How to: Take lifecycle marketing to the next level with customer insight [Part 2]

Recently, we looked at how applying insight during the “New” and “Active” stages of the customer lifecycle can help marketers be more relevant. Today we’re turning our attention to the final two stages: “about-to-lapse” and “dormant”.

As a reminder, here’s the simple lifecycle model we’re using:

Sending the right communications in these last stages, particularly to customers who are about to lapse, is key to increasing customer lifetime value. Yet in a recent survey, 55% of marketers were investing little to no resource (in terms of time, budget, and creative) in retaining these customers.

As mentioned in the last post, it’s not just about sending the right type of comms. To really engage customers – especially in these later stages of the lifecycle – your marketing must feel personalised and relevant.

In the DMA’s most recent consumer email report, 63% of respondents said most of the marketing emails they receive contain little to no relevant content – so it’s no wonder that 62% delete emails immediately, often without even opening them.

So what marketing messages should you send – and what customer insights do you need to make them truly relevant?
 

About-to-Lapse

How you define “about-to-lapse” customers will depend on the typical purchase cycle for your products – in other words, are people likely to shop with you every month, or is it typically 6 months or more before they come back?

If a customer hasn’t shopped within that time period, they may be at risk of churn. Declining engagement with your content is also a sign that they’re on their way out.

The main goal at this stage will be to catch customers who are at risk of leaving before they’re really gone.

Your marketing messages should aim to get them interacting with your content again and ultimately drive them to make a purchase, thereby moving them back into the “Active” stage of the lifecycle.
 
What to send them:
Successful re-engagement messages often start by acknowledging that a customer hasn’t shopped or interacted with your brand for a while. This approach helps customers feel recognised and valued by the brand – after all, who doesn’t like to know they’re missed?

Here’s a nice example from The Body Shop:
 

 
It’s a popular tactic and according to a study by Return Path, it works. Subject lines with phrases like “We miss you” or “Come back” had an above average open rate compared to other re-engagement emails.

Re-engagement campaigns are nearly always talked about in the context of email, but they can be applied across any channel. For example, one of our clients regularly uses targeted SMS messages to re-engage customers that are about to lapse.

Similarly, a push message that links to your app can encourage customers who haven’t been active in a while to log back in:
 

 
Make sure any offers or product recommendations are also tailored to the customer, so that the personalised feel carries through. A message that starts out with a friendly and personal “We miss you!” can easily leave a sour taste if the rest of the content feels too generic.
 
What insight you’ll need:
An up-to-date purchase history is essential for marketing to about-to-lapse customers, as it’s this information that will give you the ability to spot them quickly as soon as they’re at risk of churn – and allow you to respond in time.

As always, knowing their persona will help you show them products and messaging relevant to their needs and buying motivations.

For example, let’s say a fashion retailer has a persona called Fashionista Faye, whose “goal” is to have the trendiest items. A re-engagement campaign targeted to customers in this persona would feature messaging around staying on trend, and offer a free styling session so they can try out the latest looks.
 

 
Another key piece of insight is customer value – you might not want to offer all of your customers a high-end / expensive reward, so knowing which ones are the most valuable long-term can help you tier the offers you send and know who’s worth a bit more effort to hold on to.

You’ll also want to know how they’re feeling towards your brand, in case this has impacted their decision to stop purchasing.

For example, did something go wrong with their last purchase? Did they have an issue that wasn’t successfully resolved? Knowing whether they’ve made any returns or calls to your customer service centre can help determine how they’re feeling.

A re-engagement message that fails to acknowledge a customer’s negative experience won’t go over well. But with a bit of marketing automation and sentiment analysis, you can ensure unhappy customers receive content with a more apologetic tone.
 

Dormant

If customers still don’t engage after receiving your re-engagement message and don’t make another purchase, they’ll move into the dormant stage.

Your marketing to these customers will have two goals – one will be re-engaging them with your brand if they’re still interested; the other will be cleaning up your database.

There can be a temptation to hold on to all customer records, regardless of the last time they were “active”. But keeping your database up-to-date will ensure that any customer insights you draw out are accurate – and therefore, that your marketing comms stay relevant.
 
What to send them:
Dormant customers have already passed over your re-engagement messages, so the comms you send at this point will be more of a last-ditch effort to get them to either come back or opt out. Usually referred to as win-back or reactivation campaigns, these tend to be more direct.

For the majority of customers, your messaging may simply ask them to choose whether they want to continue receiving your marketing or opt out. Here’s a good example from fast-casual Mexican restaurant, Chipotle:
 

 
However, for certain customers (such as those who were particularly valuable) you may want to use this opportunity to find out what isn’t working and why they’ve slipped away.

A survey can help you find out why these customers have stopped purchasing – just remember to keep it brief and consider using a reward or competition to increase the likelihood that they will respond.
 

 
For those who still don’t engage, you’ll want to remove them from your list – eventually. A study by Return Path suggested that customers may interact with re-engagement or win-back emails almost two months after they’ve been sent. Give customers a little time to engage with these messages before removing them altogether.
 
What insight you’ll need:
As with about-to-lapse customers, the first piece of information you’ll need is purchase history – when they last purchased and what they bought – so you can group them into the right lifecycle stage. Engagement will also be key here. If they haven’t purchased in a while but consistently open and interact with your comms, they’re not dormant.

You’ll also want to know which customers are valuable and worth winning back – these might be the ones you send an exciting offer or reward to. Those that are less valuable might just get a feedback survey or the chance to say whether they’re still interested in receiving your comms.

Remember that value isn’t necessarily just monetary – a customer who is particularly influential on social media and has the potential to be a brand advocate might also be worth putting extra effort into winning back.

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For most marketers, the insight you’ll need will be fairly consistent across the customer lifecycle. As you’ll probably have noticed, customer personas come into play at every stage.

With a focus on who customers are in the context of your brand, and what motivates them to buy, personas can be incredibly useful for creating more relevant, tailored content.

Other key pieces of insight include customers’ purchase history, engagement, value and social influence.

Of course, to use any of this insight effectively you’ll need some level of marketing automation. Software that helps you draw out key insights and tailor messages based on this information is essential. (If you’re in the market, take a look at our Horizon Digital Marketing Hub.)

By applying this information at each stage of the lifecycle, you can create hyper-personalised marketing messages that drive lifetime value and build longer-lasting customer relationships.