Customer recovery: The Dos & Don'ts for Shopify merchants

Especially in e-commerce, it's not uncommon for customers to not revisit a business for weeks or months after their initial purchase. Getting them to buy again after this interruption generally requires two things: first, identifying the reasons for customer churn, and second, developing a strategy to win back customers. In this post, you'll learn possible reasons for customer churn, whether it's even worth it to win back lost customers, and 5 actions you can take to implement customer recovery for your Shopify store.

What does customer recovery mean?

Customer recovery is the systematic coordination of measures to win back lost customers. Lost customers are those who have already left. A successful customer recovery strategy first and foremost takes into account why customers are leaving in the first place. In this way, companies can make targeted offers to customers who are willing to churn.

Customer recovery usually has two objectives: On the one hand, important customers are to be tied back to the company and, on the other, the findings from this process are used to prevent existing customers from churning.

Customer churn: the possible reasons a buyer is considered lost if he no longer buys from a brand after a certain period of time. The reasons usually run in the same three directions:

1.Customer-related reasons: A customer goes through different life phases during his customer life. These can be characterized, for example, by a change of employer or the loss of a job. But individual values can also change and have an impact on purchasing decisions, such as starting a family, a higher or lower income, the death of a pet, or sudden food intolerance

2.Competitive reasons: Cheaper offers with better terms from direct competitors are naturally tempting to your customers and thus very dangerous to your business. In addition, your competitors may have specifically poached your customers or lured them in with simple switching offers.

3.Company-related reasons: Your support is the flagship of your business. An unfriendly customer service, long response times or poor accessibility can significantly worsen the customer experience and the image about your company. If your customer's concern is not addressed to their satisfaction, they will record this as a bad experience and be more likely to churn. The numbers bear this out, as poor customer service is the number one reason for customer churn at 68%.

If you don't ask about it directly or the customer doesn't tell you explicitly, you can only guess why they won't come back. Defining why someone is turning away from you, even if only temporarily, is one thing. The more complex task is to distinguish active customers from those who are about to churn.

Reactivating customers: Is it worth it?

Warm or in this case rather lukewarm contacts are cheaper than winning over a completely new target group for your products. So there are financial benefits for you alone in winning back your customers who have left.

However, running re-engagement campaigns has its drawbacks and is not suitable for every business.

There is always a risk of wasting money on people who will definitely not come back. And even if you were able to encourage a former customer to buy again, there's a risk that it will prove unprofitable. Finally, regained buyers may leave at the next best opportunity.

Therefore, before you launch a customer recovery campaign, you should think very carefully about the following questions:

• How profitable will the customer be to your business each month during their "second lifetime"? It usually makes more sense for you to look for the customers who spend less money each month but stick around longer, than to retain customers who spend more money but leave quickly.

• How likely is it that the customer will come back? Check how serious the reason is that the customer turned their back on the brand and how relevant your product still is.

• If the customer does come back, how long will they stay? Does your product provide lasting value to the customer?

If you have come to the conclusion that customer recovery can be worthwhile for your brand, the next step is to define at what point a customer is considered lost in your case in the first place.

Recovering customers: Advantages and disadvantages at a glance

Advantages of customer recovery:

1. cost effectiveness: recovering lost customers can be less expensive than acquiring new customers because a relationship already exists.

2. Recovery of lost sales: Recovering customers can restore lost sales, especially if they are long-term or high-value customers.

3. knowledge of customer needs: Companies that make an effort to win back customers can get valuable feedback from former customers and improve their products or services accordingly.

4. increasing customer loyalty: successfully winning back a customer can lead to increased customer loyalty, as the customer feels valued.

5. positive word of mouth: if customers are satisfied again after a period of inactivity, they are more likely to positively recommend your company to others.

Disadvantages of customer recovery:

1. challenging: Winning back customers can be difficult, especially if they have churned for certain reasons, such as poor customer service or product issues.

2. Time-consuming: Identifying and addressing lost customers requires time and resources that could be spent elsewhere.

3. no guarantee of success: there is no guarantee that a lost customer can be successfully recovered. Some customers may already prefer other providers.

4. Negative experience: If the win-back efforts are inappropriate or intrusive, they could lead to negative experiences and drive the customer away for good.

5. distraction from new customer acquisition: the focus on win-back can lead to companies having less time and resources for new customer acquisition.

Customer churn: when does a customer enter this threshold?

