A new study proves that businesses can significantly benefit their bottom line by gaining back old customers. They will get a positive return from the time and money they will spend in their attempts to win back those customers too, the study shows.
The research from the study was published in The Journal of Marketing. It showed that no matter the reason for the customer’s departure– poor service, price, etc. — the business will benefit from their return. Although this statement seems like a given, not all customers bring in the same business. They contribute different amounts of money, and the cost of providing service to them varies.
The study focused on an American telecom company — to which the customers are integral, and have a huge impact on costs. The nature of the service means customers can switch suppliers very easily, making customer retention important but sometimes difficult.
“Lost customers, if won back, can be profitable to a company… customer win-back initiatives should definitely be regarded as an important strategy for service companies to use,” the study’s authors said. “Even customers who left for price-related reasons are worth winning back. They may not be as profitable as customers who left for service-related reasons, but once they are won back, they tend to stay with the company longer.”
To get customers back, companies have to refocus their marketing. Redesigning an onsite sign will only cost $0.02 per 1,000 views, and can reach more of an overall market. Content marketing is also important. If a business produces useful and helpful content, it will help foster a connection between the business and the consumers. Plugging products without any useful context isn’t genuine, and consumers will likely disregard it.
This type of marketing can also maintain communication between a company and the lost customer. Using this technique can restore that relationship without being too forceful.
The results, of course, are dependent on the type of business, but the authors say that it comes down to “properly understanding what makes a customer more or less profitable.” Once a business has done that, all of its other efforts can fall into place.
Additional research has shown that content marketing may also be helpful in keeping binge customers — those who aren’t consistent, but when they come around, they spend a lot of money.