They may be snoozing but are they lost to your business radar? Here’s an interesting way to look at the value of dormant customers. In 2014, the Houston Chronicle pegged the average value of a lost customer at USD 289. (Business does not stop, of course, and new customers are acquired, even if it is at a higher price.) For Amazon and Walmart, if we assumed 10 percent of their total customers were dormant (this is taking the minimum in estimations), it totaled a staggering USD 4.74 Billion and USD 5.78 Billion respectively.
The question therefore merits careful thought. Do we perceive this as business lost or potential for reactivated business?
It’s a half-full, half-empty scenario. If we get past the regret of lapsed customers, we can quickly view them as of one of the best ‘prospect database’. It is easy to see why. For one, we already know what these former customers are interested in and how much they are willing to spend. And with their contact information already with us, we can reach out to them directly.
Success lies in effectively targeting them. Today’s business is a number game and analytics gives smart responses to intelligent questions such as:
And, of course, the critical question on Return on Investment (ROI); how do we maximize the customer lifetime value?
Customer-centric marketing recognizes there is no ‘average’ customer. Each customer base is diverse with different cadences and preferences. Best-in-class marketers match the message at the right point in the customer’s lifecycle.
The right message to the right customer at the right time — that is smart timing.
The secret of any successful campaign is accomplishing differentiated enhancements. Category, brand affinity, engagement behavior — when such segmentation insights are factored into communication strategies and in the selection of the right customer base, the result is marketing outperformance.
Grade, segment and personalize — that is smart differentiation.
Reaching the highest efficiency in customer segmentation is an iterative process. Data-driven insights about what makes one customer cluster different from another is the starting point. Experiments using test and control groups identify roadmaps to successful marketing strategies.
Test, refine, design, target — that is smart iteration.
Beyond clicks, there is a wider horizon of measuring more meaningful customer insights — conversions, revenue and profit per user, and customer longevity. This will ultimately drive customer lifetime value and customer equity. Key metrics for a successful reactivation campaign needs to cover the following:
Evaluating the incremental impact between lookalike groups that did and did not receive offers or incentives — that is smart metrics
Scalability is an absolute must if good ideas are to produce sustainable long-term gains. Automation is the name of the game here.
In today’s crowded and highly competitive digital marketplace, retention is crucial for business longevity. According to a McKinsey report, it is 3 to 10 times less expensive to renew or re-engage customers than acquiring new ones. Plus, a five percent reduction in the customer defection rate can increase profits by 25 to 80 percent.
The good news is that customer loyalty can be won back. Predictive analytics provides marketers the right propensity scores to prioritize efforts and resources. It also reactivates the right cluster of dormant customers to derive higher customer lifetime value and ROI.
Learn about WNS’ Customer Interaction Services to help you better manage your customers or contact us.
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Banking and Financial Services
01 February 2022
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