Microns: Solving the Customer Reactivation Problem (Part 3)

Dormant Customers

Dormant customers abound. As we have discussed, about half of the customers for a brand are likely to fall in this category – what I have called Test customers. Brands have spent good and big money acquiring these customers but for various reasons that relationship is no longer active. Instead of a blossoming friendship, brands and customers have become strangers to each other. Both have gone their own separate ways. Is there a way to bring them back together and rekindle the joy that they had once experienced however briefly?

Jerome Collomb: “One of the best moments as a marketer or salesperson is converting a potential customer into a sale. But just as importantly as converting visitors into customers, marketers need to be on the lookout for making sure that customers stay customers. Dormant customers are a bummer for any business, and it’s important as CMO to create a strategy that successfully awakens these sleepy buyers and gets them back interested in your product.”

Tracy Blanchard: “Customer retention is the most important investment any business can make. That’s because the cost of acquiring new business is five times higher than that of maintaining an existing customer. Once you’ve gone to the trouble (and cost) of gaining a new customer, you’re going to want to hold onto them for dear life. However, even the best-laid retention strategies aren’t 100% fool-proof.  Sometimes customers slip away and stop responding to prompts from you. When this happens, it’s important to be proactive in your attempt to win them back.”

Goran Dragosavac: “Dormancy is typically defined as accounts that were previously active but now have a zero balance, with no transactional or financial movement within a specified period of time. In regards to dormant customers – it is unlikely that they have been given effective “wake up” call, otherwise they would not be dormant, and whatever previous marketing effort had been spent on them – clearly wasn’t effective! The good news is that there is still chance to be awaken with the right marketing stimuli. Key is to try to understand specific dormancy drivers.

Maria Wróblewska: “All companies experience dormant customers. Knowing how to talk to them and win them back is that part of the job where a loyalty program can help you. According to COLLOQUY’s Loyalty Census report (2016), 58% of memberships in the US were inactive. That’s a huge number!”

Annabelle Avery: “The probability of selling to an existing customer is 60-70%, whereas the probability of selling to a new customer is 50-20%. Just let that sink in. So why, oh why do only 18% of companies have a greater focus on customer reactivation strategies as opposed to 44% of companies who have a greater focus on acquisition? Even if a customer hasn’t engaged with you in a while, it may be that marketing dollars are better spent drawing dormant customers back in rather than trying to acquire new ones.”

Tracy Blanchard (again): “Businesses have a 60-70% chance of selling to existing customers and only a 5-20% chance of selling to a new one. Existing customers are not only more likely to buy, but they also spend on average 31% more than new ones. When customers stop responding to marketing efforts, many businesses abandon them. But why abandon a customer who has already done business with you? Even if a customer hasn’t responded for a while, marketing dollars are still better spent courting dormant customers than acquiring new ones. In fact, it’s 3-10 times more expensive to acquire new business than it is to reactivate unresponsive customers.”

It should be clear by now that giving up on dormant customers is not the answer. Brands need a strategy and programme for reactivation.

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.