ORC #6: Reacquire or Reactivate
As marketers seek to grow their active customer base, they do a lot of paid acquisition. Over time, a large percentage of these customers become inactive. The question that marketers face is whether to try and reactivate them through existing push channels (owned by the brand) or reacquire them via retargeting campaigns on paid media (Big Adtech). The cost of using owned media is a fraction of paid media, but most marketers opt for the latter because they are unable to get their customers to listen to them on the push channels. These reacquisition campaigns can be a big drain on marketing budgets.
Ironically, the inactivity of existing channels is in part a result of marketers not building better relationships with them. Because push channels have remained largely unchanged in their capabilities, marketers have been unable to get past the twin problems of attention recession and data poverty. Also, with 85-90% of the budget being directed towards new customer acquisition and retargeting of inactive existing customers, the focus on existing customers and keeping them interested is low. Thus, marketers get trapped into a negative feedback loop with the worst possible spending – reacquiring and retargeting existing customers on expensive paid media.
There are two solutions which can address the reactivation problem: hotlines and Progency (product-led agency). Hotlines can help marketers build two-way interactions, while Progency can make reactivation like performance marketing where payouts are linked to outcomes.
As I wrote in The Coming Martech Era: Driving Exponential Forever Profitable Growth: “Reactivation is the missing link in the customer engagement chain. The reality is that customers do become inactive. They start ignoring brand messages and are as good as lost. But the brand still has a hotline to them in the form of an email address, a mobile number or a still installed app. How can this connection be used to reactivate the customer? Instead of a laundry list of offers, perhaps some interesting content can ignite interest. Instead of treating the customer as part of a big segment, a narrowcast message based on specific affinities could do the trick. Reactivation is hard, so allowing customers to become dormant should be avoided. But it is still cheaper than reacquisition which entails using Google-Facebook and spending many times more.”
I then added: “The progency can…work on the “Test” customers and reactivate them by using push messaging, rewards, affinity-based content, the full stack DXP (digital experience platform), and a touch of paid media if needed. The key point is that the progency takes complete responsibility for the dormant database and delivers activated customers at a lower price point than what reacquisition would cost.”
A metric to track is the reacquisition ratio. I wrote in Martech’s Magicians: Microns, Micronbox and µniverse: “My belief is that a third of all acquisition is actually reacquisition. No brand that I have spoken to is actually tracking this. It is not difficult to track. For every new paid acquisition, a brand needs to simply look at its database and see if that email ID or mobile number was in the customer database. The reacquisition ratio is the number of reacquired churned customers to the total acquisitions being done. The higher the number, the greater the waste. Brands should then use reactivation techniques as an alternative to reacquisition via ad platforms.”
To summarise: reacquisition via Big Adtech should be a last resort, not the first port of call. Ideas like hotlines and Progency can help marketers reduce dormancy and in the event that it happens, lower the cost of bringing the relationship back to life.
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Conundrum: what to do with inactive customers – try and reactive them with push messages or reacquire them via paid media
Insight: reactivation can cost a fraction of reacquisition
Solution: use hotlines (using AMP for interactivity in emails and Atomic Rewards as incentives) and Progency (product-led agency) to help drive reactivation
