While most marketers will agree that every lifecycle-stage model should include Registered, New, Active and Churn, many omit a valuable additional lifecycle stage: Reactivated customers. We define Reactivated customers as those who have churned and subsequently become active customers once again.
Let’s start with a shocker: more than 50% (!) of reactivated customers will end up churning two weeks after reactivation. You might mistake these customers for promotion seekers, showing up only to claim their freebies and leaving, but the reason for their incredibly high churn rate is usually different.
Years of marketing work have taught us that by treating this customer group separately, and giving them the right attention, you can decrease churn rates by 20% and generate more loyal, long term customers.
Reborn Customers
Reactivated customers have their own persona, characteristics and needs which you will need to address in order to retain them. In a way, they are “reborn” customers who should be incubated and nurtured carefully, as though they were new customers once again. In many cases, a special emphasis is needed in order to recreate brand awareness within this segment.
In order to better understand this group of customers, here are the main angles you should consider:
Highest Achieved Segment
In order to understand the potential future income from reactivated customers, it’s very important to group them by their highest achieved customer tier or segment. A reactivated VIP customer should be treated differently than the average reactivated customer. In most cases, you will want to monitor this on a daily basis and use different methods of communication for the different customer tiers.
Reactivation Source
There is a substantial difference between customers who reactivated organically (without any impetus from you) and those who reactivated reactively (by responding to a specific campaign or promotion you sent them).
Organically reactivated customers will usually migrate to the active lifecycle stage in much higher ratios than reactive customers. In order to keep reactive customers active, you will probably need to keep sending promotions and incentives that will intrigue them: you will need to keep the communication channel open.
Number of Times Churned
Every B2C business experiences the zig-zag phenomenon, meaning that they have customers who zig-zag between the active and churn lifecycle stages.
Whereas only 18% of customers who churned once before will end up active (after having reactivated for the first time), more than 50% of the zig-zag customers will reactivate again in the future.
Understanding and tracking this behavior will help guide your promotion plan and your decisions as to which customers should receive the most attractive offers. First–time-churn customers should receive stronger incentives since they are more likely to churn again. Multi-time churn customers are more likely to churn and return again (51%), and hence should receive lower-value promotions.
Reactivation Action
The type of interaction which caused reactivation is also a very strong predictor as to whether the customer will stay active or churn again. Customers who reactivated by making a payment will migrate to the active lifecycle stage in higher volumes compared to customers who were reactivated with a free-bonus promotion or who had old money remaining in their account balance.
Customers who reactivated only by using money they already had in their account or by utilizing free promotions will need to receive additional incentives in order to keep going. Customers who made an actual transaction will benefit more from you noticing them and making sure they had a good experience.
Customer Experience, Post-Reactivation
Customers who were reactivated and experienced some wins will usually regain their confidence, whereas customers who lost all their money right away will need your help to get their confidence back in order to remain engaged.
Individual Experiences
In order to rebuild brand awareness within the reactivated segment, reduce churn rates and convert more reactivated customers into long-time customers, customer marketers must gain a good understanding of the different parameters which shape these customers’ experiences. Promotions and offers should also be tailored according to these individual characteristics. For example, customers who lost will need compensation, while winners will need additional incentives in order to keep playing with their winnings and not run away with the money.
The reactivated customer segment presents a valuable opportunity for marketers. Getting to know these customers and interacting with them in an emotionally intelligent way is sure to yield impressive results.
Moshe Demri leads Optimove’s global revenue team and is focused on helping clients optimize their customer retention plans and their use of the Optimove software. Moshe has vast experience consulting clients as a data scientist, analyzing their customer data and revealing actionable, data-driven marketing insights. Moshe holds a BSc in Industrial Engineering and Management, specializing in Information Systems.
