Lapsed customers — people who haven’t come back to buy in an expected amount of time — are a consequence of doing business. In fact, 20-25% of your customers will lapse at some point. This happens for a few reasons; for example:
- Your customers weren’t happy with their purchase
- They’re loyal but they don’t need to purchase frequently
- They purchase from different retailers based on price
Whatever the reason for the lapse, not making an effort to win them back means you’re leaving money on the table. Studies show that retained customers spend 67% more than new customers. Plus, it costs you less to retain customers than to acquire new ones.
Since people are spending more time using digital channels like email and text messages to communicate with each other, you can use these channels to engage with and excite your customers. These digital channels help encourage customers to come back and buy.
Here’s a look at how to identify who your lapsed customers are and how to use email and mobile messaging, like rich media, to win them back.
Identify What Types of Lapsed Customers You Have
Before you try to win back lapsed customers, you have to first know who they are. You have to differentiate between customers who’ve churned and aren’t likely to come back and customers who will buy again, but need some encouragement or a reminder.
Identifying what types of lapsed customers you have means your win-back efforts are more focused and personalized.
There are three types of lapsed customers to consider:
- Short-term lapsed customers: These customers aren’t loyal to just one brand. They shop where they can get the best deals and products. They might initially buy one of your products but when it’s time to restock, but they’re open to going elsewhere before buying from you again.
- Long-term lapsed customers: These customers might be loyal but the nature of your products means customers don’t have to buy them frequently. For example, if you sell cell phones, it might be years before customers have to buy a new phone. What’s interesting about this group is they’re open to buying accessories a little more frequently — for example, they’ll buy items like phone cases and chargers.
- Seasonal lapsed customers: These customers only purchase products at specific times of the year. For example, if you sell sporting equipment, customers interested in winter sports are only going to buy new gear in the winter.
To figure out what kind of lapsed customers you have, come up with a baseline time frame for when you expect customers to naturally return and buy. Use historical purchase trends to guide you. Depending on what you sell, you might find that an average repeat customer buys something once a month. Once you have this baseline, segment your customer list into the three types above. For example, you might find that short-term lapsed customers buy something every three months, whereas long-term lapsed customers buy something every few years. Seasonal lapsed customers might buy once a year.
Another way to segment your lapsed customers is with an RFM Analysis. This is where you group customers based on:
- Recency. The number of months since a customer last bought something
- Frequency. The number of purchases made over the last year
- Monetary Value. The average purchase value ranked as low, medium, and high
The RFM Analysis approach relies heavily on data, so depending on your customer size it’ll give you a more accurate picture of what types of lapsed customers you have.
Like the example above, you can use color-coding to identify your segments. For example, the customers in purple are lapsed customers with the best chance of winning back. Customers in red are also lapsed, but they purchase somewhat regularly and can eventually be targeted. Customers in black and grey have been lapsed the longest and are less likely to return. Don’t waste time trying to win them back; they’re likely not interested.
Launch Your Win-Back Campaign
When you’ve identified your lapsed customer segments, a blanket approach to re-engaging them isn’t going to cut it. What you need are customized campaigns that speak to the needs of each segment. This way, the messages each lapsed customer receives caters to their unique interests.
Here’s what this approach looks like:
- Short-term lapsed customers: Since these customers buy where they get the best deals, send them special offers that include discount codes or limited time savings. With rich media messaging (RMM), you can send a message with an offer that links directly to your product pages. Go one step further and automatically apply the offer to checkout, so customers don’t have to manually enter a code.
- Long-term lapsed customers: These customers are loyal, so introduce a loyalty program as a way to keep them engaged longer and reduce lapses. According to a report by Forrester Research, 78% of customers feel loyalty programs save them money and 60% of customers say these programs influence where they buy. Use a loyalty program to encourage this segment to buy other products between larger purchases. Send an email campaign that introduces the program and includes testimonials of customers as social proof.
