Get That Customer Back!

By Heidi Cohen , September 1, 2005

In "My Boyfriend's Back," Donna Hanover describes how she rediscovered romance with her high school boyfriend. The book has a very valuable lesson for marketers: sometimes, your best customers are former ones.

Although continually acquiring new customers is important for growth, reconnecting with former buyers is a cost-effective way to keep a customer base growing. It's the reason traditional direct marketers, especially magazine publishers, routinely re-promote to inactive customers.

Like reconnecting with old boyfriends, reconnecting with lapsed customers works because they know your brand and (hopefully) had good experiences with your company. This saves precious branding dollars. Further, if you've done a good job building and maintaining your email and postal mail house files, lapsed customers are cost-effective to contact because you know where to find them.

Online customer win-back starts with every customer interaction. Win-back isn't only about getting customers to keep coming to your site and purchasing from you. It's also about getting them to spread positive feedback about your company and recommend your products to their friends. If you're thinking, "Our former customers would never buy from us," consider improving your customer process to engage with these dissatisfied customers. To this end, use your Web site to engage consumers to get an early indicator of potential issues:

• Ask for, read, and respond to customer feedback. Have links for customer comments on every page. At a minimum, include a link in each page's footer. Have a process to resolve customer issues quickly.
  
  
• Monitor consumer-generated media. Use PubSub, Bloglines, Google, and Technorati, among others. (See "Competitive Intelligence: What You Don't Know Can Hurt You" for details.)
  
  
• Follow up with purchasers. Thank them and get their input regarding product and customer service.

Online marketers must plan customer win-back sooner than their offline colleagues, who have the luxury of re-promoting their postal house files months after the last transaction. With CAN-SPAM and junk email filters, your only chance to engage customers may be when they sign up or unsubscribe. Timing is critical:

• Engage readers so they subscribe to your mailings. This is the first step to starting a dialogue with visitors and building a list. Since confirmation email is among the most read communications, use it to start a dialogue. Tailor your early email messages to new customers.
• Offer new customers special promotions for user information. Build your email and postal lists over time with this information. Present new customers with special promotions, such as savings or free trials to your premium products. Or work with a related marketer to achieve the same outcome, enabling you to make money via an online sponsorship.
  
  
• Make your subscription center engage users. Offer readers other options, such as lower frequency, more targeted content, vacation period, and seasonal offerings, to keep them actively receiving your communications. Include a means for users to email comments. If users change their registration, send another confirmation email. Add a link to each page's footer to allow users to change their preferences.
  
  
• Use your unsubscribe confirmation to leave customers with a positive feeling about your firm. Thank them for their business, and ask for input regarding your products. These comments can yield insights into issues or concerns that could help improve your offering.
  
  
• Test a postal win-back program if you have terrestrial addresses. Test different creative and copy, and monitor costs.

For e-commerce marketers, reactivation strategies might include the following:

• Follow up transactions with a thank-you landing page. Take this further by enclosing a note with the product or sending a follow-up email after the package has been sent to gather feedback.
  
  
• Send email that reengages lapsed customers. Try different offers and creative approaches to determine the most effective. If possible, make the correspondence relevant to the customer's purchase history. Ask customers why they stopped purchasing.
  
  
• Mail catalogs or direct mail to inactive customers who've stopped responding to email. This option is usually more expensive than email, but it's acceptable if the yield is high enough. A mail piece targeted just at those who purchased from you in the past should have a good return. The recipients were predisposed to buy from you, and you don't need to spend money to find them. When using a physical promotion, allow customers to respond offline.

To analyze the effectiveness of your customer win-back program:

• Analyze email lists for non-performing recipients. This allows you to determine how to win back some of those users and better keep customers engaged while reducing potential ISP issues. According to ReturnPath, 31 percent of users change email addresses each year, translating to high potential churn.
  
  
• Check for non-responders or inactives. Repeat mailings to unknown users hurt your relationships with ISPs and may cause you to lose other customers. An inactive period may vary from 60 days to six months, based on your offering.
  
  
• Routinely perform list hygiene to keep your list clean.
  
  
• Look for clues as to when customers stop being interested or purchasing. This will help you win these customers back in a timely fashion. If the fall off begins after 60 days, start at 30 or 45 days to win them back.
  
  
• Use an email change of address service to reconnect with non-responders. Check whether they've changed addresses. Offer the option to change addresses in your email preference center, as well. This enables you to renew relations with them.
  
  
• Monitor cancellations and unsubscribes. If there's a spike relative to past experience, analyze your site to determine if there's been an internal or external change to cause it. For example, if you see a high number of unsubscribe requests after the first emailing, there may be a disconnect between your offer and what you ultimately deliver.
  
  
• Track results and costs related to customer win-back efforts. Monitor the number of lapsed customers you convert back to active customers. Relevant costs include email, postal mail, creative, and database costs.
  
  
• Develop a second customer lifetime metric. When you win back a customer, you create another lifetime of spending. Track the related sales and referrals to understand how they can grow your business. The reacquisition cost is usually lower because you have the customer's contact information. Hence, these customers tend to be more profitable.

Getting former customers to purchase from you again is like reconnecting with an old sweetheart. There's a lot of shared experiences and good memories. This translates to cost-effective marketing because you know who these customers are and they know you, your brand, and your products. For marketers who face the ongoing challenge of acquiring more customers with fewer resources, mining lapsed customers can be a great resource.

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