Gosh, I’ve Missed You!

Are you giving up on your subscribers too soon? A new study shows how win-back campaigns are re-engaging subscribers long after many of us have given up hope. Also known as re-engagement, lapsed-customer or reactivation campaigns, this staple of your automated drip campaign is designed to nudge dormant subscribers back into the buying funnel

Are you giving up on your subscribers too soon? A new study shows how win-back campaigns are re-engaging subscribers long after many of us have given up hope.

Return Path just released a new study on the effectiveness of win-back campaigns—well beyond the point where many marketers would typically relegate the subscriber’s name to the archive directory. Also known as re-engagement, lapsed-customer or reactivation campaigns, this staple of your automated drip campaign is designed to nudge dormant subscribers back into the buying funnel. While Spider Trainers believes you should Celebrate Unsubscribes (opens as a pdf), this new study shows we shouldn’t be too hasty.

In another study, Strong View found that 50 percent of marketers say they plan to include a win-back campaign in their marketing, and yet our informal surveys have found less than 5 percent of our clients have considered such a campaign.

One challenge marketers face is updating our understanding of the point at which we can consider a recipient disinterested, and it’s important to note marketers label inactive differently than email applications, mostly because we have different data points.

Email applications may define an inactive subscriber as a mailbox holder who has not logged in for a year, but depending upon your business model, you might not consider a recipient inactive unless they have not engaged with your brand for the past two years. Gmail now also cordons off marketing emails to the promotion tab, and thus, the time lapsed before the email is read has extended—according to some studies, by as much as seven days (or more). If your Yahoo!, Gmail or Outlook subscriber does not engage with your campaign, it’s more likely the email application will treat future messages as spam, and less likely your subscriber will see future messages, win-back or otherwise.

The disparity between what we consider inactive and what email applications consider inactive, and the extended time it is taking for our recipients to read and engage, both can contribute to a deteriorating sender reputation. With such high-stake risks, we must carefully balance the long-term negative effects of continuing to email to the disengaged against the potential gain of the small few who reactivate on their own.

A better solution is: Consider win-back campaigns as not just a message to throw at our list every now and again, but rather critical components (yes, we think you should send more than one) to each drip and nurture campaign we build and the type of messages we deploy before we celebrate unsubscribes.

Sidebar:
Win-back campaigns with subject lines such as, “Gosh, We’ve Missed You!” were found to have increased open rates.

According to Return Path, on average (across email applications) 12 percent of subscribers read a win-back campaign email and 45 percent of those read subsequent messages within the next 57 days. If you haven’t deployed a win-back campaign, perhaps it’s time you did—but, before you consider the success or failure of your campaign, remember to give it ample time. Like so many other things, re-engagement seems to improve with time.

When Companies Lose Customers …

United Parcel Service suffered staggering customer defection as a consequence of its 15-day Teamsters work stoppage in 1997. The result was that, even after their 80,000 drivers were back behind the wheels of their delivery trucks or tractor-trailers, many thousands of UPS workers were laid off. A UPS manager in Arkansas was quoted as saying: “To the degree that our customers come back will dictate whether those jobs come back.”

United Parcel Service suffered staggering customer defection as a consequence of its 15-day Teamsters work stoppage in 1997. The result was that, even after their 80,000 drivers were back behind the wheels of their delivery trucks or tractor-trailers, many thousands of UPS workers were laid off. A UPS manager in Arkansas was quoted as saying: “To the degree that our customers come back will dictate whether those jobs come back.”

The UPS loss was a gain for Federal Express, Airborne, RPS and even the United States Postal Service. They provided services during the strike that made UPS’ customers see the dangers of using a single delivery company to handle their packages and parcels. FedEx, for example, reported expecting to keep as much as 25 percent of the 850,000 additional packages it delivered each day of the strike.

UPS’ customer loss woes and the impact on its employees was a very public display of the consequences of customer turnover. Most customer loss is relatively unseen, but it has been determined that many companies lose between 10 percent and 40 percent of their customers each year. Still more customers fall into a level of dormancy, or reduced “share of customer” with their current supplier, moving their business to other companies, thus decreasing the amount they spend with the original supplier. The economic impact on companies, not to mention the crushing moral effect on employees—downsizing, rightsizing, plant closings, layoffs, etc.—are the real effects of customer loss.

