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Customer Churn Segmentation

Churn, Baby, Churn: Analyzing and Segmenting Customer Churn

At this point, we’ve hammered home the fact that, in most cases, brands should aim to focus on customer retention. We’ve all heard how acquiring a new customer can cost up to five times more than retaining an existing one. But, what we don’t always talk about is what to do with the customers who don’t come back. What should your brand do with the customers that are neither here nor there—not new but also aren’t continuing their relationship with your brand?

Throughout this article we’ll start by defining customer churn and segmentation. Then, we’ll explore how brands can analyze and approach this group of churned customers to rebuild the relationship. Let’s get to it.

What is a Customer Churn?

We’re going back to basics for a hot second by defining customer churn. Customer churn isn’t always clear-cut. As we covered in our winback ebook, “customer churn can refer to customers who have completely stopped interacting or unsubscribed” but it can also refer to customers who have reduced how often they interact with your brand, compared to how often they used to. So, from the get-go, your brand has to first determine how you define churn.

Once your brand has established what qualifies a churned customer, you have to decide how you’ll go about re-engaging with them. One approach is to start by grouping like-minded churned customers into categories—also known as segmentation.

What is Segmentation?

Taking one more step back, we’re going to cover segmentation more broadly before we get into segmenting churned customers. Segmentation is one of the first steps in personalizing the customer experience. “Segmenting customers can help your brand tailor its approach to each group, creating a more relevant experience for each individual.”

To start, brands need to create groups of customers based on certain underlying criteria. For example, customers can be segmented based on their location. Then, customers within a certain zip code can be segmented further to pull out those customers who have purchased the same items. Now, your brand has a specific segment of customers who live in the same zip code and have purchased the same item. From there, you can create targeted content specifically for this group of customers. The same method can be used for churned customers.

How Can You Segment Churned Customers?

There are layers to churn, regardless of how your brand defines it. If customer churn for your brand means someone who hasn’t made a purchase in over a month, there may be stepping stones that customers land on before becoming that fully churned customer. This is what your brand needs to pay attention to. A customer who opens emails but hasn’t purchased anything in over a month is different from a churned customer who won’t even open emails.

Stitcher, a podcast distribution platform, uses this methodology when segmenting their churned customers. Imelda Skinder, a Stitcher Listener Lifecycle Manager, explained that they group churned customers into three segments: “Risk of Churn,” “Churning,” and “Churned.” Those who are a “Risk of Churn” haven’t engaged in 7-13 days, those who are “Churning” haven’t engaged in 14-29 days, and lastly, those who are “Churned” have not engaged in 30+ days.

So, instead of tossing all disengaged customers into one big “churned” bucket, your brand should focus on the small nuances that lead to a customer fully churning. The goal then should be to re-engage them before they reach that final group—but how?

Using Workflows to Connect With Segments

Segmentation is only valuable if you have a way to connect with each segment. What’s better? An automated way to connect with those segments. Creating marketing workflows gives you the ability to trigger certain marketing messages for certain customers, based on set criteria. In this case, the churn segment would be the criteria.

Stitcher, for example, created different workflows for those customers who were at “Risk of Churn” and those who were “Churning.” The “Risk of Churn” workflow is triggered when a customer has been inactive for seven days and the “Churning” workflow is triggered when a customer has been inactive for 15 days. Elements within each workflow are different, depending on what marketing messages those segments need.

Personalizing the Churned Customer Experience

At the end of the day, creating segments, whether for churned customers or fully engaged customers, is about creating a personalized experience. Segmentation allows your brand to send individualized content to customers based on their similar characteristics. But, because of the focus on retaining customers versus acquiring customers, churned customers often fall by the wayside.

By segmenting churned customers, brands can tap into a wealth of information about customer behavior and their journeys to churn. Plus, as an added bonus, segmentation can help brands stop customers from churning altogether. Understanding both the steps a customer takes towards purchase and the steps they take towards churning—and then turning those steps into segments—gives your brand a chance to connect with customers on an individual level, demonstrating that your brand values the relationship and can provide a one-of-a-kind experience.

To learn more about marketing workflows and how to segment churned customers, schedule an Iterable demo today.

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