It used to take about five years to lose 50% of your customer base in the good old days. With the advent of mobile and online, this timeline has changed dramatically. As per the Mixed panel’s 2019 benchmark report, online retailers lose 99 % of their customers in year one. New customers who open Bank account have a 50% chance of closing the account in three months.

Of course, we all know that retaining 5% incremental of our base can result in a 125% increase in profitability and most marketing efforts are toward the same goal. The most robust strategy for a marketer is to read early warning signs given by customers and reduce the lost customer rate regularly. 

However, an interesting question is how long we should be chasing lost customers and keep treating them as lost customers, or is there merit to look at them with a new lens. 

Let us re-look at what are the top reasons why a customer will leave you and what are chances of them coming back – 

1. Attracting wrong customers  – Often, customers tend to purchase a product due to a promotion/ offer / extensive paid marketing, but as the customer experiences a consequence, the dissonance may creep in. These are the customers who have the lowest lifetime value. 

2. Poor product/service experience – For every customer that complaints, ten don’t, and unmatched expectations are the single most significant reason for users not to come back. Unless the marketer has some news to give these customers about improvements/changes in the product, unlikely this customer is returning. 

3. Limited utility – We often buy/ interact with the brand for a specific purpose, and if accomplished, we find no value in return. I would give you an example of OTT. If the user buys a subscription pack for content (say, a famous Bollywood movie), they are likely not to renew unless similar content is available again.

4. Lack of proactive support – Most of the churn analysis shows that customers who have complained are likely to churn. The principal reason where the brand is unable to provide timely customer resolution. 

5. Closures – This is more rampant in the financial industry, where customer explicitly chooses to close the relationship by opting out of card/ account/ investment. I would say here it can even be a compliance issue. 

What is important here is for marketers to understand the reason for the loss and take proactive action. Some strategies which have worked for me in the past have been – 

1. Choose your customers wisely while acquiring – Using look-alike models and being more specific with targeting can dramatically reduce the efforts of winning back customers. 

2. Seeking feedback – Best people to give you candid feedback and even minor improvements from their share of voice can be a great reason to reach out and win them back. 

3. Wait for your turn – Read the data insights to create an actionable plan. E.g., if we know, the customer will come only during sales, then park them till you have a sales offer. 

4. Proactive Service Recovery – When a customer complains, there is a massive opportunity for a brand to hear them and fix the problem. It always works to speak to them once the issue is resolved. It’s okay for a brand to accept there was an issue. 

5. Policy on data usage of lost customers – Each brand must specify rules on communicating with lost customers in its data usage policy. The policy may differ by industry. It could be 90 days in OTT, while in banking, it can be up to 180 days. After this time, the marketer must pause the communication to this group and reach out only when there is a good enough reason. 

We need to remember that these customers have left the brand for a reason, and least we want to do the least to further irate them. 

Building brand equity should be the single most significant reason for marketers to firm up their lost customer strategies and programs. 

Happy to hear your views, reach me on vani@consoulsolution.com