I’ve been going through my notes on books I’ve read and saved this gem from Personal MBA:
Reactivating old customers is one of the easiest and most profitable marketing activities you have.
In ecommerce these are called defected customers, they are the people who haven’t ordered for awhile.
They are common enough that there are processes called win-back campaigns that try to get customers to come back and buy again. Usually through offering discounts, bonuses, or other incentives. Some will even escalate the incentive the longer the defected customer doesn’t buy (e.g. regular price in first contact, 10% off in second, 15% off in third).
Once developed, win-back campaigns can be really inexpensive to run. Email-based ones cost pennies to send and the only other cost is the cost of your incentive. Cheap when compared to the cost to acquire a new customer. You often only need a few customers to come back to make the campaign profitable.
Also if the customers do come back, there’s a good chance they stick around and make subsequent orders which contributes even more to your profit.
Using the RFM analysis it can be easy to detect defectors and potential-defectors. Use the lower Recency scores (1,2) to build your segments. Repeat Customer Insights can even segment that further into four different defecting segments: Defection risk, Defection risk of loyal customers, Defected, and Defected loyal customers.
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