Negosentro.com | One difficult fact of business is the inevitability that all companies will experience a certain amount of churn. Though it varies from industry to industry, on average, churn rate is around 25-30%. While there are several tried-and-true ways to focus on the problem of churn, likely the most well worn are:
- Preventing churn by focusing on retention of current customers.
Offering incentives and personalized service to customers you already have is probably the least expensive way to combat churn and receives the best return on investment. After all, current customers, if treated nicely, can be your greatest advocates, making personalized recommendations to peers that often proves to be of greater effect than any marketing campaign.
- Lowering the effects of churn by focusing on engaging a new customer base
Expanding on the traditional ways a product or service is viewed is an excellent way to try to reach out to new consumers.
However, has been shown that courting new customers is around 5 times more expensive than this third option.
Winning back lost customers
There are many conversions to be had when focusing on customers that you have lost to churn over time. By using specific strategies, your customer winback may prove to be an extremely valuable method of combating churn.
Why customers leave
If you are going to understand how to win back customers you need to know why they left your service in the first place. Make sure you are collecting data surrounding churn. Reach out to customers with incentivized surveys that ask them to quickly explain why they may have gone with a new service. It may be that you find a common thread among the answers that you can address to try to win those customers back.
Focus Winback efforts
It’s tempting to try to reach a large diverse group of customers you have lost. After all, their familiarity with your service just might bring them back into the fold. But it’s more judicious to analyze the types of customers you have lost and to categorize them so that you focus your efforts on those that are most likely to convert back into your customers.
Recency, Frequency, Monetary value (RFM)
Analyzing customers with RFM will allow you to better understand who to try to engage with customer winback initiatives.
Customers that were once super users, who invested in frequent large orders in the recent past and engaged in social media or on recommendation sites, are most likely to re-engage with your product. These are the brand ambassadors that it is truly worth focusing on to try to win them back. It is worth, however, checking:
- Were they invested in just one part of your service? They may not really be aligned with your larger goals.
- Did they have a service complaint that was not resolved? They may harbor resentment that can’t be overcome.
- Was the issue one of cost? Customers who left due for financial reasons are easier to win back than those that left due to issues with service.
Trying to win back customers from a long while ago who only made a few small purchases anyway, may be a waste of effort, taking away from more fruitful avenues.
How to win back customers
There are a number of effective methods companies use to win back customers. If you have properly analyzed the consumer behavior of your lost customer you can more easily target individual consumers with the kind of winback effort that they are likely to respond to.
Incentives: The art of offering a proper incentive is that it wants to connect with a customer and give them the feeling of an offer designed just for them. Connecting with their pain points will allow you to give them the kind of incentive they desire:
- Was expense an issue? Maybe offering a discounted rate will give them incentives.
- Did they need an upgraded service? Maybe you can offer more services at the price of a lower subscription. Or offer a bundle that adds something to the services they used to enjoy, now at a lower cost.
Ad campaigns: A persuasive ad might be all that you need to connect to a lost customer. If your service has changed recently to address an issue they had in the past, let them know. Also, if there was one particular issue that many customers had with your service, put out a campaign that informs them of how you’ve dealt with that problem.
Reminders: Sometimes all it takes is to remind a previous customer of all the benefits that you offer. It might be that they left your company without knowing everything that you could do for them, or that reconnecting will rekindle the reason they liked you in the first place. If possible, use data to demonstrate what you were able to give them as a customer, such as a summary of the money they saved by using your service.
The infographic below, from Fundera, is a quick way to reference a number of excellent strategies to put into practice when working to win back your best customers and retain them too.