Turning Lapsed Customers into a Profitable Revenue Stream
Everyone knows customer loyalty is vital and we’re well aware that retaining a loyal customer is vastly more profitable than finding a new one with all the marketing and set up costs that entails. If you want proof of the importance of loyalty, take a look at the slide below
So, we agree that it’s important. But, for companies with large client portfolios and endless amounts of SKUs, boasting about customer levels of customer loyalty can be quite exaggerated. A disproportionate amount of time is actually spent chasing new business as opposed to looking after or further cultivating current customers – especially those that perhaps spend less frequently and/or spend less. Those customers can get forgotten and fall down the pecking order as contact tends to focused on those clients that currently spend the most or who shout the loudest.
The resource is also devoted to activities such as lead generation for new revenue, promoting brand awareness, and all manner of other marketing tasks that can become time-consuming and expensive. The trouble is that even organizations with great aftersales service and great products are guilty of letting slip a band of customers that could be potentially lucrative.
These include customers that:
- have purchased infrequently
- have spent relatively little thus far
- have had a problem.
The number of these types of customers inevitably builds over time & can become hundreds or even thousands for larger companies. And, since securing new ones can involve significant costs & time, letting them lapse in the first place constitutes a criminal loss that has a detrimental effect on revenue.
The answer to this problem lays indirect & effective engagement with these customers at the right time. Many companies who have tried this using internal customer services staff or management find that they don’t have the time, know-how, or systems required to put in place an effective solution based on a defined process that delivers ROI.
One option is to view these customer segments as a defined target audience that requires nurturing over time. You can potentially achieve outstanding results by making regular outbound calls to them to make them feel warm about doing more business with your organization. Of course, it’s important to profile the customer base to avoid wasting time but opportunities often come through this form of activity.
Telemarketing has been known for years for lead generation, appointment setting, market research, subscription selling & other direct sales. With new technology, cloud-based CRM’s & the ability to hotkey leads to an internal sales team instantly, outbound telemarketing can quickly become the perfect solution to re-engage with lapsed or infrequent customers with a view to getting them to purchase again.
To set up a campaign of this nature requires focusing on the data to be called with a ceiling on the upper limit of spend made by the customers. It’s also important to look at the threshold for what defines a ‘lapsed’ customer to ensure that you call those with potential as opposed to dead ducks. Profiling lower spending customers based on employee size, turnover, and/or sector can also provide a valid target list in the same way.
Undertaking outbound calling like this identifies new opportunities and also allows the internal resources to focus on the larger key accounts and those that spend regularly rather than having time diluted into smaller and less profitable customers.
Where GSA undertakes this kind of calling for clients, we manage the data so that all of the contacts are called in order to deliver the numbers required. To ensure the work is measurable and can be tracked and analyzed as the campaign progresses, it’s important to have a forecast or target for revenue growth.
Many companies extend the activity after the initial phase as they see benefits such as:
- Smaller more frequent customers spending more
- A greater internal focus on key accounts allowing better internal resource deployment
- Higher average revenue and order values per client
- Strong ROI from existing customers
- Resuscitation of lapsed business
- Smaller clients becoming key accounts
- Enriching the customer data for marketing profiling
- Identifying buying patterns & market trends.
The above are all important. But ultimately, it’s the simple fact that the extra revenue stream from this activity will far surpass the cost involved to initially set up the campaign that convinces organizations that this is a valid exercise to do.
If you’d like to talk to us about a customer care campaign, contact us now on 0845 658 8192 or fill in the form on this site.