- Existing customers are worth more (in terms of sale value) than new customers. It’s 16 times as expensive to build a long-term business relationship with a new customer than to build loyalty with old customers. The average customer spends 67 percent more in the third year as a customer of your business than they do in the first year. Businesses lose $1.6 trillion per year when customers abandon them for different companies. There are a few ways to get your customers back to active status.
When it comes to building a business, most people focus on one big refrain: get more customers. Customer generation is a massive concern for most companies, and rightfully so. After all, you need new customers to grow. In some cases, though, the attention can be a bit misdirected. While obtaining new customers is indeed essential, it may actually be more important to focus on reactivating the clients you’ve already worked with than it is to focus on bringing in new ones. Why? Existing customers are worth more (in terms of sale value) than new customers. Today, we’re going to talk about why it’s so smart to focus on customer reactivation, and how, exactly, you can do it. Let’s dive in.
New vs. Existing Customers: the Value of Each
If you want to grow your company’s bottom line, you probably think you need to haul in a bunch of new customers. That’s not always true, though. In fact, you’re probably better off investing most of your focus in reactivating the customers you’ve already worked with. Here’s why – according to HelpScout:
Increasing customer retention rates even 5% boosts profits from 25% to 95%
It is anywhere from 5 to 25 times more expensive to onboard a new customer than it is to keep a current one
For a company with $1 billion in annual revenues, a moderate increase in Customer Experience can create an average revenue increase of $823 million over three years
It is 16 times as expensive to build a long-term business relationship with a new customer than to build loyalty with old customers
The average customer spends 67 percent more in the third year as a customer of your business than they do in the first year
Businesses lose $1.6 trillion per year when customers abandon them for different companies
Twenty percent of a given company’s customers generate about 80 percent of its profits
The average global value of a lost customer is $243.
According to Marketing Metrics, if a customer has previously purchased from your company, there is at least a 60 percent chance that the customer will make at least one more purchase. If a new visitor comes to your site, though, there’s only a 20% chance that you’ll make a sale
The probability of selling to an existing customer is 60-70%, while the possibility of selling to a new prospect is only about 5-20%.
As you can see, new customers are essential, but reactivating existing customers is critical to the survival of your company.
3 Customer Reactivation Strategies That Work
Now that you know how vital customer reactivation is, let’s talk about how you can implement it. Here are a few of our favorite approaches:
1. Identify Dormant Customers
Virtually all companies have a handful of clients who are just hanging out in the wings. These clients did business with you once, they were happy with the services or products, their need was satisfied, and they went on their way. Despite that, they’ve never officially broken the contract with you or terminated their professional relationship with your company. They just aren’t buying from you right now. The first step in getting these customers back to active status is, of course, to identify them. Depending on how your company typically contacts and keeps up with customers, your approach to this will change. You can browse your client roll, for example, or sift through your email list. No matter how you choose to make it happen, compile a list of satisfied customers who have been inactive for some time.
2. Prepare Your Marketing
Now that you’ve identified your inactive customers, you’ve got to decide how you’re going to reach out to them. You can’t exactly just email and say, “Hey – what have you been up to?” Instead, you’ve got to tailor a message that will re-engage these dormant customers and inspire them to get involved with your company again. One simplified approach is customer re-engagement emails. If you’re not sure where to start with these, you can check out a resource like HubSpot, which has several excellent examples to follow. Alternatively, you can hire an agency that will store your re-engagement campaign for you.
3. Test Your Campaign
Once you’ve established your re-engagement campaign, you’ve got to test it to understand what works and what doesn’t. There are a few ways to do this. For example, you could A/B test the headlines of your various re-engagement campaigns to see what converts and what doesn’t. You may also track your response rate and tweak your emails accordingly to find out what works and what doesn’t for your customers. Once you’ve re-engaged customers, consider issuing surveys designed to poll customers on what worked. For example – was it your messaging or your service that brought them back? Was it just timing? Finding out now will benefit your re-engagement campaigns in the future.
Bringing Your Old Customers Back
Every business needs new customers to thrive. What many companies miss, though, is that the real pot of gold lies with the customers you’ve already served. By seeking out your dormant customers and finding creative, targeted, personalized ways to re-engage them, you can boost your bottom line and take advantage of all the financial perks associated with working with re-engaged customers. If you’re not sure where to start with a re-engagement campaign, don’t worry. Sometimes, it takes a bit of help to get started. Fortunately, our team is here to provide all the assistance you need. Whether you’re a small company targeting a small email list, or a growing enterprise looking to launch a widespread re-engagement campaign, our team is here to help you thrive. We’re happy to answer any questions you might have and steer you down the right road to productive customer re-engagement. Contact us today to learn more, and make your upcoming year of marketing your best one yet.