5 Steps to Win Back Inactive Customers
How to re-engage lapsed customers and increase activation and product adoption
“Unsubscribe volumes are only the tip of the iceberg. The greater risk which is hidden underneath are the inactive customer volumes which is silent attrition in the making.”
- Jens Stark
Inactive customer management can be a tricky and divisive topic. It poses a business dilemma similar to personal development — is it better to double-down on your strengths or mitigate your weaknesses?
I’m personally a big fan of the former — I do think you should double down on what you are doing well, e.g. your strengths or your “active customers” in this case.
However, this does not mean taking our eyes off the inactive customers, so you need to strike a sensible balance. The inactive volumes you see today will likely continue to grow if you do nothing and spill over into future attrition (unsubscribes/closures).
The best way to prevent attrition is to keep customer activity and usage levels high. The focus of today’s newsletter is how to effectively win back inactive customers and get them back on the active track, by re-engaging customers who are showing early or advanced signs of inactivity.
Here is my 5-step plan for tackling customer inactivity, enjoy!
1. Know why they buy
Consider this:
Do you know why your customers buy?
Do you know why they signed up in the first place?
Do you understand the underlying customer needs and wants?
There must have been a spark of interest, an intent to buy or something that made the customer make the effort of visiting your storefront in the first place. So’re when the customer ends losing interest and stops engaging— please do not be oversimplify this by saying that they were not part of your target audience and let them slip away.
They most certainly are part of your target audience, perhaps not the most raving fans, but as your business grows so will the diversity of your customer base and it’s inevitable that you’re going to have to deal with customers that have varying levels of engagement.
Because the customer lifecycle is interconnected, it’s possible that outcomes in one part of the customer lifecycle can be the mirror image of what is taking place in a preceding lifecycle stage. For example, your customer attrition (closures) can be the mirror image of customer acquisition (how you’re selling).
Is the way you are approaching the sale and distributing the product/service meeting the needs of the customer, whilst also providing a good customer experience?
2. Segment your inactive customer base
Without customer segmentation, you will be left with a “one-size-fits-all” solution which is better than nothing at all, but ideally, we'll want to make sure that we are using tailored offers and messaging to tackle different types of customer inactivity.
Let’s start with a very simple and high-level customer segmentation. I will use my own Substack recent subscriber data to illustrate.
The image below shows 20 subscribers who have signed up to my newsletter in the last two months. Names excluded for privacy reasons, but we can see the signup date and how many days they were active in the last month. The overall activity is described and summarised with number of stars ranging from zero (no activity) to five stars (highly engaged).
Remember, we are only interested in inactive customers here for the purpose of this post; so, I would suggest focus on those with zero, one and two stars. We can also make a distinction between subscribers who are new subscribers (defined as those signed up in the last week) vs. existing subscribers.
It might be a good idea to create a data summary of all these individual entries, so if I now go ahead and do that, it will provide us with a much better overview and understanding of the situation - and it’s going to look something like this:
Data observations:
There are mostly highly engaged subscribers (11) across the existing subscriber base (Thank you guys - hope you are enjoying my posts 🤩).
There is a cluster of inactive or low activity subscribers (7) from the existing subscriber base.
We also see an emerging tale of two stories: subscribers have either very high or very low levels of engagement, with no customer group in between (no two or three stars).
Out of the new subscribers (2) in the last week, both are inactive or with low engagement so far. This might be perfectly natural if it takes a bit of time for new subscribers to get up to speed, or it could also indicate a potential risk/issue/opportunity in this space.
3. Get ‘em while they’re hot
The single most important thing you can do to drive activity and adoption with your product or service is to perfect the start of the customer lifecycle.
First impressions do really count and there is a saying “the trend is your friend” and this applies to customer lifecycle management too.
If the customer starts using your product/service right away — they are likely to keep using the product. This makes life easier for us and we can then provide a little nudge to reinforce positive behaviours and they’ll likely use the product even more.
On the other hand, if a customer does not use the product from the start, you’re going to need more than a little nudge. The longer time passes, the harder it will get to change the customer’s behaviour and at some point, it will become too late.
This is why the art of the start is critical. Get the start right, and the rest will fall in place.
Some specific actions you could take to optimise this could include:
A seamless account set-up experience
Logical, clear and user-friendly customer welcome material
Effective client onboarding
Incentivising early usage of your product/service
4. Plan out the whole motion from the start
After the early customer lifecycle stage, we’re looking at the mid-point of the customer lifecycle next. Depending on your type of business, this can be a really broad and varied range from customers who have been with you couple of months with you or even years.
I often suggest that less is more in customer value management and I would advise that we want to approach this strategically with a couple of really strong and timely engagement offers, instead of a flurry of small and tactical interventions.
The key thing to consider here is length of inactivity, so taking prompt action becomes really important. In other words, the longer a customer stays inactive, the smaller the likelihood and probability of re-engaging that account.
This relationship is illustrated in the chart below. The data contains hypothetical values and this can vary slightly depending on your business model and product/service. Once past a certain point, the likelihood of customer re-engagement chances will level out close to zero and this is your “silent attrition” point.
For example, you could select a couple of well-timed engagement interventions, such as:
1 week of inactivity
1 month of inactivity
3 months of inactivity
Contrary to popular belief, I would suggest using the costlier and resource-hungry interventions at an earlier stage (such as: a personal outreach instead of an automated email). My logic would be that the stakes are much higher in the beginning of inactivity, so you want to give it your best shot right away when there is more chance of a successful re-engagement.
The likelihood of re-engagement is not a linear function over time, but one of rapidly diminishing probability as time goes by. Once past a certain point, the likelihood of customer re-engagement will be near close to zero and this is your “silent attrition” point.
5. Re-engage first, cull as a last resort
As you scale, you will reach a point where the cases of disengaged and inactive customers are going to reach a sizeable number. Suddenly, your subscriber or customer base consists of let’s say 10% of your entire subscriber list who hasn’t opened a single email in 6 months. So, what to do we do now?
You could simply cull this population and unsubscribe/close all of the inactive ones. It would certainly make your stats look better, although I would suggest this should be the last resort when all other options have been exhausted.
First, as you’re dealing with a subscriber/customer who is highly disengaged and might have been for a long time, this is not the time to up-sell or cross-sell new stuff. Instead, try to re-sell the original product/service to drive activity in any shape or form.
For example, look back at your initial lead magnets and see if you can repurpose these for existing customers. Can you adapt some of your sales material that explains the benefits of the product/service to educate the customer? They might just wake up to the idea of coming back.
I would suggest using engagement methods with little value-give away at such a late point in the customer lifecycle. Try educating the customer, explaining existing benefits of the product/service and eventually you might want to try to incentivise further usage with a specific offer.
Once you’ve tried different engagement approaches and if the customer still doesn’t reactivate, you can consider culling them as the last resort.
A few questions for you
Before we close, here are a few questions for you to consider:
How would you define inactivity in your subscriber / customer portfolio?
How many customers are inactive and does this look different across new vs existing customers?
Do you know the main reason behind the inactivity? (pro tip: ask a small sample)
If you reactivated X number of customers, what would this be worth in $?
Work through these questions and try to think of at least ONE specific action that you can take to mitigate inactivity in your own customer base.
This concludes today’s topic on customer inactivity and I hope you now have enough knowledge to start tackling your inactive customers before it turns into a closure scenario. The latter requires a very different approach and if you would like to learn how to master this, I also wrote a two-part series on Customer Retention which you can find here:
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Jens
This looks like an interesting post! I will be reading this in depth! Thanks for sharing this!