Every e-commerce company is different and defines the threshold for customer churn differently. For one company a buyer may be considered lost after one month of inactivity; for another, a customer doesn't enter that territory until after four months. Of course, it also depends on what you sell. Are your products coffee, toothpaste, nutritional supplements, or are they luxury goods like perfume?

The key is to identify the typical buying cycle in your customer data.

The easiest way to do this is as follows:

1.Calculate the average time between a customer's first and second purchase.

2.Calculate the average time between the second and third and third and fourth purchases to further differentiate the cycles as customer loyalty increases.

Of course, you should also get to the bottom of potential issues if they are the reason for customer churn. To do this, read comments under your social media posts, direct messages on Instagram and Facebook, and emails your support team receives. Is there one or more difficulties that keep getting mentioned? Maybe it's something that can be fixed with more training or by updating processes and policies.

So, once you've identified the reasons for customer churn and identified the customers you've lost, it's on to customer recovery actions. In the following, we'll introduce you to 5 and, in the process, also reveal what you should do your best to avoid in the process.

Retention Marketing: Engaging the customer before they are lost

Retention marketing is a marketing strategy aimed at retaining and engaging existing customers and building long-term relationships with them. In contrast to new customer acquisition, which focuses on acquiring new customers, retention marketing focuses on maintaining and satisfying the customers already acquired. Thus, retention marketing could also be understood as customer loyalty marketing.

Advantages of Retention Marketing:

• Cost effectiveness: acquiring new customers can be expensive as it requires marketing costs for advertising, lead generation and sales. Retaining existing customers is usually more cost-effective because they are already familiar with your business and require less persuasion.

• Increased sales: Repeat customers tend to spend more money than new customers. Targeted cross-selling and up-selling strategies can increase revenue per customer and drive business growth.

• Customer loyalty: maintaining customer relationships and providing excellent customer service leads to customer satisfaction and loyalty. Loyalty means customers are more likely to stay with your business, even when competing offers are available.

• Positive word of mouth: Satisfied customers are more likely to recommend your company to their friends and colleagues. Positive word of mouth can facilitate customer acquisition and strengthen your company's reputation.

• Long-term growth: by focusing on retention marketing, you can build a stable and growing customer base. Long-term customer relationships are an essential building block for sustainable business growth.

Aspects of Retention Marketing

• Customer loyalty: Retention marketing aims to bind customers to your company so that they repeatedly buy products or services from you. Customer retention is an important success factor for long-term growth.

• Customer loyalty: loyalty is the ultimate goal of retention marketing. Loyalty programs, rewards, and personalized offers are some of the ways to build loyalty among your customers.

• Personalization: by collecting data and information about customers, companies can create personalized marketing messages and offers. Customers feel valued when they receive personalized communications.

• Customer service: excellent customer service is an important part of retention marketing. Responding quickly to inquiries, resolving issues, and providing support all help to satisfy and retain customers.

• Feedback and reviews: Invite customers to provide feedback and reviews on a regular basis. This helps you identify weaknesses and increase customer satisfaction.

• Cross-selling and upselling: Leverage existing customer relationships to offer additional products or services. Cross-selling (selling related products) and upselling (selling a higher-value version of a product) are effective methods.

• Repeat purchases: Encourage customers to buy from you again by sending special offers, discounts, or reminders about past purchases.

• Customer communication: Keep in regular contact with your customers. This can be done through email marketing, social media, mobile apps or other communication channels such as WhatsApp.

• Loyalty programs: Loyalty programs reward customers for repeat purchases or certain behaviors, such as referring friends or reaching a certain purchase volume.

• Analytics and measurement: use analytics and measurement to track the success of your retention marketing efforts. Metrics such as customer loyalty, repeat business, and customer reviews are important indicators.

Retention marketing is especially important because retaining existing customers is often more cost-effective than acquiring new ones. Satisfied and loyal customers can also become brand ambassadors who recommend your company to others and help attract new customers. Careful planning and implementation of retention marketing strategies can lead to sustainable business growth.

Customer recovery on Shopify: 5 actions & tips.

There are no hard and fast rules to convince a customer to come back after they've been away for a while. However, there are several customer recovery strategies you can test out or even combine for your Shopify store.

1.Plan your messages

How do you want to communicate to the outside world? Of course, this depends on what the most common reasons for churn have been lately. Was there a serious mistake that your company made? For example, did you announce products in a big way, only to have stock for only a fraction of the prospects?

