Customer Winback

What is Customer Winback?

Customer winback refers to the steps a business takes to re-engage and recover customers who have stopped using a product or service. It involves identifying former, inactive, or disengaged customers, understanding why they left, and implementing strategies to “win back” their business.

A successful customer winback campaign helps businesses:

• Retain customers
• Improve customer satisfaction
• Boost customer engagement levels
• Grow expansion revenue over time
• Increase customer lifetime value

Retaining an existing customer is generally more cost-effective than acquiring a new one. In the SaaS industry, for instance, acquisition is generally 4-5x the cost of retention. This makes a customer win-back strategy a crucial element of any business’s overall customer retention plan.

Synonyms

• Win-back campaign
• Win-back strategy

Understanding Customer Winback

Customer acquisition is remarkably difficult. You have to invest tons of money into content, ads, sales personnel, and countless other activities just to bring new ones into the funnel. Out of every 100 customers that wind up going through the process, only somewhere between 3 and 8 will end up actually paying if we’re talking averages).

Meanwhile, you can’t build a sustainable business if you’re constantly investing resources into new customer acquisition. You need reliable sources of income you can build your business on top of. Otherwise, you’re stuck on the hamster wheel.

Why Do Customers Leave?

The first question you have to ask yourself is, “Why are we losing customers in the first place?”

There are numerous reasons for customer churn, but we can group them into two categories: voluntary (the customer left on purpose) and involuntary (they stopped paying due to a failure on your part).

Causes of voluntary churn include:

• Dissatisfaction with the product, customer service, or overall experience
• Switching to a competitor offering a better deal or more value
• Realignment of the customer’s goals or needs
• Changes in personal circumstances (e.g., budget constraints or changing business structure)

Causes of involuntary churn include:

• Outdated payment info
• Server errors
• Insufficient funds
• Credit card expiration

Any one cause of voluntary/involuntary churn may or may not be part of the equation for you. To figure out what’s causing your churn specifically, you need to run customer feedback and exit surveys, analyze past interactions and purchase history, and identify patterns or trends in customer churn.

What is a Win-Back Campaign?

A win-back campaign is what you launch after your customer retention efforts don’t succeed. It’s how you approach lost customers with a targeted message to reignite their interest in your business.

The goal of any win-back campaign is simple: Convince customers to return by offering the right incentive or messaging to meet their needs.

There are a few different ways to win back customers:

Personalized Emails

The most common way to get lapsed customers back on board is to send win-back emails. These generally include a series of messages that evolve from gentle reminders of the brand’s value to more direct offers or incentives.

An initial email might simply remind the customer of their past positive experiences with the brand. Subsequent emails will likely take a more aggressive marketing approach with more forward calls to action. The final ones will provide exclusive offers or discounts. Of course, this isn’t always the best order — you should A/B test different messaging like you would with any other email campaign.

Sometimes, there will be obvious indicators of what type of email to send. For instance, if an inactive customer indicates in their exit survey they left due to pricing constraints, you could immediately offer them a discount to return. Or, if they mention an issue with a product feature (or lack thereof), you could send them a personal email update when you’ve added that feature or patched that issue.

Social Media

A customer needs to stay on your email list if you want to send personalized messages straight to their inbox. When that isn’t the case, you need another approach.

Winning back customers on social media could either be through paid social media ads or organic outreach. If the sales/CS rep or dedicated account manager has a friendly relationship with the inactive customer, it’s best to start with a personal message.

Retargeting Ads

Since you have info about who they were as a user, you can create personalized ads and popups that’ll be more likely to grab their attention. There are two main places you can target lost customers:

• Social media
• Your website

The idea behind retargeting ads is you don’t want them to look obvious. You might create an ad that features a new and improved version of the product they left to pique their interest. Or, you might have a “Nice to see you again! We have something special for you…” popup offer on your website when (if) they return.

Push Notifications

If there’s a mobile app component to your product and they haven’t deleted the app, you can trigger push notifications to get their attention. This is especially helpful for SaaS vendors when getting inactive subscribers to return.

In your push notifications, you might include a messaging tactic like “We miss you!” and send them a personalized offer. Or, you could reinforce your value proposition with messaging like “Staying organized has never been easier. Check out our new update!”

Importance of Win-Back in SaaS

Predictable revenue is both (a) what makes the SaaS business model so scalable and (b) its entire reason for being. Users have an ongoing (often everyday) need for the product, so they pay a monthly or annual price to access it. In return, the company itself continues to maintain the software, keep it secure, and roll out updates and features.

Since SaaS products are available on the cloud, they only have to be created in one instance. If they operated solely off of one-time payments, there would be no way to sustain the cost of running the service.

Given that user acquisition costs SaaS companies 4-5x more than retention, constantly investing in the former to make up for the latter isn’t sustainable. In fact, the general consensus is an LTV:CAC ratio of 3:1 or better is the baseline for running a healthy SaaS business. 

