Thousands of struggling small business owners are missing out on a ‘low-hanging fruit’ opportunity to increase cashflow within 7-28 days. This overlooked strategy falls up under one of three ways to grow a business:
- Generate More Leads
- Convert a Higher Percentage of Leads to Customers
- Get Customers to Buy More Often
The overlooked opportunity I’m speaking of here is #3. Far too many small/local business owners fail to implement a consistent strategy to re-engage previous customers who had a great experience and would gladly come back. Most are scrambling to bring the next new customer in the door. While new customers are critical, this approach is leaving money on the table.
Research shows it can cost 6-7x more to acquire a new customer than to keep an existing one.
Don’t take my word for it. Keep reading to see how one organization quickly capitalized on this opportunity (to the tune of a 738% ROI) by taking action.
CASE STUDY: Reactivation Campaign for Performing Arts Center Sees 738% ROI
Summary: With a list of 550,000 names, 30% of which were duplicates, the Denver Center for the Performing Arts (DCPA) was struggling to be relevant to them all.
Learn how the center embraced data, got to know its subscribers and used that knowledge to launch a campaign that targeted 40,000 lapsed patrons and saw 738% ROI in email alone and a 210% increase in clickthrough rates.
- Knowing how to appeal to 750,000 patrons on their customer list. They needed to transition from a mass-marketing model to one where their ideal customer was identified in order to create a more relevant message.
- Being a non-profit, they did not have the same type of resources as for-profit entities and their marketing was less sophisticated.
- Their database was full of duplicates and needed to be purged in order to create a more efficient mailing.
- They started by setting out to learn how to use customer data to understand and then identify their key groups.
- The end goal was to create a message of value as a brand and a product in order to be relevant to the consumer.
Step #1. Use Data to Understand Your Customer
- The team started by collecting data, cleaned their entire database of duplicates (they went from 550,000 to 330,000 ), and reached out to lapsed customers and made them an enticing offer to come back.
- This was the beginning of changing their marketing strategy by informing it with data in order to better understand their customer and transform their email communications.
- The DCPA enlisted a service to “append” the 330,000 remaining database records. They created a “mosaic” or lifestyle attributions to understand the lifestyle segments these people belonged to.
- The database was scored using the RFM model – Recency, Frequency, and Monetary.
- “It was a pretty basic score, we were able to just take those three things based on people’s buying behavior and score them,” she said, adding each person in the database had an R score, F score and an M score, “so we would not just have a snapshot in time, but …[understanding] who are these people who have a high RFM score. This brought the organization to “a whole new realm,” in her estimation, because “we’ve never really understood our customer before.”
After using the RFM model to learn more about DCPA’s customers, the objective was to understand the qualities that made someone more likely to purchase, not only once, but over time.
“In a business like this where there are so many one-time buyers,” she said, what “we really want to boil down to [is] who are those customers who come and spend the most amount of money?”
Step #2. Identify a Propensity to Return
Nealson and her team went back to their 2007 list and analyzed millions of lines of data, focusing on clients that had not transacted with the center in two years.
Propensity to return was judged by a few factors:
- Transaction history
- Ticket price classes
- Marital status
- Home ownership
The most prominent trend that emerged was within the demographic of people who had lived in their house for a year or less. They were more price sensitive, and less likely to have purchased in the last two years. They would be marked to receive the reactivation offer from DCPA.
Nealson and her team were able to produce 40,000 names from 366,000 total on the list as the “best” lapsed patrons to target with a “Welcome Back” reactivation campaign.
Step #3. Create Collateral for the Campaign
After identifying the 40,000 lapsed patrons, Nealson and her staff put together a three-piece “welcome back to the center” email campaign, along with a direct mail send.
The elements they wanted to bring into the emails were:
- Exclusivity: spoke in a relevant tone
- Offered value: a discount at one of the highest price points of the season
- Time sensitive: Put an end date to the offer
“We did those three things in accordance with an integrated plan, which was one direct mail and a series of three emails,” she said, and it was implemented for their holiday season, running from October 11 through December 1, 2012.
