Everything Old is New Again: How To Reactivate Your Inactive Consumers

Over the last four years, rising costs and economic uncertainty have impacted marketing budgets and strategies. Additionally, many consumers have cut back on spending. As many marketers can’t afford to invest in acquisitions at the same level as they had previously, we often recommend clients look within at their own inactive buyers.  A former customer is more likely to open and respond to an offer than a prospect who has never purchased from you before.

As our Epsilon whitepaper demonstrates, your former customers can become your high valued repeat buyers once again.

Outlined below are five key tactics vital to a successful reactivation strategy:

1. 1.    Identify your best reactivation candidates by leveraging external transactional data. Your brand-specific data married with external merchant activity, available through cooperative databases, and demographic data can produce models that reveal which consumers have the highest probability of response. This population can be modeled separately from those who have never purchased from you so that past activity with your brand is able to play a role in prediction and can be weighted appropriately.

You can combine what you know about your inactive customer with what others know about them. Top predictors in modeled reactivation include:

•  Recency of last purchase with the brand

•  Number of merchants from which a household has purchased across a cooperative database

•  Promotional history

•  Categories of products a household has purchased from the brand and across other merchants

•  Number of direct competitors a household has purchased and is still actively purchasing from

1. 
   
2. 2.    Use past data to guide current offers, messages and featured products. Capitalize on the history you have with lapsed customers to create more relevant offers. Also, tailor your approach to meet your verticals’ business models and specific nuances.

For example, non-profits should utilize past donation amounts to determine current “ask” amounts. Similarly, publishers can find the best candidates to target by identifying their last season of signup and using it as a potential indicator of when a customer might be in market.

Try varying your offer based on past average order trends. Perhaps the customer became inactive after a customer service issue or a problem with a returned item. Use this opportunity to highlight new or improved policies that could motivate a former buyer to give your brand a second chance.

1. 3.    Use a multichannel reactivation approach. Make use of the multiple touch points you have with your inactive buyers with a message that will resonate with them. There’s a higher likelihood of response with a greater number of contacts. Direct mail and email messaging, offers and featured items can be coordinated for a multipronged effort.

1. 4.    Measure success through an acquisition perspective. Remember that inactive customers will not perform to the same level of a “good” housefile segment, which is why they’re often eliminated during the merge process in the first place. View them from a longer term investment perspective.

Understand the value of each reactivated customer over time – the next 3, 6, 9, 12 months and beyond. This value can be calculated with a Near Term Value computation. When using a value scoring approach like Near Term Value, be sure it’s performed on reactivation segments as a separate group and with their own specific acquisition costs. Don’t lump them together with other prospects because your reactivation group will most likely respond at a higher rate, thus lowering their cost to acquire. You’ll want to measure reactivated customers differently than a typical buyer with no prior history.

1. 5.    Test to find the best segmentation, contact strategy and depth. Strategy components should be tested and revalidated on an ongoing basis. Testing allows marketers to answer questions specific to their brand and offer. Compare your new method to business-as-usual segmentation. Marketers can expect to see a 10 to 30% improvement in incremental lift over non-modeled selections depending on their current methodology.

How deep into the available universe you can target while meeting your reactivation and longer-term profitability goals, and how many times you should target an inactive customer are all important questions that should be explored during testing.

All marketers have access to past customers that they can tap into for reactivation efforts. Consider the special needs of your industry vertical to tailor the strategy and focus most on what matters to your brand. Inactive and lapsed relationships can reactivate and become valuable once again. For examples, tips and more reactivation strategies, download the Reactivating Your Customer Base whitepaper today.