• Rana Hesham

Customer Retention: How to win back long lost customers?



Increasing customer retention by 5% can increase profits from 25-95% and acquiring new customer costs five times more than retaining an existing one. However, the problem is that it's now harder more than ever to keep customers interested. E-commerce market got very competitive over the years. Consumers moved from Facebook to Instagram. And it’s been easier than ever to start promoting new brands thanks to influencer marketing. That means, brands need to compete in more dimensions than pricing. As by 2020, customer experience will overtake price and product as the key brand differentiator.We have all experienced that story - customers used to be active and purchase often, but then they’ve stopped and don’t even open the Sale or Discount emails anymore... Before you say goodbye for good, check out how to improve customer retention and win back long lost users.



First, analyze and segment on customer characteristics - CLTV & purchasing power


“Defensive approaches prevent you from winning. Success will come from focus on your customer's needs and success. Seek to understand then deliver customer value." Dave Blake, Founder and CEO ClientSuccess

Customer lifetime value (CLTV) measures the value a person brings to a business across all of her interactions over time. Not just a single transaction. Imagine this, two customers purchase from a baby apparel website. The first purchased a gift for a baby shower that worth 400$. The second is a new mom who purchases more often but her spending's are not more than 100$. Which one do you think is more profitable and worth your efforts to keep? If you looked at it in terms of revenue, at present the first customer could seem worth more. But in terms of CLTV, the relationship with the new mom could be worth more over time. A lot more. CLTV helps you not only to be good at finding and keeping your profitable customers. But also you won't spend money on the wrong ones.


“If you don’t have some type of lifetime value calculation, even at a broad level. It will soon be impossible to compete.” George Popstefanov, founder and CEO of global advertising agency PMG.

Segmentation will never be perfect. But when you understand segments based on value, you will be able to spend to keep the best customers.


Customer retention 101: Tying up a great brand with an amazing experience, you will have something really powerful.

Customers expect increasingly personalized experiences in their brand interactions. They became less loyal to brands and more loyal to the overall experience. In order to charge ahead in your customer retention strategy, brands must think beyond short-term, transactional gains. And focus on customer lifetime value to stoke the ongoing engagement, acquire and increase retention.


The key to CLTV is in the first party data.

Leading marketers are 72% more likely than the mainstream to strongly agree that they’re investing in improving the quality and/or volume of the first-party data they capture.


A study from The Institute of Direct and Digital Marketing. Shows that 82% of marketers using personalization have seen an increase in open rates. 75% have seen a higher email click-through rate, and 56% have seen an increase in sales.Before laying down your re-targeting campaigns to get a lost customer back, it’s critical to have a holistic view of your relationship with her first. And that type of insight starts with the first-party data you capture.


Using a data-driven attribution in winning back a lost customer will help your marketing team to understand intents, signals and interactions that increase customer retention and most importantly who is worth your efforts to keep and who is not. Later on by coupling data with machine learning. You will have a stronger success shot in winning back and keeping a customer.


An example of a company that has successfully embraced customer lifetime value is Experian. According to Jane Yu, Senior Director of Digital Analytics and Ad Operations at Experian. They have successfully shifted to CLTV by establishing what lifetime value looks like across a number of scenarios, not in terms of dollar amount only. In other proxies as well, and then they used those engagement and loyalty behaviors as indicators of high-value relationships. So, even when a customer is not ready to buy just yet. They work to be on top of her mind when she is ready to complete a purchase.


Second, personalize your customer experience with data


Every day marketers are challenged by industry changes - in the market dynamics, the more than ever-competitive landscape and most importantly in customers rising expectations.According to Salesforce, 63% of Millennial consumers and 58% of Generation X consumers are willing to share data with companies in exchange for personalized offers, discounts, experiences and product recommendations. Consumers want things with greater relevance and elevated level of interaction.

“CRM stands for ‘consumers really matter.’. Unfortunately, most companies are spending millions on CRM. Still doing a lousy job at personalizing the customer experience with data.” Peter Weedfald, senior vice president of sales and marketing at SHARP Home Appliances

There is no handbook that can tell you what’s the best customer engagement tactic for your business. The answer lies in the data you capture. It’s the only reliable source of information that can tell you what works best for your brand and what doesn’t.


The data you capture to be used in your customer retention strategy falls into three categories:
  1. Reference Data

  2. Structured data

  3. Unstructured data.


Reference data and structured data like trade numbers, transactions and churn rates are relatively easy to capture and analyze. However, these sources account for only a fraction of customer data.


