Beyond 2018, the General Data Protection Regulation (GDPR) may result in a limit being placed on how long you can hold data. Although the wording is vague, stating personal data can be kept “…for no longer than is necessary for the purposes for which the personal data are processed.”, it could mean customers who have not bought from you in a certain timeframe may have to be deleted from your database. To prepare for this change, you should be focusing on reactivating lapsed customers so you don’t potentially lose them.
While email is the cheaper channel for reactivation (although falling open rates means its less effective) your catalogue still delivers better uplift and a ‘better’ customer.
Companies focus more resources on getting new customers than keeping hold of existing ones. However, there are fundamental reasons you must take better care of those customers. In particular:
- Getting new customers is costly - it’s 5-25% more expensive to acquire a new customer than retain an existing one
- Existing customers are more profitable... - increasing customer retention rates by 5% can increase profits between 25-95%
- ...they’re easier to sell to... – the probability of selling to an existing customer is 60-70%, but only 5-20% for a prospect
- …and it’s where your sales come from - 65% of a company’s business comes from existing customers,
Focusing on the right customers to reactivate
The challenge is to work out which customers to spend money on reactivating - and which are not worth the effort. The longer since someone has bought from you, the harder it is to know their potential value. This is where Epsilon Abacus can help. By tapping into the Alliance, we can show you who is still buying and, crucially, who is still buying in your category. You can then concentrate on persuading only those people which offer the best opportunities.
In addition, since they last bought from you, they may have moved. Again, we can help. As we output the most recent address we have for them, you can still target them, even when they have not informed you of their new address.
For all multi-channel retailers, customer lifetime value is crucial. In today’s changing environment, you should be having greater focus on who you know rather than who you don’t. While the GDPR will bring benefits for consumers, it has implications for marketers and you need to consider this in terms of your inactive buyers. Remember, keeping existing customers happy is cheaper and more profitable than getting new ones, so it makes sense to take action now.
To find out more about how the GDPR could affect your business, register for our Insights Conference on 30th March where we will be discussing the challenges around the new legislation.