Smart strategies for a marketer to reduce secret churn
In present day marketing, reducing email churn is one of the constant challenges for a marketer.
Customer retention and reducing churn is a major part of CRM. Because of a rise in non-paid services, the attrition numbers have grown as users don’t incur any losses to unsubscribe from a service they don’t wish to use any more.
A brand marketer can turn a business profitable by reducing the amount of churn from their mailing list and increasing conversions from customers who become repeat transactors.
Email churn will refer to customer attrition from a marketer’s mailing list. This is the inability to keep your users engaged to your brand. Dissatisfaction is the primary reason why users change their loyalties quickly in the current fast-paced digital world.
Increased customer attrition will result in reduced mailing size, which will ultimately mean a significant reduction in your business opportunities to convert these users. Keeping with the Pareto principle, 80% of your revenue should come from 20% of your customers. Thus, you get the reason why most email marketers will be trying every possible strategy to retain their loyal customers.
Customer retention is a no-brainer for businesses. Retained customers offer more business opportunities and an ability to experiment with cross-selling. They are also more engaged with the brand and ready to be sold your next big offer on premium services.
According to a survey by Bain and Company, increasing customer retention rates by a mere 5% leads to an increase in profits in the range of 25 to 95%. These are huge numbers for profit margins for companies and hence there is a good deal of research that goes on to explore the techniques to reduce churn rates.
Traditionally, a marketer will go through their mailing list, to use data mining techniques to find those users who have a high propensity to churn. Then target these customers with their best offers to retain them. Today, those conventional techniques have been replaced by AI/ML algorithms like random forests, support vector machines and hidden Markov models.
Some questions to consider to solve the current puzzle of a retention based marketing model:
Despite the advanced technology help, why does a marketer fight a losing battle with retaining their customers?
Why is there an increase in attrition when the same “at-risk” users are targeted with your best campaigns?
Why is targeting high risk customers proving ineffective for a marketer’s plans?
The solution: A change in outlook for a marketer to identify churn correctly.
We reckon that there is a better and a more effective way to predict churn.
It will guarantee that the users who get targeted for retention-based campaigns will be the most responsive and will yield positive results with better conversions and retention rates.
In this post, we shall try to decode the email churn puzzle:
- Why users churn out plus the types of email churners.
- We shall discuss the ways to detect these churn types and strategies that a marketer can deploy to target their “at-risk” customers and retain them.
- We also suggest relevant insights that a marketer can gain from these techniques.
The saying goes, there is no smoke without fire.
So firstly let’s start with the fundamental question on why some users prefer to churn out?
Why do email users churn out?
There are a multitude of factors for your email subscribers churning out. The following could be some of the reasons:
- Not enough attractive offers on products
- High email frequency which overwhelms the users
- You are not taking feedback from your users
- They are lured by better deals from other brand and switch loyalties
- Not enough brand affinity.
- They find your content irrelevant.
- Change in interests or channels to receive offers.
Ideally, the retention process starts right from the time when the user signs up to your email newsletters. The onus is on the marketer to keep the user engaged with the brand and keep doing interest-level testing exercises periodically.
Thus, the customer is always king and needs to be catered to on a personal level with your content and attractive offers to retain. This means making sure that your messaging is on point in your campaigns whether they are informative or just plain promotional. The more value you offer to your customers, the longer they will stay loyal to your brand.
The problem right now with the marketing automation industry is that an average marketer is just collecting the data set from the data analytics team of high propensity churners. This data set is shared by the analysts based on past transaction history, activity on email and other AI/ML based methods like markovian modelling and data mining methods like outliers, random forests etc.
This data set may contain different types of churn and hence each may require different strategies to re-engage. But if the marketer is unaware about the churn types then a generic campaign for all of them will not give the required results.
Surveys have showed that in such scenarios, the percentage of churn actually increases and you have more people churning out instead!
According to a churn statistics survey, it costs 5 times more for a company to acquire new customers then it does to keep the current ones. Despite this alarming difference in spend towards churn retention and new lead creation, there is a high percentage of customers who still churn out from your mailing list each year.
In order to know the reason for that you need to know the types of churn users so that you can target them accordingly.
Types of user churn:
A marketer looking at his CRM and email engagement statistics has three types of churners to consider.
What gets perpetuated in the email industry is that only dormant users are high risk of propensity to churn. But there is a type of churn which goes unnoticed by marketers. This churn type is called the ‘overt churn’.
A brand marketer needs to realize that trying to retain churners is not a ‘one size fits all’ solution as the different types of churners need to be targeted in unique ways to retain them.
The marketer has to formulate strategies based on the type of churners to tackle it in an effective way.
Overt churn :
These users are highly reactive and responsive to your emails in the form of regular opens. Although they are openers, they do not click on the emails and are basically observing the kind of messages or offers you are sending to them.
After a period of time of opening your emails and getting disappointed with the offers to bother taking any action to transact with your brand, the users unsubscribe and churn out.
When the customer preferences are not met with your messaging, then this is the major reason for your engaged users to downgrade to “at-risk” churners.
They could also display another behaviour where they just start ignoring the emails and transition to other type of churn called ‘silent churners’.
Silent churn :
These users are plain unresponsive from an early part of the customer life cycle stage. They are disinterested in your email campaigns and don’t open them and check for the content. These are the non-openers or dormant users. This is a particular characteristic of this churn type that they are inactive for a long time, but they don’t unsubscribe.
This gives the impression to the marketer that there is always some way to get them back in the fold, which frankly is difficult after such a long period of non-responsiveness. These types of users need to be sunset from your mailing list according to your policy.
These type of churners are of a special but rare kind and provide positive feedback to the app or website service they were subscribed to. These users have unsubscribed as they have completed the objective for which they signed up.