Lost jobs and lost profits propelled UPS into an aggressive win-back mode as soon as the strike was settled. Customers began receiving phone calls from UPS officials assuring them that UPS was back in business, apologizing for the inconvenience and pledging that their former reliability had been restored. Drivers dropping by for pick-ups were cheerful and confident, and they reinforced that things were back to normal. UPS issued letters of apology and discount certificates to customers to further help heal the wounds and rebuild trust. And face-to-face meetings with customers large and small were initiated by UPS—all with the goal of getting the business back.

These win-back initiatives formed an important bridge of recovery back to the customer. And it worked. The actions, coupled with the company’s cost-effective services, continuing advances in shipping technology, and the dramatic growth of online shopping, enabled UPS to reinstate many laid off workers while increasing its profits a remarkable 87 percent in the year following the devastating strike.

UPS is hardly an isolated case. Protecting customer relationships in these uncertain times is a fact of life for every business. We’ve entered a new era of customer defection, where customer churn is reaching epidemic proportions and is wrecking businesses and lives along the way. It’s time to truly understand the consequences of customer loss and, in turn, apply proven win-back strategies to regain these valuable customers.

Nowhere are the effects of customer defection more visible than in the world of Internet and mobile commerce, where the opportunities for customer loss occur at warp speed. E-tailers and Web service companies are spending incredible sums of money to draw customers to their sites, and to modify their messages and images so that they are compatible and user-friendly on all devices. Because of this, relatively few of these companies, including many well-established sites, have turned a profit. Customer loss (and lack of recovery) is a key contributor. E-customers have proven to be a high-maintenance lot. They want value, and they want it fast. These customers show little tolerance for poor Web architecture and navigation, difficult to read pages, and outdated information or insufficient customer service. Expectations for user experience are very high, and rising rapidly.

Internet and mobile customers, to be sure, have some of the same value delivery needs as brick-and-mortar customers; but, they are also different from brick-and-mortar customers in many important and loyalty-leveraging respects. They are more demanding and require much more contact. They require multi-layer benefits, in the form of personalization, choice, customized experience, privacy, current information, competitive pricing and feedback. They want partnering and networking opportunities. When site download times are too long, order placement mechanisms too cumbersome, order acknowledgment too slow, or customer service too overwhelmed to respond in a timely fashion, online shoppers will quickly abandon their purchase transactions or not repeat them. Further, they are highly unlikely to return to a site which has caused negative experiences.

What’s more, the new communication channels also serve as a high-speed information pathway for negative customer opinion. If unhappy customers in the brick-and-mortar world usually express their displeasure to between two and 20 people, on the Internet, angry former customers have the opportunity to impact thousands more. There are now scores of sites offering similar negative messages about companies in many industries, and giving customers, and even former employees, a place to express grievances. It’s a new form of angry former customer sabotage, which adds to the economic and cultural effect of customer turnover.

For many of these sites, part of their charter is to help consumers find value; and, like us, they understand that customers will provide loyalty in exchange for value. They also recognize that the absence of value drives customer loss, and that insufficient or ineffective feedback handling processes can create high turnover. As one states: “The Internet is the most consumer-centric medium in history—and we will help consumers use it to their greatest personal advantage. We will increase the influence of individuals through networks of millions. We will raise the stakes for companies to respond. We will require companies to respect consumers’ choice, privacy and time, and will expose those that do not.” This may sound a bit like Orwell’s “Animal Farm,” but it does acknowledge the power of negative, as well as positive, customer feedback.

Some businesses seem minimally concerned about losing a customer; but the only thing worse than the loss of high value customers is neglecting the opportunity to win them back. When customer lifetime value is interrupted, it often makes both economic and cultural sense for the company to make an active, serious effort to recover them. This is true for both business-to-business and consumer products or services.

