Why Every Business Needs a Win-Back Strategy
Selina MarshallDecember 4, 2019
For subscription and DTC businesses, churn is a fact of life. Unfortunately, many companies don’t do enough to rekindle customer interest. Making that extra effort can pay dividends.
We call this process the win-back – because you don’t have to admit defeat once a customer leaves the fold. 8 out of 10 customers aren’t actually “lost,” they’re just waiting on you to win them back.
Defining customer win-back is relatively simple: it’s the process re-engaging with former customers, typically by stirring up renewed brand interest through personalized offerings. Once dialed in, these practices are effective at minimizing churn.
The customer journey is comprised of four main stages: acquire, engage, retain, and win-back. Many growth executives fixate on acquisition, leaving the final stage criminally neglected. We’ll explore the merits of implementing a win-back strategy, and demonstrate how customer and business success are fundamentally linked.
Why is the Win-Back Important?
Win-back is a vital part of the subscription business plan for one key reason: Winning back former customers is far easier (and cheaper) than acquiring new ones. Here’s why:
The Power of Familiarity and Your Bottom Line
We know that customers leave for various reasons. Many companies believe they can offset these losses by attracting new customers. Statistics on the issue say, “Not so fast!” SEO Hosting asserts that acquisition costs five times as much as customer retention. This is compounded by the fact that new customers haven’t yet developed brand loyalty.
New products and services are flooding the market almost daily. It’s becoming increasingly difficult to differentiate your company’s offerings from competing options. Plus, subscription fatigue is a real thing. You’re not just competing against products in your market, but all subscriptions services.
It’s much more difficult to get noticed, and loyalty is hard earned. Your best chance for success is to win-back customers already familiar with your brand.
Loyalty and Win-Back Are More Profitable
Here are some stats on why subscription businesses love customer loyalty.
- Loyal customers are worth up to 10 times as much as their first purchase (White House Office of Consumer Affairs)
- Boosting retention by only 5% can supercharge profitability by 25% to 100%
- Just 8% of customers generated 40% of revenue
Whether these numbers are perfectly accurate or not, they paint a picture we all know to be true: Customer loyalty is more profitable than chasing new customers.
Win-back candidates have the potential to be your strongest customers once they’re back in the fold. A study on the telecom industry found that returning customers had a 15% higher Lifetime Value (LTV) than one-time customers. Return customers are more loyal to your brand, and therefore more profitable.
Customer loyalty leads to higher levels of customer satisfaction as well. This generates more word of mouth marketing. Happy customers will tell at least five other people about your brand on average. That reach is powerful. Surprisingly, embracing a win-back strategy plays a pivotal role in customer acquisition.
Customer Data Makes Personalized Win-Back Easier
Personalized offerings are key to any effective win-back strategy. They make customers feel as though they’re being catered to. Going back to our telecom example, you wouldn’t offer a departing UFC fanatic a free Disney+ subscription (Who are we kidding… everyone loves Disney). Mistakes like this will make you appear out of touch, which can damage your reputation.
Luckily, we’re living in the big data revolution. Behavior analytics tools make it possible to track customer spending habits, preferences, and thousands of other data points. Companies can turn this data into powerful insights, especially for winning back customers.
Another example: Imagine an OTT (video-streaming) service wants to develop a win-back strategy using customer viewing preferences. One customer cancelled 6 months ago after their favorite show ended. With this data in hand, the OTT can send that customer an offer to re-subscribe when a similar show is set to air next month.
Developing personalized offerings is easy for a single customer, but doing it at scale is a major challenge. That’s where machine learning and recommendation engines come in handy.
How do you design a good win-back strategy?
A successful win-back strategy relies on understanding your customers — why they left and what would get them to come back. You need tools that help identify these preferences. The best solutions take win-back a step further by automatically generating offers based on a customer’s preferences.
Every business should have a win-back strategy in place. Subscribe to Bellwethr Insights for more articles on how to develop a great win-back strategy for your business.