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Rick Cook Mining The Marketing Database For Lost Opportunities

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 By Rick Cook

Nurturing Dead Leads and Former Customers Back To Life

We all know its less costly and time consuming to sell existing customers over new customers, but many marketers fail to recognize its also less costly to sell to former prospects and customers than new prospects and customers.

Call it “re-engagement” or “win-back” or “reactivation”, the idea is the same; To turn those inactive names in your marketing database into active prospects and then satisfied customers. Consider this 11 step process to add new life to old prospects.

  1. One of the most important questions in reactivation marketing is why the customer left in the first place. Your Customer Relationship Management database can help answer this by looking at the totality of your contacts and activities with the customer. How long has it been since the last contact with the customer? Was a dialogue actually established or were they simply a name on a list? Did they have a complaint or was there a failing (not delivering product on time) at the time they left? You've got a lot of information on your customers, active and inactive, in your CRM database. Use it. Customers who left because they were dissatisfied pose a particular challenge and take special handling. You'll probably want to craft a special campaign acknowledging their concerns, describing new business process improvements and stressing your efforts do to better in a highly personalized manner.

  2. Establish a cutoff point. That is, non-responsive prospects or customers who haven't placed orders or engaged within a certain amount of time are to be considered as inactive and therefore potential candidates for a reactivation campaign. Just what that cutoff point should be is subject to discretion and somewhat industry dependent. You want it to be long enough to establish that the customer is lost, but not so long that time exacerbates the customer's reason for not responding. Although six months or a year is a typical period, this is somewhat influenced by industry. A pizza restaurant can expect to have contact with its customers at least once or twice a month, so six months without contact is reasonable. A florist, on the other hand, may only see the customer once or twice a year (Valentine's Day, Mother's Day, etc.) and a year or even longer is a more reasonable period.

  3. Next examine the names on the list for potential response and segregate the likely from the unlikely responders for separate campaigns. The simplest division is between former active customers and those who never responded to any of your previous marketing campaigns. The non-responders are probably deadwood to be trimmed. Now you've got a list of “lost” customers to be found and you can get down the real work of analysis and campaign strategy.

  4. An initial question to be considered is “do we want this customer back?” If the customer was new and the transactions were marginally or inconsistently profitable, it may not be worth the effort to try to woo them back. At most they may be worth one or two simple attempts to reestablish contact. Someone who was a long-time customer, or a particularly profitable one is worth a more concentrated effort.

  5. Plan your campaign carefully. Reactivation campaigns require special thought and effort to be most effective. A typical program will involve a nurture marketing campaign with four to seven attempts to win back customers. Usually they will proceed through an arc with successively better offers and a final message that simply asks to reestablish contact again. Remind the customers of the relationship and generate excitement about products or services introduced since their departure.

  6. Personalize your messages, especially the first one. You're trying to reestablish a relationship with a customer. The first message is critical in building that relationship anew. It should use the customer’s name and remind them of the previous relationship.

  7. Incentivize the customer. Offer them something special to make contact or to deal with you again, something to get them over the hump. This can be non-monetary, like a product test drive or invitation to a beta program.

  8. Offer deals. Typically a 10 or 15 percent discount, or even more, on a popular product will be offered. Since the customer is inactive you’re not detracting from your bottom line – unless the deal is so good it amounts to a loss leader.

  9. Include a call to action in each message to try to motivate the customer to come back. Experiment with different call to action messages and measure the results.

  10. Analyze the results of your campaign. Keep careful track of who responds, and rejoins your regular customer list, who responds but isn’t moved to further action and who doesn’t respond. Again, this is an ideal job for your CRM system and possibly an opportunity to delegate the target population into more specific nurture campaigns based on their actions. The ones who fully respond, say by buying again from you, go back on the customer list and are treated as regular customers. The ones who respond but don't take further action should be put into a persistence campaign. The ones who don't respond at all may receive a final campaign or be removed from your customer list permanently.

  11. Repeat. Win-back marketing isn't a one-time event. It should be an on-going cycle of nurture marketing campaigns aimed at getting customers back. Use your experience in previous campaigns to better tailor your messaging to move people to be your customers again.

Understand that reactivation marketing is a kind of recycling. A significant percentage of the list isn't going to come back. That's unfortunate but that's life. Write them off and move on. However every profitable customer you can salvage represents a net win for your business. The cost of reactivating a customer is generally less than prospecting for and acquiring a completely new customer. For this reason alone, reactivation marketing is worth your time and investment. End

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Reactivation campaigns are less costly and more effective than prospecting for net new customers. Here's the 11 step CRM mining and marketing campaign approach to engage and win-back inactive accounts and former customers.

 

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