Their solution: Prioritize customer loyalty. And, for inactive subscribers who haven’t responded to retention efforts, focus heavily on customer winback.

Effective Strategies for Winning Back Customers

Although there’s some overlap in what a company might do to retain its customers and what it’d do to win them back, the two require vastly different approaches overall. While retention is all about keeping your customers satisfied and happy, customer winback requires you to prove you still have (or now have) what they need.

Survey your customers on their way out.

This is something you can set up automatically by integrating your marketing automation tools with your subscription management software. Any time a customer cancels their subscription, they’ll receive an email with an exit survey asking about:

• Their experience with your product
• Why they decided to cancel
• Whether they’d ever consider returning

In addition to gauging their sentiment toward your product and customer experience, this is ammo for potential future engagement (and improvements to your product). Let’s say a customer mentions they’d come back for Feature X, but they found a solution that gets the job done for a lower price. If you find it’s profitable to implement that feature, you can send them a win-back email when you do.

Segment your customer base for targeted win-back campaigns.

Customer segmentation isn’t just a concept for potential and current buyers — it’s also essential for your churned users. You should aim to segment customers by the unique qualities they had before leaving. This data will help you understand why your once-loyal customers have churned and reveal patterns in their behavior that can inform interventions or new features.

For instance, you might segment your customers by…

• Reasons they left
• Features they were using the most before leaving
• How long and how often they used your product before leaving

…in addition to their buyer personas.

This info can help you tailor your re-marketing message for a particular customer, making it more authentic.

Develop new products and services.

If you take the two above approaches, you might find you’re losing a significant amount of valuable customers for the same reason — you’re lacking a certain feature, product, or service add-on they’re looking for. At a certain point, investing in those things is most likely profitable for your business.

Let’s say you sell a tracking software that allows customers to monitor their daily exercise. You might find that 40% of users leaving are more interested in the nutrition aspect, which only a competitor currently offers. In this case, it’d be worth creating additional software that lets users enter their dietary info to track in the same interface as their exercise app.

Another huge reason customers leave is for budget considerations. Offering tiered pricing plans with varying levels of features and services can be helpful in retaining loyal customers who may need to downgrade due to financial constraints.

Offer value and incentives.

If monetary issues are the main concern, incentives are an easy way to get otherwise-satisfied users to return. You don’t have to offer anything too big — something small like a discount on their next subscription or access to new features might be enough to win them back. You could even create exclusive deals or add-ons for returning customers as a bonus for their loyalty.

The key here is to align your offer with the exact reason they left. Again, you can figure this out through exit surveys and customer segmentation.

A piece of cautionary advice: Avoid offering discounts too early or too often. If your custoemr base assumes they can always get a better deal by canceling or waiting X amount of time before another purchase, it becomes harder to justify your true product value in the future.

Personalize your re-engagement efforts.

McKinsey research shows effective personalization yields a 10-15% revenue lift (on average). The reason is simple: customers want it. And while that pertains to the experiences you deliver throughout the customer lifecycle, it also applies to your win-back strategies.

There are several ways to personalize your re-engagement efforts:

• Send a personalized email from the account manager or customer success rep who previously worked with the buyer.
• Use dynamic content to swap out images, headlines, and even offers depending on data you have for that customer (e.g., what they’re interested in, what stage of the sales funnel they dropped out at).
• Use social media to re-target ads to churned customers with a message specifically tailored to them. This might involve highlighting new features, addressing concerns mentioned in their exit survey, or featuring customer testimonials.

Especially if they already had a positive experience with you, it’ll be much easier to convince previous customers to return than it would be to win over completely new ones.

Measure and analyze your customer winback initiatives.

You can analyze the results of your efforts in a few ways:

• Determine how many customers you win back. It’s  a good idea to break down this metric by the segment you’ve targeted (e.g., win-backs from customers who canceled because of budget constraints vs. features).
• Analyze how long it takes for lost customers to return. This will help you gauge how effective your efforts are and adjust your strategies accordingly.
• Look at performance metrics for each winback initiative. Email/ad open, click-through, and conversion rates tell you how well each component of your strategy is working.
• Calculate the ROI of each winback strategy. How much does it cost to win back one customer, and how much revenue does that customer bring in over time? Which strategies yield the highest success?
• Monitor changes in your churn rate. If your win-back efforts are successful, you should see a decrease in overall churn.

Tracking this info and taking a critical look at your performance enables you to take an interactive approach to customer winback. As you test different channels and messages, you’ll learn more about what works and, perhaps more importantly, what doesn’t.

Key Takeaways on Customer Winback

Winning back your customers is almost always more cost-effective than acquiring new ones, so it’s an important strategy to prioritize.

The basics of an effective win-back strategy are:

• Exit surveys
• Customer-led product development
• Personalized and carefully-timed re-engagement efforts
• Measuring and analyzing results to inform future strategies.

When executed well, customer winback does more than just bring back lost revenue. It also improves overall customer satisfaction. Over time, you’ll realize more and more of your customers aren’t even leaving in the first place.

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