How to Increase ROI from Dormant Customers with AI

How to increase ROI from dormant customers starts with investing primarily in re-engagement strategies that add the most value to their brand experience. Dormant customers are hungry for personalised reactivation.

Personalised email re-engagement campaigns or loyalty incentives can help reacquaint these customers with the value of your product or service. Analysing their purchase history and preferences can help inform your strategy, making sure your outreach efforts serve to meet their needs with the most relevant information.

Incentives such as loyalty-based discounts or early access to new releases tend to be effective in rekindling their interests. Using intelligence from past data to identify trends enables you to develop specialised marketing plans that connect most effectively.

By implementing creative strategies to reconnect with these customers, you can transform dormancy into reengagement, ultimately increasing both retention and revenue. In the remainder of this article, we’ll look at five actionable steps you can take to make this a reality.

Key Takeaways

• Dormant customers are just what they sound like—people who have cut back on or completely ceased interaction with your brand. Finding these customers and bringing them back to an active status can have a significant impact on your overall return on investment (ROI) and customer lifetime value.
• Customer dormancy is most commonly a symptom of factors such as dissatisfaction, competitive offerings, or market changes. Knowing why customers are going dormant will enable you to identify the most effective way to address the root cause of their inactivity.
• Use predictive modelling and advanced data analytics to identify triggers for inactivity. Identify dormant customers by the behaviour type, and build specific, specialised strategies to revive them.
• Reactivating dormant customers is much less expensive than acquiring new customers today. Personalised offers, incentives, and strong calls-to-action will significantly boost re-engagement.
• Multi-channel approaches that utilise email, SMS, and social media increase the likelihood of winning back dormant customers. Maintaining consistency and brand alignment across all of these channels and touchpoints is essential.
• Measuring success through key performance indicators (KPIS) such as engagement rates, conversions, and ROI ensures that you refine your strategies and maximise the financial impact of reactivation campaigns.

Who Are Dormant Customers?

Dormant customers are those who were previously very engaged with a brand. Now, they’ve decreased or even halted their activity, such as buying products or engaging with marketing campaigns.

These customers are far from dead. Yet they’re a dormant gold mine, easier and more cost-effective to reactivate than new members are to recruit and a shrewd way to boost your ROI (return on investment).

Research has shown that companies have a 60-70% higher chance of selling to current customers. By comparison, your odds of making a sale to a new customer are just 5-20%. Understanding the differences between dormant customers and those who remain active is crucial for developing effective re-engagement strategies.

Defining Customer Dormancy

Customer dormancy occurs when a once-active shopper ceases to interact with your brand. Measuring this might involve setting parameters, such as zero purchases within the last six months or a decrease in app usage.

Dormancy levels can fluctuate greatly. You don’t just have “lapsed” customers who will happily come back to you with a bit of outreach—they’re “inactive” customers and require more targeted reactivation efforts.

Clear definitions tied to your business goals, such as tracking purchase frequency or engagement thresholds, provide actionable insights for segmentation.

Why Customers Become Inactive?

Dormancy can occur for many reasons. Dissatisfaction with customer service, product quality issues, or discovering less expensive options are frequent triggers.

External factors, such as economic shifts or changes in an individual’s personal life, cannot be overlooked. A lack of a powerful emotional bond with the brand plays a role in this, as it makes them more difficult to keep around permanently.

Spotting Inactive Customers

By analysing customer data, you can spot the signs of inactivity. Identify customers who last made a purchase six months ago.

Additionally, monitor engagement indicators such as email open rates and downward sales funnels for those who are drifting away. Monitoring these trends allows you to step in quickly with targeted reactivation campaigns.

Why Reactivate Dormant Customers?

Reactivating dormant customers presents one of the most potent opportunities for maximising ROI with the lowest cost. Dormant customers, who were once loyal to your brand, have recently gone cold. Surprisingly, reactivating them is an efficient growth opportunity that is much cheaper than acquiring new customers.

