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Every loyalty or CRM program experiences some amount of churn, but the question is, how do you correct the problem? One of our retail clients asked us to identify and address the high level of churn they were seeing across their customer base. To meet this business challenge, we went back to basics to build and deliver a targeted campaign that would resonate with customers at risk of lapsing from the brand. The campaign’s goal was to actively re-engage customers efficiently and effectively in lead up to a large shopping holiday.
Looking into shopper purchasing behavior, we identified 64% of customers as either showing signs of lapsing or having lapsed from the brand based on their purchasing behavior. From this, we created two key segments to target through a multi-stage Electronic Direct Mail (eDM) journey.
The first segment contained customers identified as ‘Pre-Lapsed;’ these were members of the loyalty program that hadn’t purchased in 6 to 12 months but had made at least one purchase prior to this period. The second segment contained members that hadn’t purchased in over 12 months and were considered ‘Lapsed.’
Our campaigns team developed a multi-stage journey for both segments; offering customers a variety of offers throughout the journey. During this process we also sought to understand what offer mechanics resonate best with the lapsing customer base. Customers in the lapsed segment received a stronger incentive than the pre-lapsed segment since, based on what we’ve seen in the past, these customers would be harder to re-engage.
Image: Segment journey communication path toward re-engagement
Reminder sends were included in the journey for those customers who didn’t open the main email delivered through each wave, utilizing a different subject line across both segments. To drive the greatest cut-through with this campaign and to ensure all results could be attributed as accurately as possible, targeted customers were excluded from all other communications during the campaign period. Customers that were successfully re-engaged were then removed from the journey and added back into the main brand communication journey.
The win-back campaign was successful across a number of metrics. Firstly, the campaign drove an 8.2% re-engagement, across both segments,during the campaign period. Of which, 23% were incremental (measured versus control group). An ROI of 5:1 was achieved, a fantastic result when targeting customers that had disengaged from the brand. Of the three offer mechanics (percent off, cash-back voucher and a point multiplier) the cash-back voucher resonated best with both segments and drove the strongest incremental revenue (47% of the total) with the points incentive also seeing strong uptake (40% of total incremental revenue).
Even though these customers weren’t actively shopping with the brand at the time, the campaign drove high email engagement, far exceeding the industry average for reactivation campaigns:
Interestingly, over 70% of the revenue driven throughout the campaign was attributed to customers that received the reminder eDMs; highlighting real cut through and value in the use of reminder eDMs for customers that don’t open initial promotional emails.
In an age where customer data and personalization is a key focus area for most business and marketing departments, sometimes going back to basics and avoiding analysis paralysis can still be an effective approach for brands. By targeting customers with communications that resonate at the right time, campaigns can deliver high returns for business without being extremely labour and cost intensive.
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