We’ve all heard it before: acquiring a new customer is usually more costly than getting an already-acquired customer to repurchase. Alright, we know, we get the picture.
But given that we all know how valuable repeat customers are, it’s surprising how little effort many online retailers put into re-activating customers that have dropped off the radar, especially those who have been great customers in the past. Surely getting these guys on board is an easy win, no?
Losing a few customers here and there is part and parcel of running an online store, but by not putting some legwork to win back lapsed customers, online retailers are missing out on an important revenue-making opportunity.
Sure, the relationship may have lost its spark, but don’t give up on your customers the minute they start to show signs of getting cold feet. In the game of reactivating lapsed customers, it’s all about taking a Rick Astley approach rather than a Taylor Swift one.
This blog post aims to provide an overview of how you can use emails to win back lost customers, so that you can start to plan a strategy of your own (spoiler: it doesn’t have to involve prancing around in a church crypt in a funny trench coat).
What do lapsed customers look like?
The answer, as always, is it’s not that simple. There are all sorts of reasons someone might have gone AWOL and some are, regrettably, out of your control:
Their circumstances/interests have changed (e.g. they’ve left the country, you’re a golfing equipment retailer and they’re not into golf any more, they used to buy presents for their girlfriend from you but they’ve since broken up :( ).
They’ve changed email address and have signed up for a new account (causing annoying duplication, but you can begin to address this by setting up a script to identify similar customer entries in your ecommerce platform and merging ones that are obviously the same person - difficult to do, but a worthwhile activity).
They bought something because you were offering an extraordinarily great deal on it, but they were never really that engaged with or interested in your brand.
Your emails might be falling into their junk mail folder so they never see or act upon them (putting an ‘add us to your address book’ CTA in your emails can be a good remedy to this).
They’re a gift shopper and buy from you only very occasionally.
They had a bad experience with you for whatever reason and have decided not to come back.
Your product offering has changed, and they’re just not that into you anymore.
Your marketing messages just aren’t doing it for them.
Segmenting lapsed customers
Right, so we’ve established that your lapsed customers may have gone cold for a whole host of different reasons. Factor into that other things like how valuable a customer they are and you get one very complicated picture, especially since you want to contact these people with messages that really resonate with them rather than boring, generic fluff. Segmenting your lapsed customers is key.
But how? There are technologies (like our very own Ometria platform, for instance) that do all the analysis necessary for identifying and segmenting customers that are at risk of lapsing. If you haven’t got access to any of these solutions, doing a spot of analysis using an RFM matrix can be useful (but if you want to get it right, it can involve some pretty heavy data analysis).
Below is a simple RFM matrix, which maps three things that are great indicators of the customer relationship:
Recency from last order (in months) - the most important measure of customer health
Frequency (number of orders in a year)
Monetary value (low/med/high) - based on average order value
I’ve used used some arbitrary figures for each of these - of course, you will have to do some maths to come up with figures that work well for your business using data about A) a customer’s most recent order B) the number of times they’ve bought from you in the past year and C) their average order value.
While it’s possible to make educated guesses at category boundaries if you’re going down the manual route, in the long run getting these figures right is incredibly important and will involve serious analysis, which is why a technology solution that can do this all for you (and more) is often the best way forward.
Now, onto the fun stuff. Using my made up RFM matrix above, you can see that I’ve colour coded the boxes. The funky flashing boxes are the ones that should be the main focus of your win-back campaigns. As I mentioned above, not all your customers are equal, and you may want to focus your attention on those who are most valuable to your business (if you win them back, of course). In my basic model, I’ve grouped them as:
Lapsing heroes (light blue)
These guys have been great customers in the past (having made a lot of orders and/or having a high order value), but are showing signs of inactivity (having not purchased for 6-12 months).
Action to take: invest serious effort into to getting them back (more on the content of your emails later).
This refers to regular customers who don’t have ‘hero’ status that are at risk of falling away.
Action to take: make regular attempts to re-activate.
Lapsed heroes (orange)
This group is made of hero customers who you haven’t seen in a long time (in this case 12+ months).
Action to take: make a last-ditch big effort to re-activate these guys.