So how does a company defend itself against the perils of customer loss? The best plan, of course, is a proactive one that anticipates customer defection and works hard to lessen the risk. Companies need defection-proofing strategies, including intelligent gathering and application of customer data, the use of customer teams, creating employee loyalty, engagement and ambassadorship, and the basic strategy of targeting the right kind of customers in the first place. But in today’s hyper-competitive marketplace, no retention or relationship program is complete without a save and win-back component. There is mounting evidence that the probability of win-back success and the benefits surrounding it far outweigh the investment costs. Yet, most companies are largely unprepared to address this opportunity. It’s costing them dearly, and even driving them out of business.

Building and sustaining customer loyalty behavior is harder than ever before. Now is the time to put in place specific strategies and tools for winning back lost customers, saving customers on the brink of defection and making your company defection-proof.

How to Create Win-Back Emails That Actually Win Customers Back

Effective win-back programs are the simplest way to increase revenue and profitability. Once the acquisition costs have been reclaimed, retained customers are the most profitable segment in a company’s database. I often wonder why every business doesn’t have an aggressive campaign in place

Creating and implementing effective win-back programs is the simplest way to increase revenue and profitability. Once the acquisition costs have been reclaimed, retained customers are the most profitable segment in a company’s database. I often wonder why every business doesn’t have an aggressive campaign in place.

The typical win-back program consists of an email or two that declares, “We want you back!” with no acknowledgement of the recipients’ buying history or relationship with the company. It’s as if the marketers think that changing the subject line and mentioning that the customers have been missed is enough to make people come running back.

Generic win-back emails come from B-to-C and B-to-B companies. The first example is from 1800PetSupplies. There are three mentions about wanting the customer to buy again. The first is in the subject line. It reads, “Psst! Come Back for 25% Off Your Entire Order.” The two other mentions are in the body. They are, “We Miss You! Come Back & Save 25% Off Your Entire Order!” and “We Miss You! Come Back & Save!” There is something missing from this email. While you are thinking about what it could be, let’s look at the second example.

Bloomberg BusinessWeek sent an email that looks like it might be designed to win subscribers back. The subject line reads, “Welcome Back Rate – Save 88%” but there is no other mention of wanting the recipient back in the email. The message is personalized with [insert name here] technology, but there is nothing about the subscriber’s history.

What Is Missing From Typical Win-back Campaigns?
People stop buying, subscribing or donating for a reason. Knowing why they left is the first step to getting them back. The typical win-back campaign is missing the personalization that entices people to come back. It’s very hard to convince customers that they were missed when you don’t recognize them.

Creating personalized emails designed to engage recipients’ requires detailed analytics and business rules that insure the right message is delivered. How much more effective would the 1800PetSupplies email be if it mentioned the recipient’s name and pets before noting that she was missed?

Information in an individual’s buying history can be used to create detailed emails designed to bring people back. Win-back campaigns that limit selection criteria to last purchase date can do more harm than good. Customers who leave because of service issues respond negatively to “we want you back” messages that don’t acknowledge the problem. The best win-back programs are designed to speak to individual needs. Here are some tips to get you started:

  • Start the win-back campaign as soon as the first order is fulfilled or donation is received. Customize the marketing message to include follow-up information from the first transaction. A soft win-back approach keeps people from leaving.
  • Separate people who have had issues from everyone else. Winning back an unhappy camper requires special care. The investment in TLC will pay off because people who have negative experiences resolved to their satisfaction are more loyal.
  • Build the program from the ground up. Adding some personalization to a generic campaign doesn’t deliver results like creating one designed to optimize reactivation. The better the foundation, the higher the return.
  • Develop a multi-level program. It is much easier to retain a satisfied customer with a recent transaction than one that has been dormant for months. It also costs less. Save the big incentives for the last resort.
  • Continuously test and improve. People are easily trained to wait for the best deal. Include activity patterns and seasonality in your segmentation so the big incentives aren’t offered when your customers are already scheduled to buy.

Dealing With This Season’s Burned Out Subscribers

In September, all email marketers have good intentions. They meticulously map out segmentations; plan a logical calendar to support strategic initiatives; and commit to holding firm on protecting margins, avoiding the trap of ever increasing sweeteners as we near the end of December.

In September, all email marketers have good intentions. They meticulously map out segmentations; plan a logical calendar to support strategic initiatives; and commit to holding firm on protecting margins, avoiding the trap of ever increasing sweeteners as we near the end of December.

