Ronn Torossian, CEO, 5WPR
To many Silent and early Boomer Generation types, “Lover Come Back” starring Rock Hudson was an unforgettable 1961 movie and one that many moviegoers may likely seen more than once. Unlike the happy ending in the movie, brands that lose customers don’t often get that second chance.
Recent studies revealed that the cost of losing customers is high. RightNow Technologies reported that 89% of consumers switched brands after a bad experience. A Harvard Business Review recently showed that 48% of consumers who had a bad experience also told another ten people.
A 2019 Forbes article Indicated that the cost of acquiring new customers was five times greater than retaining existing ones. That statistic not only confirms the importance of maintaining excellent customer relations with current customers, but also signals the value of attempting to recapture those who once loved the brand and left for one reason or another.
How the brand stacks up against others varies by industry. OTT/SVOD or over the top and subscription video on demand services had one of the highest churn rates of 10.01%. Consumer goods were up there at 9.62% followed by healthcare (7.55%), consumer services (7.49%), business services (6.25%) and education (5.06%). SaaS (software as a service) trailed at 4.79% and media and entertainment reported at 4.67%.
Brands whose churn ranks even higher than the industry not only need to pay particular attention to customer retention, but also initiate recapture strategies. According to Small Business Trends, lowering a company’s churn rate by just 5% can increase profits from 25% to as much as 95%. Here’s what it takes.
Brands must understand their former customers before attempting to recapture them. For starters, segregate and rank them on a scale of one to five using the RFM model. The first category is “R” or recency of the last interaction either through a sale or visit. Five is the highest. The “F” stands for frequency or the total number of transactions or average time between transactions and/or visits. The “M” represents monetary or the average of transactions.
The top prospects will score fives all around. They’re the best prospects to start recapturing. Focus on them first and then work down the list as time and budget permit.
Armed with the RFM information, send out personalized emails acknowledging their absence and the brand’s desire to determine why they left and an even stronger wish to make things right. They likely stopped because of an unsatisfactory and unpleasant experience so offer them a reward or incentive to answer a short survey of why they’re no longer a customer.
As Alexei Orlov of MTM says, “A common reason for leaving is poor customer service. Acknowledge it and apologize while indicating that positive changes have been made. Offer a free product upgrade or swag or something of value for them to give the brand one more try. Include the name and email of a customer service rep they can contact directly if they need help or have an issue.”
Some customers leave because they found the product or service too complicated. If so, offer a free demo or training. Another option is giving them exclusive access to educational content that will help them. This could be training material that’s usually accessible to staff.
Others simply left because they felt the brand became too expensive. Offer a discount and share all the benefits and features they may not have been aware of. This can be priceless because in some cases, they may not have totally understood the brand’s price to value ratio. As in all other strategies, measure, track and compare results on a regular basis, both with the industry and within the brand so that adjustments, if any, may be made in a timely manner.