Customer churn is a frustrating and costly part of commerce. To re-engage dormant or inactive customers is certainly an investment, but the price of acquiring new customers is far greater. In fact, customer acquisition costs can be up to seven times more expensive than the cost of retaining a customer.
By investing more of time and budget to re-engage existing customers, brands can save money and increase profits by 25% or more.
What Are Dormant Customers?
Dormant customers are shoppers who have engaged with a brand in the past but are not doing so now. Retailers also refer to them as inactive customers. These customers had previously responded to a brand’s outreach, including promotional emails, direct mail, social media ads, etc., and made a purchase as a result of that interaction. But now, those shoppers have stopped engaging with a brand or its marketing and have not made a purchase.
Reasons Customers Go Dormant
Every brand aims to create loyal, life-long customers. But despite even the most clever marketing strategies, there will always be a segment of a brand’s customers that stop engaging and buying. Understanding why customers disengage and become inactive helps brands in two ways:
1 – Brands that know why customers go dormant can craft highly personalised win-back strategies.
2 – Brands can potentially identify trends (like poor customer service in a particular region), address the issue and prevent more customers from becoming dormant.
While each customer is unique, there are typically a handful of reasons that shoppers stop buying from merchants. Such reasons include:
- Poor customer service
- Poor product quality
- Lower prices on similar products from a competitor
- Change in life circumstance
- Little to no connection to the brand
It is possible to re-engage a lapsed customer, but doing so requires understanding why that customer disengaged in the first place.
How to Identify Dormant Customers
The criteria that classifies a customer as dormant will vary by industry and category. Brands that sell big-ticket items, like engagement and wedding rings, would not consider the customer dormant after only 6 months because that kind of jewellery is meant to be a one-time purchase. An apparel brand, on the other hand, might consider putting a customer in a win-back or reactivation campaign after 6 months because apparel can be purchased almost constantly.
Brands looking to segment dormant customers should consider the following as well as their industry and context.
- Time since last purchase
- Type of purchase
- Purchase frequency
- Type of interaction (brands should consider more than purchase behaviour when identifying dormant customers)
Once a brand has defined and identified a segment or segments of dormant customers, it can develop strategies to re-engage and win customers back.
9 Strategies to Re-Engage Dormant Customers
1. Capture Customer Contact Information
The first step to re-engaging dormant customers is to make sure there is a way to get in touch with them. If a brand is not already capturing customer email addresses, phone numbers and other basic contact information, they should start doing so right away. Merchants can collect this data using a customer database, loyalty program or during other website interactions. Once brands have this data, they will have a much easier time trying other re-engagement methods. Data is essential but brands must be aware of and comply with all applicable data collection requirements and regulations.
2. Survey Customers
Brands that do not know why certain customers stopped engaging should consider conducting surveys. Merchants should create a detailed survey to identify why customers originally engaged with the brand, and what caused them to stop engaging. Brands can send out a survey to customers based on the amount of time they have been away. For example, brands could send a unique survey to customers who have not visited the website in a year and a different survey to customers who have not visited for six months.
3. Send Direct Mail
Direct mail may seem outdated, but it is actually an approach many customers find refreshing. After all, they spend much of their day inundated by digital ads, and sometimes a trip to the postbox is a refreshing change. There are plenty of reasons for merchants to employ a direct mail strategy, too: the average ROI for direct mail is more than $4 for every $1.27 spent, and the average response rate is 2.7-4.4%. In contrast, the average email response rate is a mere 0.5%.
4. Segment Emails
The average office worker receives an astonishing 120 emails a day — meaning that to get a customer’s attention, brands need to break through the noise. Brands can make emails stand out by using a targeted approach. Segmented emails are proven to be one of the key elements of a successful email marketing campaign, with 78% of brands saying they use the technique to improve their effectiveness. Targeted emails can be hyper-personalised, based on a customer’s behaviours, interests, location and more. Brands can distinguish themselves from competitors in the inbox by sending emails based on past purchases, web pages shoppers have visited or links they have clicked on.
5. Offer an Incentive
According to HubSpot research, some of the most effective email subject lines include a promotional offer. Brands could consider offering a free item, a discount on a purchase, a birthday gift or another incentive that makes your customer feel special. It could be just the impetus shoppers need to start re-engaging on a regular basis.
Amazon Prime Day and Prime Early Access Sale are high-profile examples of incentivising shoppers with access to member-only pricing.
In addition to price incentives, brands could offer experiential incentives. Such incentives could include a virtual or in-person meet and greet with a product designer or creator. Or, brands could offer early or exclusive access to products or product lines.
6. Give Customers More Options
Sometimes customers feel stifled by the sheer volume of emails and marketing messages they see from a particular brand, which leads them to unsubscribe. By allowing shoppers to choose what kind of messaging they receive and how often they receive it, they may choose to engage differently but not cut off communication altogether. Better yet, brands can proactively change the cadence and content of emails based on customer behaviour. This method has proven highly effective, with 63% of businesses reducing the frequency of emails when subscribers are less engaged.
7. Host an Event
Make customers feel appreciated by strategically sending invitations to exclusive events. Younger customers value exclusivity more than ever, and a personalised invitation could be an effective strategy to re-engagement. Brands with brick-and-mortar stores could consider hosting a seasonal party, product launch party, charity event or brand collaboration. A brand with a digital presence could host a webinar, Q&A series or influencer meet and greet.
8. Share Educational Content
Offering free educational content is a great way to build trust, credibility and customer satisfaction. Not only that, but free content also drives website traffic, boosts brand advocacy and increases leads. To re-engage dormant customers, brands should create regular, valuable content like blog posts, interviews with experts, guides or ebooks.
9. Remind Customers What They Are Missing
When customers are not engaging with a brand’s loyalty program or brand community, they may need to be reminded of the benefits and the reasons they joined. Re-engagement efforts should include reminding customers of accumulated rewards or benefits. Brands could also highlight and values-driven initiatives, such as supply chain transparency or achieving net zero status.
Re-engage Your Customers with ESW
Looking for more ways to re-engage dormant shoppers and increase loyalty? ESW can help. Our complete enterprise commerce solution is the premiere choice for brands who want to accelerate growth with ease and speed. Contact us to learn more about our suite of solutions.