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It’s generally agreed that it’s far easier to sell more to an existing customer than it is to acquire a new one. And while I won’t digress into why some folks don’t mine their existing customers as much as they could, what about the idea of getting more money from your existing customers without actually get them to buy more?

Almost seems too good to be true.

Well it is possible. Totally legit. Not just the flick of a switch – not much ever is – but certainly shouldn’t take 6 months to implement.

Below are 5 ways to do so:

1. Retry billing

For those of you with multi-pay options or with continuity models, I’d suggest taking a look at your processes to see what happens when a customer’s credit card doesn’t go through. For soft declines (soft typically meaning insufficient funds, etc.; as opposed to a hard decline which can mean a lost or stolen credit card, invalid number, etc. – for hard declines, pull those out and jump to collections below. They won’t go through.) As for soft declines, are you trying again? How often are you doing so? I’ve talked to marketers who retry those declined credit cards anywhere from 3- 20 times. Certainly, it’s not free to do so – your merchant provider charges you per attempt (and then you pay your percent on a successful transaction), so you have to do testing and some math to see how many attempts you can try and still remain breakeven – just remember that breakeven is relative to incremental margin, not revenues. Too many people do this analysis relative to revenues and totally overestimate the number of attempts.

Not only should you test the number of attempts, but you should consider the frequency between attempts – every day, every few days, 1x per week? Again, I’ve seen people do all of the those. The rationale for every week is that, assuming it was a reject reason like insufficient funds, you’re banking on your re-try happening after the customer gets paid. (And if you think that’s sneaky, well, it’s also not cool for a customer to buy but not honor their agreement to pay.)

To execute this strategy, you’ll need to pull together your marketing, finance and IT teams to make sure everyone is coordinated.

2. Following up with declined credit cards

Concurrent with a retry attempt can and should be some form of communication to the customer. This can be an email or a phone call, informing them that their credit card didn’t go through. Depending on whether it’s a multi-pay instance vs. a continuity, obviously your messaging can be different – the former is about paying for what they’ve already received versus the latter is about not discontinuing the subscription, service, product, etc.

Certainly, email is cheaper than the phone, and contact rates on phone calls are never especially high, but depending on your price point, that phone call could ROI if you have a 4- or 5-figure price point.

3. Account Updater

You or someone on your team should be digging in to the reason codes for credit cards that decline. You should also work with your merchant provider to make sure you are entirely clear on what each code means, especially the one called “other”, which for many folks is over 10% – so not insignificant. But you need to know what each one means to understand what type of action you might be able to take.

One of the reasons that cards decline is that the expiration date of the card has passed. A customer might have purchased something to be paid over 3 months. The initial payment was in July, but the credit card you have on file shows an expiration date of July. The initial payment went through but presumably the following ones didn’t.

Well, it turns out that there is a service called Account Updater, whereby you can send the info for cards that have this expiration date issue to get the expiration date updated. And the beauty is that you only get charged for card numbers that actually get updated. Depending on your partner and your status, you can get charged anywhere from $0.06 to $0.18 per updated credit card. Now, no matter your price point, that shouldn’t be that hard to ROI.

There are only certain banks that participate in this service, so it won’t be 100% of the expired cards, but this has added significant dollars to the companies that use it. You should reach out to your merchant provider or gateway provider to discuss how to implement this.

4. Collections

You can take the above measures and you’re still not going to collect everything that customers owe you. So the next step is to employ a collection agency to pursue the funds on your behalf. Typically these agencies keep roughly 33% of the funds they collect, but this is money you were not going to collect.

I will say that I know some marketers who choose not to send anything to a collection agency because they don’t want to go to that level of interaction and relationship with their customers, even if their customers are the ones who broke their end of the promise. This is entirely a business decision you must make. There is no right or wrong answer, but at the least you want to be intentional about your action (or inaction).

5. Lower your return rate

Sure. Sounds simple enough. Just like saying that if only you increase your conversion rate on your site from 3% to 4% (just 1 percentage point increase), you’ll make a ton more money. Except that it’s actually a 33% increase to go from 3% to 4%. That’s a HUGE increase. But it doesn’t mean you don’t try to make incremental, or even step-function, improvements.