If a user X has applied for a fitness program on an app or a website. Or if he is connected to the local gym and they mail weekly newsletters. Now after a gruelling 1 year of losing weight the user X decides that he has fulfilled his/her weight loss goal and thus leaves the service as an outgoing happy customer.
These customers might stop using your service/product but are evangelists spreading a good word about your brand. They can leave with good feedback which is an indication of this type of churn.
These churn types can also be retained offering them new goals to set and continue their journey.
Apart from the above three is a list of users who regularly engage with you called ‘engagers’. These are your loyal band of superstars, your unspoken evangelists who like whatever comes to their inbox from you regularly transacting with your offers. These need to be catered on a ‘velvet rope’ basis to retain them.
The point to remember here is that these engagers are equally at a danger of going to the ‘at-risk’ or ‘dormant’ stage if you are not careful with your email program.
In this post we shall be referring to the overt churners as “at-risk” users and the silent churners as “silent” with “engagers” completing your mailing list.
Now we come to the point on how to detect this ‘overt churn’?
How to detect the overt churners ?
Adam is a regular subscriber to a health and wellness brand which caters to a large audience of people with different fitness styles and diets. Adam is a budding vegan and wishes to receive content on vegan diets and yoga. He has set his preferences on the website for receiving promotions based on these categories only.
He opens the brand’s emails weekly to check the content but he soon loses interest as he never receives any offers on vegan products or any fitness tips for yoga. After regularly being engaged with the brand for 3 months, he decides to unsubscribe one day owing to his expectations being unfulfilled.
Adam is an example of an overt churner who was showing interest in the brand emails to see if they serve his purpose but when they repeatedly failed to get him interested or even acknowledge his feedback, he had to leave.
The tip here is to detect when the user is behaving like an “at-risk” individual rather than “engaged” one. Both of these categories of users will show similar engagement statistics but where the ‘at-risk’ users will differ is that they will be keen to open the emails but not click on the CTA and visit the website.
It is reported that overt churners unsubscribe from the brand 5 times more than engagers or silent churners. This number is significant and hence they need to be catered to in order to reduce the probability of them churning out.
These type of churners are not easily visible from your email metrics so we have come up with a solution to trace and detect these at-risk customers.
Response test campaign to detect the category of churn:
Users who have a high propensity of churning are acquired from the entire dataset with the help of advanced data analytics like logistic regression, hidden markov models, ML techniques like random forests and support vector machines and boosting algorithms.
Once the marketer has the dataset of high probability churners, they can create a random small sample of these users and target an informative campaign to these users. This will be your response sensitivity campaign.
The engagement metrics of this campaign is analysed and depending on the results the types of churn is segregated.
The users who have been responsive and have opened the emails but not clicked will be in the “at-risk” category. The users who have plain ignored the email will be in the “silent” category.
Once the segregation is done, the marketer can compare the attributes of the “at-risk” churners with the rest of the churn database to find similarities like past transaction history, age, gender, demographics, etc. Other data sources like social media channels and website activity should also be considered for creating this dataset.
Thus, doing this activity can separate out the two types of churners and help the marketer to target them differently.
Fig: Transition of churn users between the 3 states
Which is where we come to the strategies that a marketer needs to develop to retain these types of churners.
Strategies to target each churn type to retain them:
- The way to retain this type of latent churners is by offering them better deals from your offer list.
- These users need to be treated like royalty and a marketer should offer their best content to convert them from mere “opens” to “clicks”. A regularity in engaging these users to go to your website and browse offers would transition them from at-risk to engaged state.
- Your content should be highly personalized and value offering.
- It should create a curiosity in the users to click on your deals or educative information and visit your website page
- Increasing the variety of offers has also proved helpful in inciting more clicks on the content.
- Velvet rope marketing will be the best strategy to deal with “at-risk” customers where an offer to cater to their personal needs with increased discounts/reductions in your prices may prompt them to re-engage with your products or services.
- Give them the time to decide on your offers by extending the expiry of their deals within a few days could increase your click-through and open rates.
A travel company offering 50% discount on a hotel in a favoured destination to an at-risk customer who has not been clicking on any offers lately but checking out all of them from the same destination.
- It is also important to show appreciation and gratitude to your regular users by sending them “Thank you” campaigns for being a part of your brand journey. These should be personalized campaigns which consolidate a feeling of belonging for these users.
- Run a feedback campaign for these users to collect their preferences on what type of content they would like to receive. This would be vital to understand what motivates your at-risk users to become engaged users. Analyse the feedback and design your content accordingly to retain them.
Now dealing with the dormant users is a bit tricky. There can be 2 suggested ways of going ahead with it:
- Send them highly personalised content based on last transaction history with best offers you have available at the moment.
- Increase the number of deals inside your email campaigns, might increase the number of clicks you get.
- It has been observed that making your deals sound urgent by keeping the expiry of the deals very close to your campaign date could increase the click-through rate for these type of churners.
- Alter the headers of your from domain for your emails to signal to these users that you mean business and are ready to engage with them on new offers. Example alter the sending domain as ‘email@example.com,’ ’firstname.lastname@example.org’ , ‘email@example.com,’ ’firstname.lastname@example.org’
- Sunset the unengaged users for the last 6 months from your mailing list.
Attrition will occur in every brand’s mailing list but the difference between apparent and secret churn has not been thoroughly investigated till now.
Ignoring this concealed attrition of overt and silent churn, marketers miss the opportunity to predict and treat different types of churn behaviour.
The above tactics suggested will build on a marketer’s arsenal to better predict which users are ‘at-risk’ churners based on their email metrics and those users who need to be said goodbye and removed from your mailing list.
This will eventually lead to effective churn management.