Nealson added it was especially important to grab readers’ attention at the time, because one the of presidential debates was taking place at The University of Denver.
“Denver was very involved in the election, right at the high point … so it was hard to get through,” she said.
So, Nealson and her team decided on a product that would grab attention and would be generally well-received by the recipients — holiday shows.
“It was a production that had some value in the holiday season. I think we put our best foot forward with our product offering, which I think was key,” she added.
First email subject line: “We miss you! Come back & save 50%”
It opened with “We haven’t seen you in a while and we miss you! Please join us with an exclusive limited time 50% discount for you to attend a couple of our upcoming shows!”
It then offered a simple call-to-action to purchase, with a graphic for each of the two shows followed by a “Buy Tickets” button. Clicking this button lead the subscriber to a landing page (below) to purchase tickets.
Second and Third Emails
The second and third emails were essentially the same, urging subscribers, “Don’t forget!” that they can purchase tickets at a 50% discount to two holiday shows. But the window is closing, and the “offer expires on December 1.”
Second email subject line: “Your exclusive 50% discount is expiring”
Third email subject line: “EXPIRES TOMORROW — Your exclusive 50% discount”
“It’s not necessarily hard to sell tickets at the holiday season, but we’re coming across the line to win their business back,” Nealson said.
Secondly, she added, they gave an offer that “helped them re-engage with the brand, and the tone told them that we had noticed that we hadn’t seen them in a while, and we’d missed them.”
With the learning that these patrons were lapsed, Nealson said it was important to keep a tone that felt as though “you’re speaking to them, so they feel it is relevant.”
One direct mail piece (see it below) was sent out first with an initial offer email. It was then followed up with the second email a week later to re-emphasize the offer, and then the final email 24 hours before the deadline was a “take us up on it today because it is going to expire,” she said.
“We are just at the beginning,” Nealson said, of their efforts of changing towards relevancy.
Based off of what they have learned, she added, “we have literally implemented that whole philosophy.”
They are currently building their whole database around it, and have hired a data analyst to help in the transition.
“We are very, very dedicated to looking at data as the core information source to guide us in the way in which we market,” she said, adding the campaign served as proof for “the need for us to be relevant.”
What she wanted for the campaign was to prove that by using propensity models and data-driven segmentation “we actually would see an increase in ROI and revenue and reach.” The results they were able to achieve showed that proof, with:
- An email-only ROI of 738%
- An overall campaign ROI of 506%
“Welcome Back” emails:
- A 38% open rate increase
- A 210% clickthrough rate increase
- Decrease in opt-outs of 95%
- A 90% decrease in spam complaints
“We’re still in the first stage of really learning and identifying how we are going to use this approach to dramatically improve sales and reach, but we’ve already learned so much,” she said.
Relevance is a way for marketers to gain subscribers that are “very loyal,” Nealson said, at a time when opting out is becoming easier, and more frequent of an issue.
“That idea of relevance, it isn’t just a buzzword — it’s a minimum requirement if you want people to communicate with you,” she concluded.
While this case study represents a more involved process, 95% of small businesses who have repeat buyers can realize immediate benefit without going through so many preliminary steps. Any business with frequent repeat buyers can stabilize their cashflow by adopting a basic customer reactivation strategy.
Here’s a short list of industries where the low-hanging fruit opportunities are obvious:
- Dental Practices
- Hair Salons
- Auto Service Centers
- Tool & Equipment Rental
- Chiropractic Offices
- Massage Therapists
- Gyms and Fitness Centers
- Local Veterinarians
What makes the customer reactivation difficult to execute is when a small business has a poor reputation. It’s hard to get people back in the door if the business has 2 or 3 out of 5 stars. Consumers are slow to make a repeat visit if they didn’t enjoy their first experience. However, companies with a 4 or 5-star reputation are leaving money on the table when they don’t reach out to their satisfied customers on a regular basis.
Would you like to boost sales and profits in your local business by putting a Reactivation Campaign in place? If so, reach out to chat with us on Facebook Messenger. We’ll be glad to answer your questions.
I will showcase additional case studies in future blog posts. Subscribe below if you’d like to be notified when they go live.