Winback Lost Customers
Did you know that there is a little known line in the Almanac that Marty McFly buys in Back To The Future. “A winback strategy that reactivates your lost customers back to life is the 3rd easiest way to create new income”. OK, it was in the little read marketing consultancy section of the almanac!
Anyway, in the story, Biff pinches this Almanac, goes back in time and gives it to his younger self. And he profits from the knowledge of what is going to happen in the future.
Couldn’t happen in real life, right? Well, sort of wrong.
Imagine if you could look back at the customers you have served previously, that for one reason or other, you have lost touch with. Now the chances are you lost the customer (a) because you didn’t follow up with them (the biggest reason for customer attrition) or (b) they moved and didn’t tell you or (c) they were dissatisfied and cleared off to a competitor.
It is a focus on acquiring new customers that typically leads organisations to take their eye of this very profitable ball. Which is a bit silly as it costs you a lot more to win a customer than it does to winback a customer. You really need a winback marketing strategy.
So what should you do?
First of all, audit your database.
This is a simple process which allows you to discover how many of the individuals on your database are no longer living or no longer living at their address. This determines the absolute limits to your winback marketing strategy.
However good you thought your relationship was with your customer, they just don’t always inform you of their new address. Life gets in the way.
But by using sophisticated data suppression products it is possible to trace the customer, potentially through several addresses, to where they live now.
So, how much will it cost?
Imagine you had 10,000 names and addresses to process.
|Process||Volume In||Matched %||Volume Out||Estimated Cost||Total|
|Input Processing||10,000||98%||9,800||£2 per ‘000||£20|
|Deceased||9,800||2%||9,604||£0.40 per match||£78.40|
|Gone-aways||9,604||5%||9,123||£0.40 per match||£192.40|
|Forward address*||9,123||10%||8,210*||£0.40 per match||£365.20|
- Good news, you reduce the risk of upsetting the bereaved by removing people on your database who have died;
- Good news, you save money by not mailing people at a corrupted address or at an address they do not live at; and
- Very good news, you add back 913 former customers at the address they live at now.
*Forward address matching enables you to suppress the old address and use the address someone lives at now. In the example above, your database finishes up as a cleansed 9,123 records.
The next step?
Talk to me about producing a simple reactivation campaign. More at http://finelyfettled.co.uk/direct-marketing
Having a winback strategy for lost customers or donors is still the 3rd easiest way to generate income, with active customers first and referrals second.
So investing in obtaining forward addresses makes marketing sense.
At their new address, they may have fewer communication competing for their attention. Being reminded of their relationship with your business, and how important they are to you, is a powerful emotion and often campaigns based on such reactivations achieve excellent returns and perform more like active customer responses than they do cold campaigns.
More maths, sorry!
Imagine you mailed a postcard to each of the 913 ‘reactivated’ lost customers and your active customer conversion rate was typically 10% with an average order value of £100.
Running a 3 postcard sequenced campaign for best results could look like this:
|Process||Volume In||Estimated Cost||Volume Out||Total|
|Data Processing||Assume ALL costs above set against campaign||£656.00|
|Print & Postage||913||75p per postcard||(3X) 2,739||£2,054.25|
If the ‘lost customer’ campaign generated a conversion rate of 7%, or 64 customer buys, at an average order value of £70, then the campaign would (initially) return £4,480 versus a cost of £2,710.25, or a return on investment of 1.65.
The key thing is these ‘lost customers’ will act like your active customer base thereafter and offer further ROI, through lifetime value. You conduct a winback strategy for the “wonbacks” after all.
Biff had the right idea, however sleazy he was.
You can go back to the future too, with your lost customers. Call me on 01535 654930 and I’ll tap into your own database Almanac!