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Investing in Lapsed Customers to Drive Reactivation

By: PWelsh on October 21, 2015

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For retailers, winning a customer is only half of the battle. Once a brand has converted a prospect to a customer, the buyer’s journey is still an ongoing process and as such, the retailer must find opportunities to sustain bilateral engagement with customer.

According to industry data, <5% of customers make a repeat purchase after 18 months of inactivity. This is a troubling trend because according research from Bain & Company, it is 6 to 7x more expensive to acquire a new customer than it is to keep an existing one. This means that retailers are paying more to acquire customers versus realizing incremental revenue gained from customer’s who go on to make a repeat purchase.

Once a customer is reactivated this increases their future lifetime value or simply stated the potential revenue associated with future purchases made by that customer. At the same time, this decreases the cost of acquisition because it is more cost effective to market to past customers.

However, with sustained engagement and maintaining communication with lapsed customers in a customer-centric manner, multichannel retailers can help reactivate past customers. One avenue for driving customer reactivation is through an orchestrated outbound communication series that creates an increased sense of urgency as customers approach 18-month inactivity cliff.

By offering an incentive or an email with personalized and tailored content based on previous purchases, this can help to rebuild the lost relationship. Retailers can also model future value of a reactivated customer so that they can have a framework for investing in win-back initiatives and the value gained once a customer is reactivated.

Once a customer reactivates, it the responsibility of the brand to ensure that the customer’s relationship with the brand does not end with the initially transaction. Rather the brand should use past customer behavior and interactions with the brand to dictate future engagement strategies and ensure that the brand maintains its customer-centric marketing approach.

Although it varies from industry to industry, nearly 75% of all buyers are one-time only customers. Yet, the customers who go on to make 2, 3, Nth purchases are more valuable and generate incremental revenue for a retailer. The bottom line: reactivation is a simple yet effective lifecycle marketing strategy that should be used to reengage customers who have lapsed.

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