Research shows that it’s 10 times less expensive to re-engage your current customers than it is to recruit new ones. In reality, acquiring new customers is 25% costlier! This monetary benefit is reason enough to make reactivation a strategic priority for any business looking to maximise their marketing spend.

Reactivating dormant customers further improves customer lifetime value (CLV). By addressing common reasons for disengagement, such as poor customer service, product quality concerns, or a lack of connection to the brand, businesses can craft personalised win-back strategies.

Email marketing, for example, segmented email campaigns, an approach employed by 78% of brands, send more relevant content that speaks directly to the needs of dormant customers. Direct mail provides a staggering average ROI of over $4 for every $1.27 invested.

At the same time, text messaging has open rates that are 78% greater than email. These approaches prompt them to re-engage, driving more repeat purchases and further enhancing customer lifetime value (CLV).

Finally, dormant customers have second-chance potential to become passionate advocates. Customer loyalty, offered through a loyalty program that attracts three-quarters of customers, can turn these reacquired individuals into advocates for your brand.

Their renewed trust and happiness lead to increased short-term purchases. They provide informal word-of-mouth marketing through organic customer evangelism, creating even more brand awareness.

Re-engagement helps cut churn, too. Sixty-three per cent of businesses have achieved success by adjusting the email sending frequency for unengaged subscribers. When used together, these strategies deepen customer loyalty and turn desired growth into achievable, long-term success.

How to Increase ROI from Dormant Customers

Re-engaging dormant customers is a smart move to increase ROI while maximising value from existing relationships. Dormant customers have significant untapped revenue potential. They’re already familiar with your brand, making them far more likely to convert.

Companies have a 60-70% likelihood of selling to an existing customer, compared to 5-20% for a new prospect. Keeping these customers is five times less expensive than winning new customers. This method significantly multiplies Customer Lifetime Value (CLV). Below, we’ll discuss practical ways to re-engage these dormant but valuable bonds.

1. Segment Inactive Customer Lists

Prioritise dormant customers based on previous purchase volume, product affinities, and frequency of engagement with your brand. For example, create segments like high-value previous customers or cart abandoners.

When you segment, you can design targeted campaigns that address the specific needs and interests of different groups, resulting in more effective reactivation efforts.

2. Personalise Re-engagement Communications

This is where personalised outreach is key, Campbell’s answer. Use your customer data to develop tailored messages that address customers’ current needs or reflect their previous interactions with your brand.

Product recommendations based on past purchases could be added with dynamic email content, for instance. This kind of relevance captures people’s attention, boosts engagement, and helps rebuild trust.

3. Craft Compelling Subject Lines

Subject lines are essential to email open rates. Experiment with subject lines that build urgency, such as “Your Favourites Are Back!

Or create intrigue with value-based lines like “Exclusive Offer Inside.” You should measure performance to determine what’s resonating most with your audience and optimise accordingly.

4. Offer Relevant and Valuable Incentives

Deliver incentives that match what customers value. Some examples are customised promotions, advanced notice of new products, or points in a loyalty program.

Ensure these offers deliver sufficient value to inspire the desired action without compromising profitability.

Re-Engagement Strategies and Techniques

Re-engaging lost shoppers requires a nuanced approach that caters to their individual preferences and shopping habits, meeting them where they are. By harnessing the power of data-driven insights and personalised engagement strategies, brands can reconnect with audiences and foster long-term loyalty.

Below, we explore practical strategies to re-engage with those you’ve lost.

Reactivation Email Campaigns

Email campaigns will remain a primary strategy for re-engagement. Creating segmented emails specifically targeted at inactive customers is crucial, especially considering that 78% of brands report that their engagement has become more effective as a result of segmentation.

Content and feed posts should be eye-catching, concise, and offer strong incentives, such as special discounts or exclusive access to new products. Incorporating one clear, concise Call-to-Action (CTA) makes it easy to guide users toward their next step, whereas multiple CTAS can create unwanted confusion.