Then reality sets in. Although this year has been significantly better than last year in terms of business buying and consumer spending, most email marketers are quickly caught up in the email marketing return on investment trap. When times are tough, the pressure goes up to send just one more email campaign in order to boost revenues and response.

That strategy can work in the short term, but come January, the reckoning takes hold. This is when email marketers must rebuild relationships sullied by overmailing and lack of targeting. Hopefully, your business can pause and take a deep breath in order to both slow down the frequency as well as improve customization and relevancy. If you still see low response rates and list fatigue, then it’s time for a strategy to win back your audience.

Strategies for winning back subscribers
A win-back strategy can be anything from a friendly reminder to visit the preference center to a full-on bribe, like offering a steep discount or free service if the subscriber clicks now. Test a few of these ideas on subscribers who didn’t open or click on your emails in December and January. After a few attempts to win them back, if you still don’t see any activity, it may be time to clear the dead wood from your file.

While suppressing data is an anathema to direct marketers’ hearts, clearing nonresponsive subscribers from your email marketing file can help with everything from reducing churn to lowering costs to improving the new engagement metrics used for inbox placement and deliverability. Logically, it makes sense. More active subscribers are more likely to respond.

Surprisingly, however, clearing nonactive addresses from your file also improves response. That boost in response isn’t just on the rate off of a smaller base, but is also on absolute response and revenue per subscriber. Why does this happen? By focusing on the needs of active subscribers, marketers improve relevancy and lower frequency. They start to segment their files with tighter subscriber profiles. Be sure to note that this is the opposite of what you’re able to do in the rush of end of year.

Even permission files end up with anywhere from 25 percent to 65 percent of inactive subscribers. These subscribers, despite giving permission at some point, haven’t opened, clicked or converted from email in the past year or more. Unfortunately, the fourth quarter is when most subscribers burn out. The overflowing inbox at a busy time of year just becomes too much. They tune out your messages if you’re not offering value. Pretty soon, ignoring your emails becomes a habit.

For a long time, it was widely believed to be reasonable to keep all those dead addresses on your file, as it didn’t cost much to mail them and having a larger denominator made complaint rates and other deliverability metrics seem lower. Plus, marketers are ever hopeful. Even if a subscriber hasn’t responded to their emails in a long time, they still believe that today’s message will be the one that rouses them to profitable response. Of course, very few of these sleepers ever wake up.

However, internet service providers and mailbox providers like Yahoo, Hotmail and Gmail have long been suspicious of marketers who keep such nonresponsive data on their files, believing that they’re trying to game the system and escape penalties of higher complaint rates. In the past six months, all three global providers have introduced new metrics as well as new inbox management tools to help them see subscriber-level activity. MSN/Hotmail was the first to announce the use of activity measures to block senders from a particular subscriber’s inbox (I wrote about this in early September).

I’ve seen some success in win-back campaigns that respect subscribers, are honest about the offer in the subject line, and keep the message and tone in line with the brand. Test a few alternatives and segment as much as possible to improve relevancy as well. For example:

  • A publisher tested several approaches and found that “We hate spam, too. Change your email settings now” in the subject line was the best way to encourage 90-day nonactive readers to adjust frequency and title choices. Typically, I find that clarity trumps cleverness in a subject line. Just say clearly what the subscriber is being asked to do.
  • A retailer sent an email campaign to six-month inactive subscribers inviting them to vote for the brand’s next catalog cover. The engaging campaign consistently earned 25 percent clickthrough rates. By focusing on the click (the action needed to prove that the subscriber isn’t truly dead), the campaign earned a very high response rate. As a bonus, while many subscribers were on the company’s website they took advantage of specials offered on the landing page.
  • A retailer tested the effect of a win-back campaign versus lowering frequency to six-month inactive accounts. Lowering frequency is a commonly used tactic to respect nonresponding subscribers level of interest, but, of course, does nothing to actually engage them. The win-back strategy was the clear winner, earning a 10 percent response rate and $900K in revenue versus a 2 percent response rate and $150K in revenue from the segment that received lower frequency.

Let us know how you’ve successfully re-engaged subscribers by posting a comment below.