Lost causes (red)
Lower value customers who have been off the radar for a long time.
Action to take: try tempting them back in… but don’t hold your breath (and don’t put too much effort in).
While the RFM matrix above takes into account the time since last purchase, another important factor to take into account is whether a customer has been active on your site without buying anything. I’ll discuss this more in the email content section below, but this suggests that they are more engaged with your brand than those who have been completely absent, and you can use their behaviour on your site to dictate the contents of your email.
Win-back email campaign
We’ve taken a look at some of the ways you can segment your lapsed customers; the next step is designing tailored email series for different segments.
There are a number of tactics that you can use to get old customers buying again, and for each customer group you should experiment to see which types of email (and at what frequency) get the most traction.
For example, for lapsing hero customers, you might want to send them a simple ‘we miss you’ email to test the water, followed by a discount offer email a week later, followed by a further discount offer and then a final re-permission opt in email.
Research suggests that using a shorter subject line is more effective in win-back emails. Research from Return Path showed that using the words “miss you” in a subject line achieved a 13 % read rate, and messages with the words “come back” in their subject lines achieved a 12.7 % read rate.
On top of that, in the same research, win-back emails with £-off discounts in their subject lines were nearly twice as successful as emails with %-off discounts at getting people to open and read them.
Although getting a customer to open an email is a good start, the contents of that email will make or break whether you win them back or not. Here are some different approaches to the contents of lapsed customer emails (and it’s certainly advisable to create an automated workflow of emails employing more than one).
A win-back offer email
Give lapsed customers a juicy deal to encourage them to get back buying (like the examples from Missguided, Tesco and American Apparel below). You may want to create a stronger incentive for lapsing and lapsed hero customers. Likewise, if their average order value is high (i.e. they’re not a bargain shopper), you could offer non-monetary incentives like free p&p or gift wrapping.
This triggered email from JOY is a fabulous example of incentivising activity following a recent purchase (three months after purchase).
An offer follow-up email
If a lapsed customer doesn’t respond to your offer by coming back and purchasing, you may want to either A) send them a follow up email to remind them about the offer (making it time limited to create urgency can be a good tactic) or B) send them an even better offer than before (though this risky, as customers may get wind of your tactic and keep holding out for better offers).
Adidas' offer follow-up email is a good example of encouraging activity through time-based offers - third in a three part offer series employing urgency to reactivate.
If a lapsing customer is still active on your site...
Some technology platforms (us included) will be able to tell if a customer has been active on your site, but just not purchased anything. If a customer has been browsing but not buying, personalise emails with products and categories that they’ve viewed or shown an interest in (and of course, a cheeky discount wouldn’t go amiss).
Dollar Shave Club sends this email to those who have browsed the site, but not bought.
If a lapsed customer is not active on your site...
This is the step before the final step (see below). If your once active customer has "gone fishing" and has stopped visiting your site or opening emails, it's important to remind them about what they're missing. Boden's message is a good example of using great copy and visuals as a personality punch: a great way to reassert your brand story, image and tone to encourage activity and remind them why they loved you in the first place.
A re-permission email
This should really be a last-ditch option, as ‘re-permission’ campaigns (where you ask lapsed customers whether they still want to hear from you) tend to have pretty poor engagement rates.
Below are some nice examples from Not On The Highstreet, Boden and Urban Outfitters:
Don’t just shrug your shoulders and let your lapsing or lapsed customers ride off into the sunset, put them onto a dedicated win-back email workflow until you win them back.
Once you’ve decided what time frame constitutes a customer being deemed ‘at risk of lapsing’ or ‘lapsed’, segment your lapsed email campaigns for better results. You could segment by:
How valuable they are to you (high CLV vs low CLV, high average order value vs low average order value, and whether they purchase frequently or infrequently)
Whether they’ve been active on your site during the lapsed period or not (if they have, personalise your emails with what they’ve been looking at).
When it comes to the contents of the email, try experimenting with one or more of the following:
A simple ‘we miss you’ email (preferably personalised)
An offer or promotion (dynamic, depending on whether they’re a valuable customer you reaaaallly want to win back or not)
Reminder emails about any offer you gave them
A re-permission email, asking whether they still want to hear from you