The average knowledge worker gets about 120 emails per day. To get noticed, you need to go above and beyond with eye-catching designs that convey your message with value at the forefront.

Integrating campaign tracking, metrics such as open rates, click-throughs, and conversions, into your campaign will help gauge success and inform future campaigns.

Targeted Marketing Initiatives

Using insights gained from customer data to develop personalised marketing messages helps to ensure relevance. Retargeting ads, for example, signal to customers about their past brand interactions and can show them products they’ve already viewed on your website.

Tools like Custify can help identify trends in disengagement, enabling brands to address specific pain points proactively. Targeted campaigns enhance brand awareness and reduce expenses, resulting in higher margins of up to 25% or more.

Loyalty Program Integration

Applying loyalty programs to your customer base further incentivises return visits. Personalised rewards tailored to individual learners' histories, such as points for completing or purchasing course content, give the illusion of value.

Highlighting these benefits a few times throughout your communication channels helps motivate people to re-engage.

Personalised Messaging Tactics

Personalisation creates genuine relationships and is a key element in effective customer reactivation strategies. By using a customer’s name, mentioning previous purchases, or leveraging shopping history to customise offers, we ensure that messages resonate with consumers, increasing engagement rates.

Applying behavioural insights enhances our marketing efforts, enabling us to connect with individual customers through targeted and compelling messages. This approach significantly increases the likelihood of reactivating dormant accounts, thereby improving customer retention rates.

Multi-Channel Communication

Connecting with customers through various channels, including email, text messages, social media, and direct mail, creates multiple touchpoints that bring your brand to the forefront.

Direct mail, for example, has an incremental ROI of $4 for every $1.27 spent. First, consistency across each platform creates cohesive messaging.

Second, monitoring performance by channel helps to optimise strategy moving forward.

What Channels Re-Engage Customers?

Re-engaging dormant customers is more complex than a one-size-fits-all approach, requiring effective customer reactivation strategies that focus on capturing attention and driving action. By utilising the right platforms, you can implement effective reactivation email campaigns that meet consumers where they are, using forms and media they prefer.

Email Marketing

As in past years, email marketing is the most prominent channel for re-engaging, with 78% of brands sending segmented emails to increase relevance. Segment your audience into defined groups, such as those based on previous purchase type or site browsing behaviour. This enables you to create personalised communications that are tailored to each individual's unique journey.

Forever 21 uses an email strategy that suggests products after checking what you’ve looked at before. Brooklinen increases purchases with strategic discounting offers, such as 20%, and inserts countdown timers to build urgency. Keeping track of open rates and click-through rates helps you adjust your strategy and ensure your emails are hitting the mark.

Text Messaging (SMS)

SMS provides a highly personal, more direct, and immediate method for re-engaging inactive customers. Concise, engaging content, such as promotional deals or reminder notifications, creates a sense of urgency to drive immediate engagement.

For instance, sending customers alerts about short-term price drops or exclusive sales to encourage interaction. Tracking response rates ensures you’re reaching customers effectively while maintaining a concise and impactful approach.

Direct Mail Campaigns

Despite the digital shift, direct mail offers a tactile, personal touch, with an average ROI exceeding $4 for every $ 1 spent. Personalised, colourful postcards and letters stand out the loudest in crowded mailboxes.

They become all the more irresistible when you combine them with incentives like member-only pricing or limited-time offers. With response rates ranging from 2.7% to 4.4%, direct mail holds untapped potential as a re-engagement tool.

Social Media Engagement

Social media campaigns offer a creative and engaging method to re-engage. Types of interactive content, like polls or Q&AS, remind your audience that your brand is alive and active.

By monitoring engagement metrics such as comments and shares, you can tweak your strategy to create content that truly resonates with your audience.

