What Is a Dormant Customer?
Definition and Characteristics of Dormant Customers
Dormant customers are those who have previously used a product or service but have not engaged in transactions for a certain period. The specific definition of this period varies by industry and product. For example, in the case of daily consumer goods, a customer may be considered dormant if they have not made a repeat purchase within a few months. For high-value products, dormancy might be defined as a lack of repeat purchases over several years.
Furthermore, for SaaS products, usage rates can be visualized through log management even before a contract is canceled. It is important to define a decline in usage over a certain period as dormancy and implement an approach for improvement.
A characteristic of dormant customers is that it can be confirmed they previously had an interest in or need for the product or service. However, for some reason, they are currently not actively engaged in transactions.
Potential Value Dormant Customers Bring to a Company
It is generally considered that the cost to re-engage dormant customers is lower than that of acquiring new customers. This is because dormant customers have prior experience with the company, possess brand and product awareness, and have already established a relationship of trust.
Therefore, by implementing an appropriate approach, there is a high probability that they will resume transactions as active customers without incurring the same costs as acquiring new ones.
The Importance of Revitalizing Dormant Customers
Revitalizing dormant customers contributes not only to a temporary increase in sales but also to long-term profit growth. By reactivating long-term dormant customers, you improve their Customer Lifetime Value (LTV).
Reactivated customers may have an interest in new products or services, which can lead to continuous transactions. Furthermore, before a reactivated customer becomes dormant again, opportunities for further upselling or cross-selling will arise.
Additionally, succeeding in the revitalization of dormant customers increases opportunities to acquire new customers through their word-of-mouth or recommendations. This enhances the company's brand value and market reputation, laying the foundation for long-term growth and stable revenue.
Six Points for Approaching Dormant Customer Revitalization
Point 1: Identifying Dormant Customers Through Data Analysis
The first step to effectively revitalizing dormant customers is to accurately identify them. By utilizing data analysis, you can clearly distinguish dormant customers based on purchase history, activity, and the time elapsed since their last transaction. This analysis allows you to narrow down the target customer group for your approach.
A problem that arises when attempting data analysis is the duplication of customer data. Data cleansing and matching require complex rule settings and are tasks where one can easily become discouraged. Customer data is the key to a business that produces results with minimal effort. It is important to resolve data deficiencies by requesting assistance from data experts.
Point 2: Categorizing Dormant Customers Through Data Analysis
Once you have identified dormant customers, categorize them in more detail. Even if they are all called dormant customers, their situations and states vary.
Confirm the following information as much as possible through data analysis:
- Reason for dormancy
- Time of dormancy
- Purchase status before dormancy
The categorization of dormant customers leads to the content of personalization and direct approaches, which are the subsequent points. For example, if a customer feels that the reason for dormancy is a decline in the quality of support or after-sales service, simply providing an offer may not lead to revitalization.
Point 3: Providing Personalized Content
To get dormant customers interested again, it is necessary to provide content tailored to their needs and interests. Create personalized messages and offers based on past purchase history and interests to capture the customer's attention.
For example, if a customer previously purchased a certain system, providing the latest information on that system or related event information can encourage motivation for a repeat purchase.
Point 4: Direct Approaches via Direct Mail, Email, and Phone
As a direct approach method, direct mail and email marketing are effective. In particular, by providing special offers and information for dormant customers, you can encourage motivation for repeat purchases.
Approaching via telephone is also effective for revitalizing dormant customers. In telemarketing, through direct communication, you can grasp the customer's needs and concerns and make proposals accordingly.
For example, when conveying information about new products to dormant customers or inviting them to special events, approaching them by phone can capture their interest.
Point 5: Providing Special Promotions or Discounts
Providing special promotions or discounts is also an effective means to capture the interest of dormant customers. By preparing limited offers and benefits, you can increase the willingness to make a repeat purchase.
For example, create an opportunity for a repeat purchase by providing a coupon code exclusively for dormant customers, such as a "Special Discount for Long-term Customers."
Point 6: Improving Services by Incorporating Customer Feedback
Feedback and opinions from dormant customers are valuable sources of information for improving services and products. By incorporating the voice of the customer and improving the quality of service, you can increase long-term customer loyalty and the success rate of revitalization.
For example, if you receive complaints or requests regarding a certain product from a dormant customer, improving the product based on that can increase customer satisfaction.
Tools Useful for Revitalizing Dormant Customers
SFA and CRM
SFA (Sales Force Automation) and CRM (Customer Relationship Management) are tools that are very useful for managing and analyzing customer data. By using these tools, you can prepare the prerequisites for effective approaches, such as identifying dormant customers, tracking purchase history, and customer segmentation.
In particular, when planning a revitalization campaign for dormant customers, it is necessary to build a strategy based on the results of data analysis obtained from these tools.
Email Marketing Tools
Email marketing tools are suitable for direct approaches to dormant customers. By utilizing functions such as creating personalized messages, delivery by segment, and analysis of open rates and click-through rates, you can implement effective email campaigns.
Also, by using tools with A/B testing functions, it is possible to find the most effective messages and designs.
uSonar Live Access Feature
uSonar's Live Access feature is a tool that visualizes the companies of prospective customers who access your website, but it can also be utilized for approaching dormant customers.
In normal access analysis, you cannot know "what kind of companies are visiting the website," but by using the Live Access feature, you can grasp the companies accessing the website in real-time. Therefore, it is possible to detect the movements of those companies and take optimal approaches before the customer takes specific actions such as contract cancellation, document requests, or inquiries.
If there are dormant customers among the companies visiting the website, you can judge that they are "dormant but have not lost their purchasing intent" or "are looking for some information regarding the product or service." By approaching them there, you can increase the satisfaction of dormant customers, and the possibility of succeeding in revitalization will increase.
