A major concern for any new or growing business is maintaining a stable stream of revenue. While signing contracts and securing more customers is a great way to do this, inevitably a client or customer will leave your service, which is referred to as churn. Though churn rates will vary by industry, the average for B2B companies is 24% and for B2C companies, 31%. Yet some industries like phone services, online streaming, and gyms see even higher rates of churn.
To combat this, companies typically have two options: market towards new customers to replace the lost ones, or employ strategies to win back customers. While both are a vital part of a healthy business, acquiring new customers can cost 5 times more than winning back old ones, and the old customers can end up staying longer in the end. Since you already know your customers are interested in your product, much of the time identifying the right people to market to is reduced.
However, there’s no one-size-fits all technique for customer win-back — you’ll have to decide for your business and customers which will most likely re-engage them. Below, we’ll discuss what you need to consider before choosing a strategy, and some of the most popular ways to win back customers. You can also skip to the infographic to see a quick summary.
You won’t be able to win back every former customer, and you not every customer can be won back using the same method. That’s why it’s essential to do your research before deciding on the right win-back strategy to use.
First you’ll need to figure out who to win back. To understand which customers are ideal for winning back, you should be going back through your usage and feedback data. If you don’t have any, now’s the time to start collecting. Higher rates of utilization of your services indicate that your customer saw the value in much of what you were offering. However, if they only ever used one service or product in your line, it’s likely they don’t see your company as closely aligned with their goals.
The customers most likely to return are the ones who who have referred others, had few complaints in the past, or had their complaints successfully resolved. (Click here for more on successfully dealing with customer complaints.) Former customers who are unhappy with pricing are more likely to return than those who are unhappy with the service.
You may also wish to conduct an RFM analysis. This assesses the recency, frequency, and monetary value of purchases made by the customer. Your best customers will have made large purchases frequently, and have made one recently. Lost customers not worth saving will have only made a few small purchases a long time ago. Segmenting your customers in this manner will allow you to target high-value customers that are most likely to return.
Then, you’ll need to do your best to figure out why they left. If you’re like 82% of other business owners, it’s likely your customer left because of poor service or dissatisfaction with the products. The good news is that these are things you can fix. If you can, conduct exit interviews or send exit surveys to figure out the specific reasons your customer isn’t satisfied. You may simply need to demonstrate you care about providing them excellent service and value.
Once you’ve determined which customers are most likely to return, and why they left, it’s time to apply a win-back strategy:
One of the most common ways for companies to win back customers is through special offers that motivate them to return. The goal is to make the customer feel like they’re getting too good of a deal to turn down. There are three ways to do this:
You can offer them a discount good for one purchase, or a reduced rate on their subscription, which is ideal for those who left because of pricing.
Another option perfect for subscription services is to offer your customers an upgrade to a higher package free of charge. This may mean more channels for a cable service provider, or more frequent meal delivery for a meal kit service. For customers who were dissatisfied with the product or service they received, this can be a good way to show them you still have something to offer.
Similar to upgrades, bundling adds additional services or products for the price of what they were paying before.
When using an incentive to win back customers, leverage these to make your offer go further: time sensitivity, exclusivity, and personalization. Customers are more likely to take you up on an offer if it’s only for a limited time and only for them. You can use personalization to offer them what they’ll enjoy most, or time your offer around something like their birthday.
When CNET switched from generic win-back emails, to including articles specific to the user’s interest along with their win-back emails, their return rate went from 9% to 26%.
If you’ve identified a unified theme across all the feedback you’ve gotten, and decide to use that to make a company-wide change, you may benefit from a win-back PR campaign. Examples of changes that may qualify for a broader campaign are formula or recipe changes, a change in sourcing materials, or a complete overhaul of your package structure. It’s important to note that this one-size fits all campaign is most successful when you can identify one main issue with your product or service across all feedback.
In 2009, Domino’s launched their “Pizza Turnaround” campaign. They realized that they’d been losing customers who were unsatisfied with the taste of their pizza, and did something about it. After the campaign, the next year’s fourth quarter profits doubled.
Especially for ecommerce industries, sometimes all it takes is a reminder of what you have to offer over others. For users who haven’t purchased or engaged in a while, an email with some of what makes your company great can help spur them to action. Maybe it’s your commitment to fair trade practices, or your always-free one day shipping, but listing out what the customer stands to gain can be helpful in bringing them back, as well as building back their brand loyalty.
Another strategy is to quantify the benefits you’ve provided them for the duration of their contract. Given how long they’ve used your service and data on how your service performs, you can say you’ve saved them a certain amount of money, or provided a large number of leads.
You can also use this strategy to update inactive customers on new benefits. Are you launching a new more convenient app-based shopping experience? Perfect time to let those old customers know you have something new to offer.
British company Chain Reaction Cycles had success with their email that listed five of their top benefits to customers, calling out their “hand picked offers” and content focused on “more than just bikes.” The benefits don’t have to be huge, just what your potential customer may genuinely enjoy.
Some situations need a highly personal touch. In cases where you’ve been working on a name-basis with clients, a discount email won’t cut it. If a client or customer delivers the bad news that they don’t want to work with you anymore—don’t panic. Figure out exactly what made them leave, and personally deal with it as quickly as you can. If it comes down to a mistake or oversight on your part, apologizing sincerely can have a tremendous effect.
Simply have an open conversation where you ask for their honest feedback, if they haven’t already given it to you, and listen. Take care to listen for both what they’re upset about, and the root of their problem. Then, show you listened by repeating back their concerns. Finally, apologizing and customizing a solution for them will help them continue to feel confident in your services.
If you’ve sent discounts, reminded them of their benefits, and still haven’t heard back? It’s time to let them go. If they’re on your email list, you may think it can’t hurt to leave them on in case you come out with a new product that they’d be interested in. However, it’s always better to have a smaller, more engaged email list than a larger disengaged one.
Maintaining a high open and click-through rate will help you avoid being picked up by spam filters and make sure your emails are going to the people who do want to read them. Plus, it’s easier to manage and segment your email list the smaller it is, so there’s no reason to make it larger than necessary.
Once you’ve won your former customers over, there’s good news: Studies have shown that customers actually stay longer the second time around. So while it may have taken a little bit of work to keep them, that will effort pay off in the long run.
However, that doesn’t mean that you have to stop working for their business. One of the most important parts of managing churn is continually to winning over your customers. That means managing engagement, building loyalty, and staying tuned into their needs.
To do this, continue to send emails that tailor your customers experience for maximum engagement. You’ll need to analyze data on what they most frequently open, buy, or read, but the extra information will pay off. Every once and awhile, send an appreciation email or offer just because.
Maintaining active social channels is important for receiving quick feedback, responding to customers on a person-by-person basis, and getting a feel for how your customers are doing.
Finally, especially if you’re in B2B, it’s important to continually add value where you can. This doesn’t always mean giving your client more work or services. It simply means keeping their priorities in front of all that you do. Even if they need work that you don’t specialize in, recommending them another business or service that will help them grow can build trust immensely.
Meredith Wood is the founding editor of the Fundera Ledger and a vice president at Fundera.
Meredith launched the Fundera Ledger in 2014. She has specialized in financial advice for small business owners for almost a decade. Meredith is frequently sought out for her expertise in small business lending and financial management.