- Seasonal lapsed customers: Since there are large gaps between purchases, send these customers reminders about upcoming seasonal sales and new products or accessories. Start messaging them weeks before the event so that you stand out in their mind and they’re less tempted to head somewhere else. Send a series of emails that include reminders of what customers have purchased in the past to get them to buy again.
Learn how to use RMM to improve your customer service: How to Manage Customer Support With Rich Media Content
Email and text are both personal spaces that your customers check multiple times throughout the day. You can even create an automated drip campaign that continuously reminds customers of the benefits you offer and your available products.
Win-back campaign best practices:
- Use short and direct subject lines. A bold but informative subject line in an email or text stands out and increases the chances of being opened. If you’re offering a discount, write something like, “It’s been a while! Get $20 off your next purchase.”
- Use messaging that shows customers they’re missed. Success in business requires you to build relationships with customers. Use your win-back campaign to share sentiments like “We missed you” or “Where have you been?”
- Make messages informative and resourceful so that they’re about more than just selling something. Show customers the value you offer.
- Monitor delivery frequency to avoid being annoying. An ideal win-back campaign should include three or four messages, but run your own tests to figure out what timing and frequency works for your customers.
Emails, SMS, and RMM all have high open rates. Make your messages engaging and clickable but including elements like bold headlines, videos, and clear calls to action (CTAs) so that customers are compelled to read through and click the links you provide to take action.
Improve Your Strategy Over Time
Once your campaigns are up and running, monitor each of them to learn what works (for example, what gets customers to click and buy something again) — and what doesn’t — to get customers re-engaged.
One option is to survey your lapsed customers and use the responses you collect to improve future campaigns. By talking to customers, you learn firsthand what they expect from you and your products and what’s stopping them from buying sooner. Based on what you find out, you can update your product offerings to give customers more options, update your pricing strategy to cater to a more specific audience, or update your marketing strategies to make your product value and solutions clearer.
Customers say they want to be heard and brands find that taking the time to listen increases revenue and retention. Use your survey to show customers you’re committed to their experience and adapting to their needs.
Learn more about how to create engaging surveys: Customer Journey Stages: Surveys & Customer Insight [Part 1/4]
Use multiple platforms to share the survey. For example, your campaigns can include a combination of email and text messages to customers. Here’s what this type of campaign might look like:
- Message #1 – Email: Send a follow-up to re-engage customers. This can be as simple as saying “We haven’t seen you in a while.” This works well for short- and long-term lapsed customers who haven’t come back in their standard return window. Send a survey with four or five questions to better understand their needs.
- Message #2 – Text: Follow up with customers that don’t respond. It’s possible the email wasn’t seen or ended up in their junk folder.
- Message #3 – Rich Media Message: For customers who haven’t responded after the first two attempts, include a special offer as an incentive to get them to complete the survey.
The benefit of combining the two channels is the successful open rate. Texts have a higher open rate than emails so you have a better chance of capturing customer attention when you incorporate these types of messages into your campaigns. As you can see in the example above, surveys sent via RMM can be just as visually appealing and interactive as emails.
Use VoiceSage to experiment with different kinds of mobile messages. For example, instead of sending a survey via RMM, consider sending interactive SMS. We’ve found that end-use customers are more responsive to SMS conversations. Use this feature to notify customers that there’s a survey available.
Also consider sharing your survey via social media. Keep in mind though that using this channel targets more than just the customers you’ve identified as lapsed. However, this isn’t necessarily a bad thing, since this information can be used to improve overall customer experience. The more data you have about customer experience and expectations, the more you can do to minimize your number of lapsed customers.
Update Your Campaigns to Adapt to Lapsed Customer Needs
Customers’ needs are always changing, which contributes to the reasons customers lapse. What met their needs a year ago isn’t quite what they need now. They’ll still buy the occasional product, but this could be much higher if you adapted to their needs.
Keep monitoring customer experience to minimize lapses and proactively launch win-back campaigns when lapses happen.
Keep asking customers about their experience and keep using the data you collect to understand what triggers lapses and which factors help to win them back.
To find out more about how VoiceSage can help you launch your win-back campaign, book a demo today.
Published on: 26th July 2019