Incentives and Promotions

Reactivating dormant customers is often more cost-effective than acquiring new customers from scratch. You’re 60-70% more likely to sell successfully to this group than to first-time customers.

Whether it’s an exclusive preview or member discount, well-designed incentives and promotions get repeat customers. They increase Customer Lifetime Value (CLV), building loyalty and driving higher spend in the long term.

Here’s how you can take advantage of these different offers to maximise your experience.

Special Offers and Discounts

Personalised discount offers are a simple and effective solution to bring back inactive customers. Limited-time offers, such as “20% off for repeat customers this month,” increase urgency and encourage them to act now.

Amazon Prime Day is a perfect illustration, where exclusive, time-sensitive offers drive customer engagement. Measuring redemption rates enables you to identify which of these campaigns are most effective and focus your efforts in future campaigns accordingly.

Exclusive Content and Early Access

Providing these lapsed customers with unique content or exclusive access to new products will help them feel valued and appreciated. For example, giving members special access so they get a first look at a new collection builds anticipation.

Providing access to member-only pricing, similar to Amazon’s Prime Early Access Sale, adds to their feeling of elitism. Keeping an eye on engagement metrics, such as click-through or download rates, provides a clearer picture of what your customers are interested in, allowing you to optimise your strategy.

Free Trials or Samples

Free trials or samples of any product lower the barrier to purchase by allowing customers to experience the value firsthand. For example, a skincare brand could send a complimentary sample of a new moisturiser accompanied by a handwritten note.

Monitoring conversion rates from trials allows you to evaluate how well they’re performing in generating repeat purchases.

Measuring Reactivation Success

Reactivation email campaigns can be among your most profitable marketing strategies if tracked and pursued in a data-informed way. Set specific measures of success to determine how well you are engaging dormant customers and use these insights to enhance your customer retention strategy for even greater success.

Key Performance Indicators (KPIS)

Finding the right key performance indicators (KPIS) is crucial for measuring reactivation success. Engagement rates, click-through rates, and email open rates indicate our efficiency in targeting these dormant customers. These metrics show us which acts are clicking, and which ones aren’t, and why.

Conversion rates provide a clearer picture, revealing the percentage of users who have been brought back to life and made a purchase. Tracking AOV accurately determines the revenue-generating value of your reactivated purchases.

At the same time, your ROI (Return on Investment) indicates the cost-effectiveness of your entire campaign. For example, if a campaign targeting non-openers generates $2,000 in revenue with a $500 investment, the ROI calculation justifies the expense.

Additionally, customer feedback scores can help you gauge customer satisfaction, providing a qualitative insight into the success of your campaigns.

Tracking ROI of Campaigns

To measure the financial return, determine the ROI by calculating the contribution margin for reactivated customers and comparing it to the campaign costs. Detailed analytics tools can provide a breakdown of revenue sources and help identify trends such as changes in spending habits.

Users who are reactivated after 30 days of inactivity are much more likely to convert. Data indicate that only 11% return to use it after this initial period.

Sharing these findings with funders and potential partners makes the argument for further investment even more compelling.

Analysing Customer Feedback

As always, customer feedback is priceless. Customer surveys or proactive scoring through direct outreach reveal valuable insights into what former or dormant customers are looking for.

Use this feedback to inform your future campaigns and feed forward the success. Incorporate a closed-loop data process to ensure your CRM accurately captures and applies these learnings for you.

Overcoming Reactivation Challenges

Reactivating customers who’ve been dormant for some time is a powerful opportunity for businesses. Their data showed that existing customers are 60-70% more likely to purchase than new customers. That process certainly doesn’t come easily. Confronting these challenges directly can lead to significant success.

You might realise an earnings boost of 25-95% with only a 5% increase in retention. Now, we’ll examine specific reactivation challenges and discuss how to overcome them.

