Retail TouchPoints: Re-Courting Customers for Winback Strategies Requires Right Access to Data
Through a special arrangement, presented here for discussion is an excerpt of a current article from the Retail TouchPoints website.
When is a customer simply out of the market for your product? When are they in danger of going to a competitor? And when do they need to be reactivated aggressively or "won back?" With new customers tough to come by, many retailers are finding strategies to define and execute these winbacks.
We have compiled five rules for customer winbacks, all of which can only be relevant after the proper data profiles have been completed:
Go for the Save Before the Winback: Customer Development Solutions CEO Vernon Tirey believes that any retailer needs to have an "attrition alert." Some of the things to look for are drops in email metrics, lack of web site engagement, and a drop in purchase levels. If an attrition alert shows that a valuable customer may be leaving the company's purchase pattern, a series of sequenced customized emails and direct mail pieces go out.
Understand the Gray Areas: Jim Harold at Acxiom, recommends segmenting the customers you want to win back and stay between the most valuable and least valuable. Valuable customers should have a different winback subject line, and cross-channel customers should get winback messages at as many touchpoints as possible.
Get the Best Ones Back First: Value seekers or customers looking for discounts are not generally the most valuable. Yet many winback campaigns extend a discount as the core of their offer. "Winbacks depend on context," said Bill Franks, managing partner of advanced business analytics for Teradata. "Maybe there's a group of 100,000 customers that shopped at full-price that have gone quiet. But in extending a winback offer, don't discount. Play to their sense of value."
Understand Why They Left: Mr. Tirey said his clients have shown three basic reasons for leaving.
1. They have a perception problem such as, 'you're too expensive.'
2. They have had process problems in ordering or returning merchandise.
3. They've had product problems.
Survey customers before executing a winback campaign. At the very least the messaging can relate to the specific problems that caused them to leave. This is why Mr. Tirey said that emotional appeals such as 'we miss you' don't work. The customer doesn't miss you. They had a problem with you. Address it.
Use social media: Social media is bigger than email. A recent Neilsen report showed that the "global active reach" of member communities was 67 percent in December 2008, up from 61 percent in December 2007. And while the most active users of social networks are between 24 and 38, Gen Y is active and willing to interact with retailers on social networks.
Social media provides a chance to start fresh and attract new data. But the other winback strategies are nothing without data. "A very small percentage of customers can actually be won back," said Merkle's Lori Connolly. "Be relevant and timely and you have a shot."
Discussion Questions: What would be your core rules for driving customer winbacks? Of those mentioned in the article, which do you think are most critical and have proved most successful?