If every inactive customer returned to your store and made just one more purchase, what would that do to your bottom line? Small businesses put a lot of effort into attracting new customers, but Omer Artun, PhD, founder and CEO of AgilOne, believes those past customers present some real opportunities, too. "Retention is a much bigger value creation for small businesses than trying to acquire new customers," he says.
Repeat sales have a multiplier effect, with the potential to increase revenues in the near term as well as far into the future. To make the most of every customer relationship, you can begin with a few simple strategies designed to reconnect with those past purchasers who haven't visited in a while.
Reconnect with Former Customers
Neil Patel, chief evangelist at San Francisco-based Kissmetrics, offers a couple of easy ways to reconnect with past buyers. After signing up for an account with an email marketing provider, you can simply upload your list of customer email addresses. "And boom," Patel says. "You email offers to all your past customers again."
Another approach is to do something similar through Facebook, by creating ads that target past customers. Both strategies work, Patel says, and typically they don’t cost much. "Those are the two simplest ways that I know to reengage with past customers all over again."
If you're overwhelmed at the thought of sparking interest across what may be a diverse base of inactive customers, try narrowing the spotlight. Artun suggests prioritizing valuable customers. "Pay more attention to those customers who spend a lot of money with you or have been valuable customers in the past, rather than the people who made a small purchase and never came back," he explains. By bringing back customers who contribute significantly to the business's bottom line, you'll reap more rewards with less work.
Segmenting customers into subgroups is another approach that often works well. How you segment depends largely on the type of product or service your business provides and what your customer base looks like. Patel says common strategies include putting men and women into different buckets, or people who bought dog food, for example, into one bucket and those who bought cat food into another.
"That's where it gets a bit difficult, but it works out quite well," Patel says, adding that good segmentation can have a real effect on results. "The more targeted the offer you can send, the better your conversion rate will be." You can then entice previous customers with discounts on a product you know they've already purchased, or show them offers for related products that may interest them.
Send the Right Marketing Message
Properly targeting past customers is the first step in rekindling their interest, but Patel says the messaging itself often proves more challenging. "What are you going to show them? How are you going to convince them to buy?" he asks.
It isn't enough to just invite them back to your site. "You've got to come up with offers and programs that tempt to them to buy again," Patel says. Collecting additional information with every purchase—such as relevant areas of interest or even products customers would like to see added to your site—can help you craft messages that really hit home with inactive customers.
One of the difficulties in targeting messages to inactive customers is determining that they're actually inactive. You know when you acquire a new customer, Artun says, because you have a specific date when they made their first purchase. "But when you lose a customer, nobody comes to you and says, 'You lost me,'" he explains. "There's no specific date to it, the customer just kind of disappears into the past."
Understanding the purchasing behavior of your customers at a collective level—those that purchase twice a year as well as those who buy from you every week—will help to identify when a customer is at risk of going inactive. It's also useful in devising a strategy of offers and other communications that speak directly to why that customer left.
"Did they go to a competitor? Did you not provide good service?" Artun asks. Addressing service or supply issues, advertising popular products your competitors don't have, and even touting delivery times that beat the other guys are all workable approaches.
Julie Knudson is a freelance writer whose articles have appeared in technology magazines including BizTech, Processor, and For The Record. She has covered technology issues for publications in other industries, from foodservice to insurance, and she also writes a recurring column in Integrated Systems Contractor magazine.
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