5 Tactics to Reactivate Lapsed Customers

Jun 02, 2012 6:58 AM  By

Reactivation strategies are marketing efforts to influence the buying behavior of customers who have not purchased from your organization for a period of time.

That period of time is different for each organization, and there’s really no rule of thumb. Twice a year may work for one company, while another in the same industry may have a merchandise assortment (and customer buying cycle) indicating a purchase every two months is desired. Only you can determine the best reactivation strategy cycle for your company.

The best way to do that is to run a report to isolate your best customers and review their purchase behavior. Ideally, you want all of your customers to behave like your best customers—and one way to do that is to structure marketing programs to influence and compel customers to make a purchase.

Reactivation efforts are important to the heath of your business, so include a reactivation effort with every planned marketing contact.

Start early
The best way to keep customers from becoming dormant (a.k.a. inactive, lapsed, tired) is to ensure that your first-time buyers quickly become second-time buyers.

Start with an immediate incentive such as “Buy now and save $X on your next purchase.” This offer can be communicated as a dot whack on the front cover of a catalog or on a bind-in card or blow-in card; it can be included on customers’ email order confirmations; or done as a separate offer included in their shipments.

Variations on the offer include, “Buy now and receive a $X Gift Card toward your next purchase,” or a percentage off versus dollars off. You should test to see which offer is more enticing to your customers (as well as financially viable for you), but each of these examples is a proven strategy. This technique works really well as an offer to both prospects and your current active buyers.

Season’s Greetings!
Customers who buy your product to send as a holiday gift should be reminded of their gift giving during the appropriate time of year. (Some companies start sending reminders to their best customers in August—but you need to determine the timing strategy that works best for your organization).

You can easily develop a specific campaign to send to these customers that includes an order form with the name of each gift recipient as well as the gifts purchased last time. Your customer need only check a box to tell you to send the gift again.

Here are some tips to increase the response rate:
If you offer flexible delivery dates, allow your customer to choose the delivery date for each giftee.
If the product from last year is no longer available, offer a suggestion, such as “Last year’s widget is not available, we suggest widget #1234.”
Always add teaser copy, such as “Don’t forget to buy one for yourself!” or “Need another gift? Add the information here.”
Ensure that these completed order forms are securely available online for customers to use.
If you have the customer’s email address, send reminder notices as shipping deadlines approach.

Online conversions
When you are able to identify inactive customers who are shopping on your website, make sure you prompt them with appropriate messaging. From abandoned cart strategies to special “welcome back” offers, test the different ways to ensure a purchase.

Immediate and time-sensitive offers work best, such as “Buy now and receive a free upgrade to next-day shipping.” Or identify specific items in the shopping cart to which you can add an incentive, such as free embroidery or free personalization. Or you can suggest a related, add-on item at a special price (e.g., the dog treats when dog food is in the shopping cart, or the file folders when hanging folders are chosen). These offers are compelling and should allow you to reactivate customers.

Segmentation
The segmentation strategies surrounding reactivation are surgical: precise development of the data, and campaigns tailored for individual segments. For the most effective reactivation efforts, it’s best to segment at a granular level.

Start with RFM (recency, frequency, monetary) and continue to parse the data—if there is an email channel, customers with a loyalty card, demographic and firmographic information, merchandise preference, radius to retail store—use anything that helps identify relevant purchase criteria.

The grid shown at the bottom of this article is an example of granular-level segmentation for customers whose last purchase occurred two years ago (recency of 24 to 36 months). The column headings are the Quarter (of the purchase); Frequency (how many lifetime purchases were made); Ave$ (average lifetime dollars); Gender; Age range; Loyalty card; Marketable email address; and the quantity available for the segment.

Using this chart to illustrate how the individual mail plans are developed, you’ll notice column headings of Drop 1, 2 and 3. If the segment is chosen to receive the catalog mailing, the quantity is shown.

As part of a contact strategy, some segments of customers with a marketable email address are not included in the mail plan. That’s because this group of customers will receive email campaigns with reactivation offers. Using email is a less expensive way to contact customers (but always test into the idea to ensure that you are making the right marketing decisions).

Keeping data on a granular level allows you to identify specific groups of customers to contact differently, and yet you can roll up the data to a macro level.

No time to segment?
If you have no time to segment your customer file but you really want to try reactivation strategies, you need to rely on your data service vendors. If you participate with a cooperative database, you can easily (and quickly) have the customers mathematically modeled and the customers with the highest propensity to make a purchase identified (by a score). Then you can mail those customers.

If you don’t participate with a co-op, talk to your merge/purge provider and find out what data overlays or scoring they can do. These two types of data mining strategies will yield higher response rates than randomly choosing a small quantity of customers within the reactivation universe.

Gina Valentino is president of catalog consultancyHemisphere Marketing.