Imagine you’ve perfectly tailored your product to your target audience, they make a purchase, and then they disappear. This is exactly what happened to the financial company GRENKE. Typically, when customers are satisfied, there’s a high chance they’ll return for more. But when the opposite happens, it’s crucial to take action.

This is where customer reactivation comes into play, one of the key tasks in Customer Relationship Management (CRM)! But how does it work, and what can you do if repeat purchases are missing? In this article, we’ll answer everything you need to know on this topic.

Why reactivating your existing customers is crucial

For many businesses, inactive existing customers pose a significant challenge. What should you do? Simply consider this customer base as “lost”? No, because in reality, reactivation measures are much cheaper than acquiring new customers – and they are even 20-40% more effective! In comparison, the likelihood of selling to new customers is only about 1-3%. Additionally, companies usually have customer behavior data such as purchase history, time between purchases, or average basket size, to follow an optimal sales strategy.

The following figure shows how the value of your customers can increase by around 30% if you spend just 10% on retaining your existing customers. In comparison, acquiring new customers only yields about 0.5-1.4%. You can see: investing in CRM pays off!

Source: University of Braunschweig 

When is the right time for  reactivation?

Many companies follow the strategy of reminding inactive customers with coupons, loyalty bonuses, birthday greetings, and other incentives about every 52 weeks.

This isn’t wise: it’s very likely that your customers have already moved on by then. Moreover, purchasing behavior varies from person to person. Therefore, it’s hardly worth it to carry out generic reactivation measures in data-driven CRM.

Personalisation is key!

Strong personalisation – with interpurchase time

Are you familiar with the concept of “Interpurchase Time (IT)”? This allows you to derive customer-centric reactivation intervals from all collected behavioral data. The timing of an action then depends on the purchasing habits of each individual customer. You can calculate the IT as follows:

Time in the system since the first purchase / Number of purchases in that time = Interpurchase Time

Interpurchase time: how does it work in practice?

Suppose someone buys a printer cartridge from your online shop every 4 weeks. Suddenly, the purchase at the usual interval stops. Instead of waiting up to 52 weeks, you should now conduct your reactivation measure as soon as possible.

You should calculate these intervals individually for each customer. Then you’ll usually recognize a pattern, allowing you to better estimate when the person should buy again and when they deviate from their interval. Of course, you can adjust this concept to suit your company’s needs.

For example, if you promote your offer or product with seasonal themes, always consider how this approach could ultimately affect purchasing behavior. The more data you can generate about your customers, the better. This way, you can not only advertise more effectively in the future but also know exactly when you can safely refrain from it. If a customer is within the usual interval, reactivation would be unnecessary and would only incur unnecessary expenses.

By the way, you can also use predictive models, such as those offered by companies like Gpredictive or marketing clouds. They provide even deeper insights and predictions on which customers are worth targeting again and which ones you don’t need to prompt. This not only saves you money but also increases uplift. Your goal should be to turn “four reactivation attempts per year” into exclusively customer-relevant reactivation attempts.

Personalise your advertising messages

If you know your target audience well, you can tailor your prompts to the various needs of your customers on typical CRM channels such as email, social media, apps, and physical mailings. You should customize your messages as individually as possible based on the different needs of your customers. For example, men and women might respond differently to your slogans, designs, or incentives.

This is especially true for physical mailings such as letters and postcards. Since you don’t need an opt-in for postal communication, you can reach valuable customers who are difficult to contact through online channels due to GDPR regulations. This requires automated printing and shipping with significantly smaller batch sizes – but in the next section, you’ll learn how to easily accomplish this.

Example GRENKE: Combine various channels for high conversion rates

Leading companies are already doing it: they use optilyz to perfectly align physical mailings with email marketing and other channels.

For example, the financial company GRENKE has a complex customer structure with dealer and direct sales. Its data-driven CRM strategy focuses mainly on customer care, where print mailings are particularly important.

Analyses of customer data showed that many new customers only make one purchase, often through the dealer channel. This is where optilyz came into play: personalised print mailings strengthened GRENKE’s customer loyalty and brand awareness.

Moreover, in the finance industry, print is still associated with credibility and trust. And the result of GRENKE’s efforts speaks for itself: the company increased the number of its contracts by up to 28%.

“With our after-sales communication, we create awareness for the GRENKE brand among existing customers, thereby increasing customer loyalty.”
Isabell Rösch, Senior Professional CRM GRENKE AG