Winning back customers is not a direct task, especially in today’s world of consumer choice. The starting point should always be to actually know which lapsed customers are actually worth seeking to win back.
The Actual Data
The key is to take all available customer data, to fully understand the individual behavior and then apply that information to inform the targeting, the message and the offer in the communications. And the appropriate data to enable this is a transactional data, which can indicate when buying patterns are changing. Other data, such as customer satisfaction data, can be used, but it is not the most credible or reliable information to use. It is necessary to have a full view that takes in all of the knowledge a company has about the customer to really understand a customer’s behavior and relationship with a product or a supplier. The best way to achieve this is by setting up a Single Customer View (SCV) database that brings together data from all departments including orders, marketing, deliveries, customer services, CRM, etc, and holding it in one place.
Single Customer View
This ensures marketers are operating with current information and are not sending conflicting messages from different parts of the company. For instance, without an SCV database, one part of an organization might contact an ex-customer that it wants to win back and treat them like a new customer, rather than acknowledging the fact they used to be a customer. Instead an SCV can help inform a fresh approach to get the customer to come back.
It can also help marketers avoid viewing customer behavior in isolation. Taking home shopping as an example, viewing a customer purely as a catalog customer and not viewing all interactions the customer has with the organization could result in the customer’s online activity being ignored. As a result, marketers could fail to communicate with the customer in the best possible way that maximizes ROI. For instance, a customer might be very happy ordering through a catalog or over the phone, but finds online ordering not very user friendly. Viewed purely as an online customer a marketer might ignore them as being of little value but by viewing the customer’s entire interactions with the firm it might be discovered that, with a little help and encouragement, they could turn into a very profitable online customer.
An SCV database can also aid organizations to avoid making assumptions about customers and, instead, provide a detailed picture of every customer. It is too easy for marketers to make expectations about customer behavior based on demographic profiles – something that was highlighted in our recently published Online Retail Index report, which showed that typically loyal middle-aged home shoppers who tend to be very loyal to their catalogs are actually more promiscuous when they shop online. Since the greatest growth in online shopping activity was found to be coming from 35 to 54-year olds this sort of information is invaluable in informing marketing strategies. Having a single and secure database also makes data safer and easier to manage, with a team overseeing what data can be used and what cannot.
When to Start a Win-Back Activity
Aside from identifying customers for win-back operation it is also essential to establish the point at which win-back activity should be initiated. Data on recency and frequency of purchase is crucial for managing retention and switching customers to win-back. If a customer is on a contract that is coming to an end changes in their behavior can highlight a risk of churn. Repeat transactions is needed start to look different. Some firms still tally customers in their customer base even if they haven’t made a purchase for three years. Mainly because of the impact it would have on internal reporting – classing a customer as lapsed or churned would reduce the volume of the customer base and not make a good impression on the board.
Instead, firms should start a 6-month pending lapsed stream to account for customers whose change in behavior suggests they might be about to jump ship. These customers can then be aimed with communications and offers designed to keep them spending rather than looking for better deals elsewhere.
The Pre-emptive Strike
Associate analysis can help identify points in the customer journey where pre-emptive action can be initiated. By taking customers who have joined in the last week and comparing them to customer who joined in another week, the customer journey can be mapped to provide a view of what is likely to happen 2, 3 or 6 months on. For example, a telecoms provider has invited people to switch to them. Analysis of the customer journey shows that some get cold feet after they receive the welcome pack, regret the decision to switch and cancel the contract. Others cancel after receiving the first bill when it transpires they aren’t getting exactly what was promised. As churn or a drop in activity is shown to occur at particular times the telecoms provider can pinpoint steps in the customer journey that need attention.
The most important thing for firms to remember when embarking upon win-back campaigns is to carefully analyze customer data and look beyond top-line conclusions in order to be able to communicate with ex-customers, or those who look likely to lapse, in a personalized and targeted fashion based on purchasing histories and other available data.