monetary (RFM) model:
Source: Clever Tap:
When conducting an RFM analysis, you give each customer an RFM
score between one and five. A score of five is a high score, and a score of
one, two, or three shows that there is work to be done. Your best customers
will have a score of 5-5-5. Take a look at this table as an example:
An RFM analysis of customers will help you keep track of what
your customers are doing. Through the analysis, you can start to place the
customers into groups and identify trends in their buying habits.
2. Find out why the
customer left
Customers leave services for a host of reasons, including poor
customer service, pricing concerns, and better alternatives offered by your
competitors.
One of the easiest ways to collect customer feedback is to send
customers an exit survey. You can also combine surveys with other customer
feedback strategies. Exit interviews, for example, will probably provide you
with more insight than a survey. Of course, it's harder and more time consuming
to conduct interviews, so you have to find the right balance for your business.
The response rate for any type of customer exit feedback will
likely be low. To improve the response rate, consider using an incentive.
The following graphic outlines reasons customers leave and how
you might win them back:
Source:Saasquatch
As you collect responses from your customers, you will gain
insights about the problems they face. That data will come in useful as you
device your strategy to reduce churn and increase customer retention.
3. Devise your customer
retention strategy
You've completed your research. You've broken your customers
down into groups based on their spending habits and engagement, and through
that analysis you have gained valuable insights into the customer journey. In
addition, you've identified problems that customers have encountered with your
company.
You next need to devise marketing strategies that do two things:
- Anticipate
the customer journey, so you can offer products or services to people when
they are most likely to buy something based on their purchasing habits
- Devise
a marketing strategy to win back lost customers based on an understanding
of the insights you've gained about your customers
Let me give you a hypothetical example of how it might work.
If you run an SEO agency and know that 76% of your clients
increase their budget between months 9-12, you can prepare a project
proposal that anticipates that need. You can also start discussing
marketing goals and share projections about the impact of a higher budget on
their business.
After anticipating the customer journey, you can create a
strategy aimed at winning back lost customers. You might have identified that a
fixed 12-month project was an issue with customers because they can't guarantee
cash flow over such a long period. You might then offer a lost customer the
chance to work with your agency for six months, with the option to cancel the
contract at no risk with a 30-day notice period.
4. Remind your lost
customers of what they are missing
There are straightforward, effective ways to use targeted
content to win back customers.
It's for good reason that marketers love using the fear of
missing out (FOMO) to drive engagement and sales. FOMO thrives on a customer's
desire not to let a good opportunity slip away.
FOMO content is often used as part of a cart-abandonment
sequence. However, it's equally effective as part of a promotion.
Here's an example of a great FOMO email by clothing shop Boden:
Source:Ometria
The above email is effective because…
- It
reminds customers of things they are missing.
- It
employs excellent visuals to get the message across, which also helps to
establish brand identity.
- It
has a clear call to action in the form of the "Discover What's
New" tab.
Your message to clients about what they are missing should
incorporate those points and many more. You can even tailor it to buyer
persona.
5. Offer retention
incentives
One of the simplest ways to draw customers back into your fold
is to give them incentives for returning. Those incentives could be discounts,
upgrades, freebies, giveaways, or others.
Offers should be specific about what the customer stands to get,
and they should employ lots of visuals that make the outreach captivating.
Also, they should make the customer feel wanted and important, and they should
have a clear CTA.
Use data from your RFM analysis to understand which offers and
incentives your lost customers would find most appealing.
For example, in 2016 a telecom company tested four win-back
offers on 40,000 customers, and some worked better than others. The results,
according to Harvard business review.
Discount ($20 off for six
months): 45% success rate and 668% ROI
- Upgrade
($35 movie channel free for three months): 41% success rate and 793% ROI
- Bundled
($20 off for six months, plus a $35 movie channel free for three months):
47% success rate and 302% ROI
- Tailored
(customers who left because of price got a discount, and those who left
because of service got an upgrade): 45% success rate and 596% ROI
Automating your product offers can proffer advantages; with the
right proposals management software, you can more easily close deals.
* * *
Without customers, no business can exist. Wal-Mart and Sam's
Club founder Sam Walton said, "There is only one boss: the customer. And
he can fire everybody in the company from the chairman on down, simply by
spending his money somewhere else."
When you notice that you are losing customers, don't throw your
hands up in despair. Some amount of churn is normal for every business, and the
tactics outlined in this article can help to bring back customers even when
they leave.
However, to keep customers from leaving in the first place,
every business should be focused on keeping them satisfied and happy by prioritizing
customer service. Look at your customers as a gift: Recognize and reward
customer loyalty; encourage customer feedback; and promptly respond to any
concerns or difficulties with your product or service. Also, be creative and
innovative in coming up with products and services that address the pain points
of your audience.
Do all that, and you'll keep customers pleased and happy.
Talk to a Marketing consultant today to guide your Business.
Reach me here:
Elvis M. Okoye; SFc; AICA; BA; CCPWB Whitebelt Associate ; M.Sc. (Lagos)
Lead Project Manager & Principal Consultant; FrontRow Technologies
MARKETING CONSULTANT I BROKER I MARKETING STRATEGY DEPLOYMENT & GO-TO MARKET STRATEGIES I
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