Common Pitfalls to Avoid

Several mistakes can hinder reactivation efforts. These include:

• Message your customers too frequently—or with topics they’re not interested in—risking loss of interest or, worse, blowing them sky high.
• Sending vague messaging that doesn’t speak to one’s unique barriers to reactivation or the value of reactivating.
• Ignoring data privacy regulations will undermine consumer trust and expose your organisation to legal risks.

For example, a customer who is overwhelmed with off-brand promotions will be more likely to unsubscribe than reactivate. Similarly, businesses that overlook personalisation miss the chance to tap into the 80% of customers who value brands that understand their preferences.

Addressing Customer Concerns

Dormant customers frequently churn because they feel unappreciated (21%) or that product quality has deteriorated (17%). Coming to terms with these issues before they’re at the committee stage is essential.

Provide any news about product updates, advances in customer experience efforts, etc. Centre your communication around empathy, addressing their previous challenges while making it clear that you’re focused on providing them with the service they deserve.

For instance, if you have improved key features since they last bought, a friendly, customised email detailing these changes can help restore trust and prompt return.

Maintaining Data Privacy

Securing customer information should be a priority. Make it easy for third parties to understand that you take security seriously by marketing yourself as such.

Stay up-to-date with regulations, such as the CCPA, and help them feel secure that their data is being handled properly.

Case Studies: Successful Win-Backs

Reactivating dormant customers is more than just a clever marketing tactic; it’s a crucial customer reactivation strategy focused on restoring community, loyalty, and value. By examining real-world examples, we can uncover effective reactivation email campaigns that deliver measurable results and insights applicable across industries.

Examples of Effective Strategies

By expanding its Corporate Experience program, American Airlines successfully reactivated some of its highest-value customers, showcasing effective customer reactivation strategies. In addition, they offered priority seating, expedited rebooking, and premium privileges, creating a compelling incentive for frequent flyers to return. This new shake-up emphasises the importance of understanding what perks are most valuable to your highest-level customers.

Netflix, the reigning customer communications champion, serves as a prime example with a personalised win-back email that highlights what’s new. This approach is beneficial as it compels them to keep messaging concise and directly relevant, aligning with effective reactivation email campaigns. By appealing to nostalgia, they help former customers return, demonstrating that proper communication can significantly improve customer retention rates.

Wordtune also exemplifies solid customer reactivation strategies by proactively addressing issues and keeping customers updated. This illustrates how timely and responsive communication can restore trust and re-establish loyalty among dormant customers. Custom-tailored communications and programming suggestions offer benefits not available to the general population, enhancing customer engagement.

New approaches, like incentivised offers and targeted marketing efforts, are crucial in reactivating inactive users. Timely, proactive communication is essential for enhancing customer satisfaction and maintaining a strong customer retention strategy.

Lessons Learned from Industry Leaders

Smile.io’s data highlights the importance of retaining your biggest spenders, with the top 10% of customers spending, on average, twice as much per order. Paddle/Profitwell data shows us that 30% of customers who churn can be re-engaged if you have the right re-engagement strategy.

Retention and churn industry leaders are proving that data-driven, account-based approaches to retention and churn prevention safeguard revenue, protect lifetime value and put growth on a sustainable track.

Conclusion

Turning dormant customers back into active ones creates immediate value to your bottom line. They’re familiar with your brand already, so it can be much cheaper to win dormant customers back than to acquire new customers. Take advantage of clever tactics like automated emails and tailored promotions. Run promotions to restore confidence, prove overdue value, and spark new enthusiasm! Be sure to select the most effective channels that align with their preferences, including social media, SMS, and even direct mail. Establish metrics to measure your performance, enabling you to identify opportunities to increase ROI from dormant customers and implement improvements over time.

Reactivating these customers isn’t just about the short-term gain of their immediate spend—it’s an opportunity to earn lifetime value. Start with small tests, see what works, and iterate on your process from there. For every customer you make the effort to win back, there are potentially deeper connections and more lucrative returns waiting for you down the line. Start reactivating your customers today.

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