For most online businesses, user acquisition is a challenging endeavor—one that is only getting more difficult. With growing competition for products or services, and rising advertising costs, marketers can no longer spend frivolously to acquire new users with no strategy in place to retain those hard-earned customers.
Many of today's savviest marketers are turning more of their attention to strategies that can help re-engage churned, or lapsed, customers.
The customer group of churned customers is a huge source of untapped potential, as they already have had prior communication with you and recognize the brand. Not only do those customers know who you are, but you also have valuable data about them.
But are all churned customers alike? Should marketers employ different strategies for re-targeting customers that churned in different ways?
We set out to answer these questions and more by analyzing data from across our network.
Quick-Churn vs. Late-Churn
To gain more insight of how marketers can unleash this potential, we decided to compare two different customer groups: "quick-churn" and "late-churn" customers.
For the purposes of our research, we defined quick-churn customers as those who interacted with the brand for a short period of time and quickly left (or churned after being "new" customers). Late-churn customers had a continuous interaction over a longer period with the brand before leaving (churned after being "active" customers).
To compare these two customer groups, we built a model around the churn and reactivation data from 30 customer-centric businesses over a two-year period.
We examined the following metrics in quick-churn versus late-churn customers and found the following results.
Definition: The percentage of customers in each of the two groups who returned to activity at least one more time after the churned period
The result: Late-churn customers reactivated 83% more than quick-churn customers.
Definition: The average length of time that reactivated customers spent as churned customers prior to reactivation
The result: There was no statistically significant difference between the two groups. The quick-churn group spent an average of 65 days in churn before returning whereas the late-churn group spent an average of 63 days as churned customers.
Definition: The percentage of reactivated customers who continued to perform transactions beyond the initial reactivation period
The result: Late-churn customers were 51% more likely to continue to perform transactions beyond the initial reactivation period than quick-churn customers
One-Month Reactivation Revenue
Definition: The average amount of money spent with the brand during the first month following reactivation
The result: There was no statistically significant difference in the average spending levels of the two groups during their first month following reactivation
Not All Churn Groups Have Equal Value
Our study confirmed significant differences in the quick-churn and late-churn customer groups. These differences are enough to clearly indicate that the late-churn group has a higher value. Not only are they more likely to return, but they tend to remain active customers longer after they return.
Savvy marketers should focus on this customer value difference when designing their win-back customer retention campaigns. It can be more worthwhile to provide greater incentives to, and invest more resources in, those late-churn customers who were once the more active ones.
On the other hand, to win back the quick-churn customers, treating them as new customers and re-incubating them is a strategy proven to be effective.
Once you've identified these different churn sub-groups, you'll be able to divide and sub-divide them, creating more relevant campaigns for each group.