Behavioural Incentive Optimisation
Behavioural Incentive Optimisation is the Pure360 methodology for using RFM segments to drive the next best action, at different key points within the customer lifecycle.
Using contact counts, CLTV and RFM values we define key cohorts and the strategies needed based on the customers behaviour.
The key to success is to define the optimum messages dependent on data insights such as purchase history, value of the segment and time since last purchase. (RFM) Then automate them!
For more information on the what and the why behind RFM segments read our blog here.
In this blog series we will be taking a deep dive into how you can use incentives across multiple key milestones in the customer lifecycle and then layer specific communications for each RFM cohort. For this article we will be taking look at Win-Back campaigns that you can segment to get the best results.
Win back campaigns
Marketers spend a lot of time and money trying to find new customers to replace ones they lose. The average company loses between 20 and 40 percent of its customers every year.
So, why do customers lapse? And what can you do to reignite their interest in your brand, so that they stay and continue to purchase from you?
Usually you would apply a broad brush approach to setting up a win back campaign, maybe at lapsing, lapsed and at risk – and your results may or may not be good. We have demonstrated with our customers that if you apply the Behavioural Incentive Optimisation methodology, your results will be awesome!
In this blog we show you how you can apply RFM segmentation to your win back campaigns to get great results.
Meet Pete
Lifecycle stage – Lapsed
Pete hasn’t purchased for a long period of time, longer than your average cycle of purchasing for this RFM segment. They have also gone past key seasonal buying cycles without purchasing.
RFM – Do not lose
Pete used to be a champion or loyal customer. Their average order value is usually very high. This is someone you do not want to lose
Goal – Regain champion status
To do this you need to not only make one sale but a repeat purchase is essential. Due to the high potential purchase value, offer a high discount or valuable offer to entice them back. Then add a nudge campaign post purchase to drive a follow up purchase.
Meet Kym
Lifecycle stage – Lapsing
Kym was a good customer. She used to purchase slightly more than the average customer but is now on the cusp of being a lapsed customer.
RFM – High Potential
Kym sits in the high potential segment. This particular segment spend slightly more than the average order value – but still need nurturing as they have only purchased a couple of times. They are often value and price driven. They have a potential of being nudged to becoming a champion/loyal customer.
Goal – Move to champion status
Due to the higher average order value and repeat purchasing this customer has the potential to spend more with you, with the right incentives. If you have an active loyalty program for champion customers then this is the time to engage them.
Meet Fiona
Lifecycle stage – At Risk
Fiona has purchased once, but hasn’t purchased in the usual window of regular repeat purchasers. With some low incentive or reminders you could bring her back easily.
RFM – Standard Customer
Fiona has purchased once – her average order value is slightly lower than your standard customers.
Goal – Convert to make next purchase
Fiona currently has a low AOV and customer lifetime value. They have purchased a low ticket item. We want to increase their average order value and move them to a high potential. The incentive is to be low or based on the customer spending a certain amount. Even a nudge reminder might convince Fiona to make the next purchase.