WinBack & Saving At-Risk Customers

An Interview with Scott Joseph

In this article, Scott Joseph draws on his decades of marketing experience to show us how to not only win back past customers, but how to identify and save “at-risk” customers from defecting.  Scott also shares his “secret sauce” for identifying and retrieving customers as they defect.

Dan Pfister: Scott, before we get to your client reactivation strategies could you share a little about yourself and your company?

Scott Joseph: I'm the CEO and founder of J&L Marketing. Early on in our 29-year history, we focused on automotive and over the last eight years we’ve pivoted to become a full range digital marketing company.

Dan: What’s your approach for winning back past customers?

Scott:  I'll give an example for auto clients. A lot of times there's a huge drop off in customer or owner loyalty once the warranty expires. There's the perception in the marketplace that the consumer can go to an independent repair shop and get their repair work done for less money. And sometimes they view it as more convenient, it doesn’t matter what the reason is, the warranty expires, people leave and they get their next service elsewhere.

The way we attack this problem starts with data. I first identify all the customers that have defected and are lost to me. 

The mistake I think a lot of people make is they generalize while they need to be looking at each customer individually.  A manufacturer might have an arbitrary rule that says, if they haven't been to one of our dealerships in 18 months, we view them as a lost customer. 

The problem with that is we all have different driving patterns. If someone drives 30,000 miles a year, they should be in there much more frequently than someone that's only driving 10,000. So to determine who's truly a lost customer you've got to identify and measure the metrics that matter.

As a sidebar, it’s also important to know why they left because that can influence how you reengage them.  I think there are only really three reasons why people leave.

One, you may have done something to upset them and a lot of times you won't know it happened, but if you do, you need to rectify it right then and there. The second thing is, because there's an infrequency in doing business with you they sometimes just forget about you. It’s not your fault, they just found something else that interested them. And the third is things that are completely out of your control, like they moved out of your market.

After you've identified the lost customers, I think it's important not to try and save all of them. You want to focus your time on the best ones.  You've got to try and identify the ones who are most likely to respond to an offer, the ones who are most likely to reengage and do business with you again.

So the end result is you’ll have a segment of customers with the highest propensity to respond to your marketing efforts and those are the people that I would market to in a winback campaign.

But then you have to take it a step further.

You want to take this group of past customers and look at their behavior prior to defecting. Then you go back to your active customer base and find people that are following a similar path. These are your “at-risk” customers and I would hit them with the same offer you made in the winback campaign.

But most businesses don’t take the time to identify and save their at-risk customers. They don’t capture the data that’s needed to build the models that predict who's most likely to defect so a lot of customers are lost that could have been saved.

Dan: Is there a common mistake companies make with their winback offer?

Scott:  I think the biggest mistake is just doing the same thing. Using the same marketing messages or offers that the customer ignored when they had a foot out the door and when they decided to leave you.

Say you buy a car, you start getting service coupons, and you go through this maintenance phase of a few years before your next purchase and all the while you're getting these coupons. 

Well 55% to 60% of those customers ignore the coupons and go to independent shops. But the dealer keeps sending those coupons and they keep getting ignored.

Dan: What would you do to reengage that lost customer?

Scott: You have to hit them with something that has a much higher perceived value than a coupon.

One way I do it is with a service clinic. I offer some type of free inspection.

A lot of times customers become a little callous and they think that the only reason you're reaching out to them is to sell something. With the clinic, it’s just about the inspection of their car so they can be made aware of what’s going on and I think it brings some defense walls down.

A lot of times our message to lost customers is, come back and buy, come back and buy, but with this approach the message is, we're going to provide you with something of value, we’re going to give.

So in the marketing I'm going to paint a picture that creates the perception that this is going to be a thorough inspection of their vehicle, something that an independent shop wouldn’t have the ability to do.  

When they show up, we're going to walk people through the 35-point inspection and educate them on what their car requires.

I also want to challenge the way they think. I want them to end up doubting the expertise level of a competitor because of what I’m teaching them.

It's one of the more successful things that we've done.

Dan: Can you share another strategy that’s worked well?

Scott: Another really successful strategy is paid search and this applies to any vertical. Paid search is amazing because it lets you know that a customer is defecting at the moment that it’s happening!

When we need something or we have a problem - say our engine light goes off - we go to our phones and we start searching.

“What’s near me, what’s the price, who has this in stock, how quickly can I get it?”

With paid search I can deliver a marketing message to you that's extremely relevant at the perfect time. I just upload the data for all my previous customers and Google matches up their address and or email and then I create ad campaigns directed specifically at my old customers.

Dan: I didn’t know you could do that.

Scott: Most people don’t know that it exists. But it's extremely powerful, especially if you're a mid to small sized business and you're competing against large national brands who’ll outspend you all day long. It works because with Google it's not necessarily about who bids the most, it's about the quality score. This allows me to bid competitively in certain areas where I'm extremely relevant.

Dan: Can you compare the ROI and all the time, money and effort it takes to create a new customer against the cost and returns you get from reactivating a past customer?

Scott: It's a moneymaker.

For the clinic, we recommend to our clients they run those about twice a year and we're looking at anywhere from a 20 to sometimes 50 times ROI on that. So, it’s a huge win.

And when I say anywhere from 20 to 50 times return, that's just on the initial 90-day window of the marketing. That doesn't count any of the future revenue that's going to come in now that they’re a reengaged customer. Now that they're back in the fold they could continue getting service from us and maybe buy more cars down the road.

Dan: Before we wrap this up, is there anything else you'd like to share?

Scott: I think the biggest thing is you have to do something different. You have to provide more value. If you want to win back customers, provide something of tremendous value and make it free to them. Then when you get this customer back in to do that inspection or do whatever you come up with, that's your opportunity to offer the discount or whatever your offer is and win them back as a customer.

It’s also important to remember that at some point they resonated with the way you sell, or with your products and that’s makes it so much easier to sell to them versus a cold prospect. 

And the other really big thing is paid search. You have the ability to use your previous customer data to identify the moment that they’re considering leaving you and you have the ability to defend against that. To me, that's the biggest opportunity out there for any business.