Then own up to that faux pas and apologize! Customers reward companies that show authenticity in their communications. A personal message can work wonders here. A study by Accenture showed that nearly a quarter of respondents returned to a company after it formulated a personal apology about an issue.
If you are not aware of any bugs and you have to assume that they are price or other service reasons, you need to plan your messages differently. Think about exactly how your business is defined and what you can offer former customers. Do you sell consumer goods? Are your products durable? Let these elements guide you in crafting your message. For more expensive products, you could slip in a note about how to care for the product before moving on to a sales promotion.

If you sell skincare products, coffee, or supplements, you could suggest a subscription to your inactive customers. Point out that a subscription eliminates the need for annoying reorders and saves money.

However, always follow the golden rules of communication in your messages: express yourself clearly, make sure each message has added value for the customer, and convey its importance (meaning: you miss the customer and their absence is felt!).

Don't: Don't talk your customers into anything. Your inactive customers used to order coffee beans from you and you think you can draw them out with your new tea set? The attempt will backfire! Your messages and marketing emails should be related and closely related to their original favorite products.

2.Write to inactive customers by email

You now know which of your customers, based on the buying cycle, should be classified as inactive. Ideally, you should look for an email service provider that not only allows segmentation by customer lifecycle, but creates it automatically. This will take some of the work off your plate and allow you to focus on creating your email automations.

After all, such emails, designed to lure back rogue buyers after a certain period of time, still have the highest conversion rate: in 2020, it was 21%.

Timing is everything. You should plan for a few consecutive emails, because one usually isn't enough. Testimonials say that three messages work best to get customers back into the store and checking out. The amount of time between messages will depend on what type of products are being sold and how often.

Consider experimenting with split testing. Everyone who hasn't made a purchase after 30 days receives one message. Then the second message is sent to half the group seven days later and to the other half 14 days later. The same split is used for the final email loop.

Automations also make it easy to proactively prevent customers from becoming a lost buyer in the first place. If you know that your average customer buys something from your Shopify store every 50 days, you could send the first minor sales email after just 35 days to remind them of your brand.

Don't: If you still haven't found a new sale after the umpteenth email, or if the past time has already exceeded the customer life cycle many times over, you should give up your efforts here. Don't start spamming! It is well known that travelers should be let go. The last thing you want is for someone who was once a loyal customer to rate you as spam online.

3.Add SMS or WhatsApp to your communication

Text messages are very effective, after all, each of us has his smartphone in his hand several times a day. So SMS messages can be a useful addition to your communication and marketing mix. Here, too, automation and even a combination makes sense. In the first step, you could send an automated email to your inactive customers. If no new sale was recorded as a result, this triggers an SMS in the next step after a few days. This workflow can increase your conversions, reach defectors on multiple channels, and thus ensure that your messages don't go under.

Don't: Never send SMS messages to former customers if you have not received the explicit opt-in for this beforehand! In addition, the same applies here: do not become a spammer. Too many messages can make undecided people leave your offer and thus have a detrimental effect.

4. Ask for feedback

We have already established that it is tedious to find out the exact reasons for inactivity if the customer does not share them with you. That's why you need to take the initiative!

With the help of a simple survey by mail, you can find out why your former customers decided not to buy again. This way, you not only get to know the weak points of your business better and can react to them, they also show good will and are ready for honest communication. This could convince former customers after all and bring them back to your online store.

Don't: Never stop listening to your customers and communicating with them. Especially when errors have occurred, don't procrastinate or ignore the problem. The longer a customer has to wait for a solution, the less chance you have of persuading them to buy again.

5.Reward your inactive customers.

Of course, luring customers with a sweet surprise to get them to buy again is the oldest trick in the marketing world. But just when you want to get feedback and improve your processes based on problems, giving lost shoppers an incentive to engage can help. Coupons, vouchers or freebies can be used not only to push pure conversions, but also just to collect customer complaints. Maybe it goes against your instincts, but isn't it better to get lots of negative notices of problems and then act on them than to silently losing customers without a clue as to why they left?

Don't: Don't rely too heavily on perks. A coupon is not a band-aid. Without the other items on this list, special offers can only help so much. At worst, they can send the message that you believe the customer's loyalty is for sale. So use this trick rather sparingly.

Conclusion

Winning back lost customers can be a challenge - but it's not impossible. And above all, it can be well worth it! After all, the cost of winning back customers is significantly lower than that of acquiring new ones.

For you as an online retailer, customer recovery is about expressing your appreciation, which can increase customer loyalty and lead to referrals. If you prepare the implementation sufficiently and, in the best case scenario, call on intelligent technological support, your chances of success in this are actually quite good. So what are you waiting for?