As such, one of the first things you need to do is understand the actual reasons customers are returning your product and/or asking for a refund. This really should be a joint responsibility between customer service and marketing – at least to own understanding of the reasons and metrics. And then other groups – depending on the reason codes – might be engaged to help address the issues. Clearly, just getting the data is the first step. And depending on what platform you’re on, it can be a huge step. But understanding returns and refunds goes well beyond saving any individual sale. In this day and age, unhappy customers are voicing their displeasure all over social media. (And as we all have experienced, unhappy customers are much more likely to post than a happy one. Check out this link to see some stats about what impact being satisfied or not can have on a customer and your business – http://www.helpscout.net/75-customer-service-facts-quotes-statistics/.)

Addressing unhappy customers – and more importantly the reason(s) for their displeasure – can eliminate or at least mitigate barriers to acquiring new ones. That is likely even more valuable than saving that sale.

If you don’t know or can’t easily get the answer from someone in your organization about the top 5-7 reasons for returns and refunds, it’s an investment worth making. It might be simply having someone pull a report, or it might require systems work and training with your customer care agents. Either way, it will pay itself back in spades.

There you have it. 5 (amongst a bunch more) ways you can make more from existing customers without asking for another sale. If you’re the type of person who just lives for the sale but doesn’t enjoy (or bother) with these types of operational issues, acknowledge that. And then either task someone within your org or bring someone in to do so. More on this in a coming post.

Please leave a comment below because I’d like to hear what you think.

In the past couple of weeks, I’ve found myself in the midst of a few heated debates about some seemingly absolute statements made in and about the direct response industry. I like to think of myself as an early adopter to technology, so it was not lost on me that I was defending some older technologies. The point here is not about technology, but rather the assumptions people make about global truths.

The arguments included the following:

Consumer response (note, not viewing but actual response) has shifted online, and no one responds via phone anymore.
You can’t make money using short-form media.
TV and the DVD business are dead.

Bottom line, there are components of each of these statements that are true, some more than others. And even if I would argue that these statements are less true than more, the real point is that they have to be taken in context. Just as some tests work for some marketers and not others (or as we have seen at Beachbody, for some of our brands but not others within our portfolio), one tenet that we’ve learned about direct response is that there are no absolutes, nothing that is true 100 percent of the time.

As to the above statements, while more people are online than ever before, it is not necessarily the case that consumer response has shifted online to the complete exclusion of the phone channel. At least not for our brands here at Beachbody. We have some campaigns where the majority of orders come on the phone, and others where the majority of orders come online. Neither is necessarily a good or bad thing. It depends on our goals, and really it’s the rate / response equation relative to those goals that determines whether it’s a good or bad thing. Yes, consumers are online to research and sometimes to buy our products, but there are factors that can influence that decision, both based on the consumer’s individual preferences and how the marketer might presents each option during their CTA.

Next, regarding short-form TV media not being profitable. Again, what is the context? For some marketers who drive to retail, it may be true that looking at only phone and web orders would not make the campaign profitable, but once you add in retail orders (to the extent tracked back to media) then those campaigns may be profitable. From our side at Beachbody, because of our network marketing business, we do not have products at retail in the U.S., but we have been able to make some short-form campaigns work (meaning they are profitable) solely via phone and online. And yes, we have been unsuccessful with others; that is the nature of this business.

Finally, the demise of TV and DVDs. They are somewhat different points, but I’ll address both here because just like the phone, they get grouped together as legacy technologies. While it is true that the DRTV model has gotten more difficult than it used to be, there is no question that it is still a viable media platform. There is a huge difference between “more difficult” and “impossible.” The same goes for DVDs. Yes, an increasing number of consumers prefer content digital-only, but that does not mean the DVD business is dead.

Bottom line, whether you are a marketer using direct response television or digital media, in the DVD business or housewares, short-form drive-to-retail or short-form drive-to-web only, nothing is an absolute within a category let alone across them.

Question everything, use tests and quantifiable information to make decisions, knowing there is no such thing as perfect information, and then dig in to optimize. This is neither a simple business to execute nor a simple business model to understand. It is always evolving—pay attention to the shifts, but the key is to figure out what is relevant and works for your business, and then maximize the heck out of it.

Direct response as a model is only growing. Pretty soon, it won’t be referred to as a niche business model but instead as a smart way to run a business—spend, track and measure, analyze, then optimize.

Just be careful about making statements that are absolutes, in any direction. Without getting too philosophical, the world doesn’t work that way. And certainly the direct response industry doesn’t either.

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