Ecommerce Marketing: How To Extend Customer Life Cycle
What’s up, guys? Tanner Larsson here.
I want to tell you about a little recovery strategy that you can use on the backend of your business to increase the lifetime value of your customers and bring back some dead customers.
We call it a “win-back campaign.” This is typically an automated email-driven campaign that’s triggered by data points you set in your shopping cart or storefront.
The Life Cycle of a Customer
Every customer in your business has a life cycle, and each business has its own unique life cycle for each type of customer. Within that life cycle, there’s the initial phase where they’re starting to go up, followed by the prime top-of-the-curve phase, where they’re in their prime buying mode, buying the most from you (repeatedly, more and more).
Then they start to decline and go into a “dead zone,” where they’re just sitting stagnant. You end up with all these inactive customers that have outlived their life cycle with you but are still on your list. But the fact remains that they’ve purchased from you before, so the idea with the win-back campaign is this:
- Catch people as they’re on that downward decline.
- Bring some of them back from the dead.
Note: These customers are already on their way out, so any of them you save is a huge win.
What you want to do is figure out what your life cycle is for a customer. In the ecom space, it’s usually between 30 and 60 days or so, but depends on the types of products you’re selling. For instance, if you’re selling mattresses, your customer drop-off rate would be in terms of years instead of days, weeks, or months. But for most online retail stores, it’s in that 30- to 60-day range.
So, figure out what that time frame is, and if someone hasn’t bought from you within that amount of time, the likelihood of them buying from you again is very low. At that point, your storefront triggers an email, and that’s the first of your win-back campaign.
How the Win-back Campaign Works
The win-back campaign basically offers a crazy incentive, discount, or special offer to old customers who have not purchased from you in a long time, trying to get them to come back and buy from you again. And the point here is to actually give away the farm because only a very small fraction of these people are going to come back. But every single time someone does come back, it gives you the chance to reset the buying cycle for that customer and have them go through the entire cycle again.
Plus, if you’re using funnels (like you should be), every time you do a win-back and someone takes advantage of it, they’re also put into a funnel sequence on the backend of that special offer.
We like to do what’s called a tiered funnel sequence. With this, the longer it’s been since someone has purchased from us, the more we stack the discount and increase the incentive to buy from us again. So, that could look something like this:
- 45 days = 15% off
- 60 days = 25% off
- 80 days = 75% off + free shipping
… Something like that.
We send out these campaigns on a completely automated basis. Once we write the email and set up the promotions, we plug them into our storefront, activate the storefront with the criteria, and we never think about it again.
The crazy thing is that by itself, a well done, one-level win-back campaign can bring a three to five percent reactivation of your dead customers. And when you tier it, you can actually get a couple more percentage points on top of that.
The win-back campaign is very simple to operate. It’s something that everybody should have in their business (because everybody has dead customers), and just operates in the background like clockwork, bringing you extra money without having to lift a finger.
So, test it out in your business, guys … and let me know how it works for you.