With rising competition and evolving customer expectations, companies realize the growing importance of customer retention. Customer churn is a grave concern for any recurring revenue business. It means lost future revenue and hampers a company’s bottom-line growth. Its impact further leads to lost referrals and negative word of mouth.
While some churn is inevitable, companies can minimize the churn rate by creating an effective winback strategy to drive loyalty, revenue and cost-effectiveness and leverage this as an opportunity to enhance their product and services.
Winback is expensive but more profitable than acquisition.
While winning defected customers can be expensive — given the cost involved in targeted marketing and personalized offers — it is still cheaper than acquiring new customers. Companies spend an exorbitant amount on marketing, as replacing canceled customers with new customers requires rebuilding loyalty and awareness of what’s new. Besides, they stand better prospects of upselling to an existing customer than turning a lead into a customer and selling to them. It is due to the following reasons:
1.You have a significant amount of data about canceled customers that you can use to understand them better and enhance their experience through personalization.
2.They already know your brand, and you do not have to spend much on awareness campaigns.
3.You know what their needs, preferences and expectations are. It makes them more promising prospects.
Prepare the right win-back strategy.
A successful win-back strategy comprises targeting the right customers. One of the biggest mistakes that many marketers make in their campaigns is mass targeting. With targets to bring back as many lost customers as possible, they often end up giving expensive offers and incentives. Such campaigns often result in regaining customers who are less profitable and likely to churn again.
It is essential to understand that your winback strategy should not focus on winning every churning customer. You should aim only to win customers who are profitable and likely to stay with a personalized approach.
Below are a few key components that should be a part of your data-driven winback strategy:
Implement an AI-based winback scoring model.
The good news is you are sitting on a wealth of data from canceled customers, which should give you the highest advantage compared to any of your competitors in reacquiring that customer. Using artificial intelligence and machine learning models will help identify which customers are likely candidates for signing up again with you.
Calculate customer lifetime value — both current and anticipated.
By analyzing data like transaction history and purchase patterns, you can calculate the present lifetime value and anticipate the future lifetime value of every churned customer. This calculation can provide insights into which canceled customers are high-value and likely to stay with you and which ones would provide little value to win back. Based on this, you can plan your marketing efforts effectively.
Understand the customer using all available data.
After determining which customers you want to recapture, gain a complete understanding of their needs and why they left — for example, whether it was a poor experience or they got a better proposition from the competition. Then you can pitch your offer or solution in a better manner. You may also want to understand their segment to position your product or services more effectively.
Personalize your messaging.
Make sure that you personalize your messaging for every customer and communicate it on their preferred media and channel. For this, you need to analyze all the data about the customer you are targeting. Show them how your product has evolved since they left and how it offers better value than the competitor they have chosen or are considering.
Here, it is better if some in-person contact is involved, and if possible, the messaging should come from an agent or employee with whom the customer is familiar. One of the key considerations here is that the switch-back process should be smooth if they decide to return.
Be empathetic and supportive.
You must show the customer that you care for them. Listen to their concerns, empathize with them and acknowledge the gaps from your end that led to them leaving. Offer them a resolution or incentive and be generous in it. You may also want to give them a few options customized specifically for them.
If they accept your offer and return, add the highlights from this interaction in their profile so that your agents know the customer’s needs and concerns, and the reasons for their previous cancellation do not repeat. However, if the customer decides to move on, be supportive and respectful. It is important not to act desperate to get their business to maintain a positive brand image.
Designing a winback strategy can be challenging. However, instead of a problem, you should look at it as an opportunity to transform customer experience delivery and drive long-term loyalty with word-of-mouth advocacy. The actual benefits of a successful winback strategy are more than a customer saved; it gives you a chance to regain their trust and drive loyalty, turning them into your brand advocates and generating more revenue in referrals.
Listening to these customers lets you create new opportunities to grow your business in a cost-effective way and strengthen your brand. Additionally, it helps identify and fill gaps in your product and marketing strategy and deliver a better experience to all of your customers.
This article was originally published in VOZIQ Blog.