Structured data can’t give you a 360 degree view of your customer dissatisfaction and alone won’t give you an edge. You have to be able to capture, make sense of, and act on every customer communication- from structured data to unstructured communication captured in phone calls, chat messages, and social media posts, etc. These types of sources can provide rich insight into customer pain, attitudes and motivations. Going further by using AI technology and establishing different scenarios, you can predict the cues of dissatisfaction and act on it before it becomes a churn.



Doing business online you can analyze unstructured data by using one of the available Customer Data Platform (CDP) software. Segment is a good tool that can help you to gather data from multiple sources and unify customer profiles across systems.


If you are willing to offer promotions to get a customer back, it’s valuable to analyze the type of promotions that the customer tried to redeem and the ones she didn’t care about. This will help you to truly understand what kind of rewards she will appreciate and get her back in line. Using an AI-powered coupon management automation like Vouchery, you can easily scale your promo strategy to 1:1 segmented, personalised incentives.


Third, engage into conversation and show that you care.


Now you can establish a personalised and data-driven customer retention strategy to get your customer back in line. Re-engaging with a lost customer is not that easy, customers are probably inundated with phone calls and emails all day long.


Your mindset should be to allow your customers to leave whenever they want, as Jason M.Lemkin says, making it hard to your customers to leave won't help. However, before letting go you must know the reason why they chose to leave.


“ Making it hard to cancel doesn’t reduce churn, it just modestly delays it, doesn’t help” Jason M.Lemkin

Looking into your customers data you know exactly who is worth your effort, their purchasing history and previous interactions with your brand. To catch your customer attention, use those information to be personal as possible and human. Businesses and customers alike experience those beautiful and all consuming sensation, known as falling in love. Surprise her how much you care and that this message is tailored only to her and not another one-to-many email.


Implement a customer survey and entice your customer to fill it out by including a voucher. Take a look at her previous purchases, know exactly what product or service she will value.Enticing your customer can go beyond price discount voucher. It can be sending sample products, inviting her to a pre-sales event or special beta launch. The bottom line is, BE CREATIVE!


Earn your customers attention, don't steal it!

If you found that your customer had an unsolved problem or hadn’t been dealt with right, be big enough and admit it. Be honest, humble and act quickly to fix it. 96% of customers would continue to buy from a company if they made a mistake - as long as they apologize and make it right.


“Say you’re sorry, be sorry, and make it better.” Dharmesh Shah, founder and CTO at Hubspot

One of the effective ways to show that you care is to send a special offer as an apology in the form of discounts or credits for the next order. However, certain customers might notice the trick and try to use your weaknesses against you - monitor how many times the offer has been given out!


Last, sometimes to win a customer you have to let her go.


As hard it is to let go, sometimes the way to keep a customer is to respect their decision and let go. The golden rule that must be kept in mind - we design for the lives your users are living, not the value you want to extract from them.


What if problems are more complex than simple fixes to content or features?


An academic professor in IMC once told me “people are complicated and it’s not always about the company or the product”.


Customer retention is also about respecting your customer's lives and choices.


Daniel Kahneman in his book, Thinking, Fast and Slow, suggests that people’s satisfaction depend on the object’s utility. The more utility a person perceives something to have, the more satisfying it is for them. In other words, everyone who is considering purchasing a product weighs its perceived utility against its cost. But this assumption is wrong simply because it doesn’t take into consideration the current life state of the consumers.


For example, Kahneman explains his assumption from an economic perspective:


A gift of 10$ has the same utility to someone who already has 100$ as a gift of 20$ to someone whose current wealth is 200$.


But, what if the first one who has a 100$ now, yesterday she had a 300$ and the second one who has today a wealth of 200$, yesterday she had 50$, are both equally happy? Do they have the same utility?

Sometimes your consumers are satisfied with the inherent value of your product/service and they go because of the utility they perceive at that moment, based on their current life state.


“Hoping to retain customers by keeping them on a path of continual engagement blatantly ignores the fact that people have lives beyond your product” Jesse Weaver

Take time to define the external events that might affect the utility of your product and instead of fighting it, respect that your customers need to manage their own lives.



Understand that your product is only part of their lives and you will be rewarded with loyal customers.

Wrapping up!


First step in working on your customer retention strategy, to understand that each customer journey is different, as they switch between channels, the purchasing funnel is changing and taking a different shape for each customer. Don’t fall, a victim of change, because you can’t see it as an exciting opportunity to establish a more meaningful and useful connection. Instead, evolve your strategy to be more assistive and value the new technology-driven customer journey — one where shoppers called the shots.

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