Nothing is as daunting as seeing customers sign out or stop using your service. But it’s an inevitable part of doing business: some of your customers, for whatever reasons, may choose to stop doing business with you.
However, an above-average churn rate is an indicator that your business is struggling. A downturn or attrition rate can cripple a business and lead to a drop in sales.
Average churn depends on your industry:
This article provides a step-by-step strategy to help you win back lost customers through targeted content, regardless of your industry.
It is worth paying attention to customer loyalty
Customer loyalty is critical to a growing business. Acquiring a customer can cost five times as much as retaining customers.
If you want to attract a new customer, you must first identify people who match your ideal customer demographics and then run a marketing campaign to convince that person to try your service or buy your product. All of this costs time and money.
For example, let’s say you’re running a pay per click marketing campaign. You need to design the ad, define the targeting, and provide a campaign budget. When someone clicks the ad, they’ll be sent to a landing page that you need to create. Once they are on your pay for email list, send them links to content on your blog that someone has to write. At the end of the process, you’re in luck if 1 in 100 people decides to try your service or buy your product.
Each phase of the customer acquisition process is a financial investment. With customers who have tried your product or service, you can skip most of it. When you offer a good product, they have some confidence in what you are offering. As a result, it’s easier to sell to that person again.
If you reduce your churn rate by 5%, you can increase profits between 25% and 95%, according to Small Business Trends. If you want to increase your profits, focusing on customer loyalty is a breeze.
The following five step strategy will help you use targeted content to win back lost customers.
1. Let data guide you
The first order to win back lost customers is to know them. Get 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 following and which strategies are producing the best results.
Start by segmenting your customers into groups. A best practice is the Timeliness, Frequency, and Money (RFM) model:
Source: Clever Tap
When performing an RFM analysis, you give each customer an RFM rating between one and five. A score of five is a high score, and a score of one, two, or three shows that there is still much to be done. Your best customers have a score of 5-5-5. Take a look at this table as an example:
You can use an RFM analysis of customers to keep track of what your customers are doing. Through the analysis, you can begin to divide customers into groups and identify trends in their buying habits.
(For more detailed guidance on how to use the RFM model, see this article.)
2. Find out why the customer left
Customers leave services for a variety of reasons, including poor customer service, pricing issues, 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, are likely to give you more insight than a survey. Obviously, interviewing is more difficult and time consuming, so you need to find the right balance for your business.
The response rate for any type of customer exit feedback is likely to be low. Consider using an incentive to improve response rates.
The graphic below shows why customers are leaving and how you can win them back:
As you collect responses from your customers, you will gain insight into the problems they are facing. This data will be useful in developing your strategy to reduce churn and increase customer loyalty.
3. Develop your customer loyalty strategy
You have completed your research. You have divided your customers into groups based on their spending habits and engagement, and this analysis gave you valuable insights into the customer journey. Additionally, you’ve identified issues that customers have encountered with your company.
Next, you need to develop marketing strategies that do two things:
- Anticipate the customer journey so that you can offer products or services to people when they are most likely to buy something based on their buying habits
- Develop a marketing strategy to win back lost customers based on understanding 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 you know that 76% of your clients increase their budget between months 9 and 12, you can come up with a project proposal that anticipates that need. You can also discuss marketing goals and share projections about the business impact of a larger budget.
After anticipating the customer journey, you can create a strategy that aims to win back lost customers. You may have noticed that a solid 12 month project is a problem for customers because they cannot guarantee cash flow for such a long period of time. You can then offer a lost client the opportunity to work with your agency for six months. You can terminate the contract without risk with a notice period of 30 days.
4. Remind your lost customers of what they are missing
There are simple and effective ways to use targeted content to get customers back.
It’s not for nothing that marketers like to use Fear of the Missing (FOMO) to increase engagement and sales. FOMO lives from the wish of a customer not to miss a good opportunity.
FOMO content is often used as part of a shopping cart exit sequence. However, it is just as effective as part of an action.
Here is an example of a great FOMO email from the Boden clothing store:
The above email is effective because …
- It reminds the customer of things they are missing.
- It uses excellent visual elements to get the message across, which also helps establish brand identity.
- It has a clear call to action in the form of the “Discover What’s New” tab.
Your message to customers about what they are missing should include these points and many more. You can even tailor it to the person of the buyer.
5. Offer customer loyalty incentives
One of the easiest ways to get customers back into your crease is to encourage them to come back. These incentives can be discounts, upgrades, freebies, freebies, or others.
Offers should be specific to what you want the customer to receive, and they should use lots of visual elements that make the reach immersive. 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 find most appealing.
For example, a telecommunications company tested four recovery offers for 40,000 customers in 2016, and some worked better than others. The results according to the Harvard Business Review:
- Discount ($ 20 discount 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
- Tailor-made (customers who left for the price got a discount and customers who left for the service got an upgrade): 45% success rate and 596% ROI
There can be benefits in automating your product offerings. With the right quote management software, you can close deals more easily.
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No business can exist without customers. Wal-Mart and Sam’s Club founder Sam Walton said, “There’s only one boss: the customer. And he can fire anyone in the company from the chairman by simply spending their money elsewhere.”
If you find yourself losing customers, don’t throw your hands up in desperation. Some level of churn is normal for any business, and the tactics outlined in this article can help bring customers back even after they leave.
However, to prevent customers from leaving in the first place, every business should focus on keeping them happy and satisfied by prioritizing customer service. Treat your customers as a gift: Recognize and reward customer loyalty; Encourage customer feedback; and respond promptly to any concerns or difficulties with your product or service. Also, be creative and innovative in developing products and services that address your audience’s vulnerabilities.
If you do all of this, customers will be satisfied and satisfied.