How to Monetize Dormant Customers With a Successful Winback Campaign

How to Monetize Dormant Customers With a Successful Winback Campaign

Are you continually trying to acquire new customers but are frustrated by the associated costs? Unfortunately, it is vital if you want to stay in business but you can’t keep churning and burning new customers either. 

Data shows that acquiring new customers can be as much as seven times more expensive than retaining the ones you already have. These numbers make a good case for having a stellar retention strategy and crucially, activating previous customers to buy from you again.

In the end, it’ll save you money and help grow your existing customers’ spend over time. If that doesn’t inspire you to make the effort now, let’s see if I can convince you of the “why” and “how” by the end of this post.

Why Customers Stop Buying

There are many reasons why your past customers stopped buying from you. Maybe they only bought something from you as a gift the first time. Maybe your product mix has changed? Bad experience? Only bought because of a deal?

Whatever the reason, they’re gone. They haven’t bought from you in months and it’s looking rather unlikely that without an intervention from your side that they will ever buy from you again.

That intervention comes in the form of a winback campaign or offer. Before we can get into details on what exactly that is and what it should contain, we must first identify who are the people that we’re trying to reach.

This is where email list segmentation comes into play.

First, you need to define the criteria for who is the customer that needs reactivating. The criteria can include things like timing -- how much time has passed since the purchase, previous shopping frequency, average order value, etc.

As you’re setting everything up, you’re likely to see trends emerging. For example, customers who haven’t bought in 3 months but were previously frequent buyers, or they haven’t bought in 4 months but previous data shows that big orders are made every 5 months. They also may be opening marketing emails but not clicking through, opening marketing emails and clicking through but not buying, and so on.

There are many sub-groups within the general group of people that fit the category of inactive customers. If you really want to succeed, you’re going to have to develop different offers for different groups.

It’s probably not reasonable to offer $100 off for a past customer who only ordered from your store once. Meanwhile, making the same offer to someone who has bought thousands of dollars worth of merchandise from you before might just work out great.

Possible customer groups & offers criteria to consider:

  • Buying frequency - daily, weekly, monthly?
  • Average order value
  • Product categories bought from and viewed - which categories of products have they bought previously, which ones were only viewed?
  • Email behavior - customers opening but not clicking, clicking through but not buying?
  • Browsing behavior - looking at popular categories, customers adding to cart but not buying, etc?

Depending on how you’ve setup your store, this and much more (or less) data is available to you and can all be used to your advantage. The more targeted your offers are, the better your chances of being successful.

All this grouping and subgrouping can seem like a lot of work, but it really isn’t as hard and time consuming as it seems. All you need to worry about is developing criterias for different sub-groups.

The more targeted you are, the more work it’s going to take. Then again, the more targeted your win-back offers are, the better your chances of being successful.

Setting Up Win-Back Campaigns

A typical ecommerce win-back campaign consists of a sequence of “We miss you!” emails.

The first one usually contains some version of “We miss you” and then adds either a set percentage or a set dollar amount off of the next purchase. The second one can add time constraints -- “Offer valid only until X,” or simply up the percentage or set amount off.

Sometimes companies use a re-permission email as a last-ditch effort to get customers active again. In it, they simply ask if the customer still wants to hear from them or not. But campaigns tend to have very poor engagement rates.

As an example of a win-back campaign, Pinkberry offered a free yogurt as an incentive:

Image via Marketo

And Bliss offered 20% off of the next purchase:

Image via WhatCounts

While Crocks was handing out $10 off coupon codes:

Image via Impact

Regarding the effectiveness of these campaigns, Remarkety recently studied millions of emails across thousands of ecommerce sites and found that win-back campaigns achieve average opening rates of ~39%, and click rates of ~20% with a conversion rate of 2.6%. That’s not bad considering that normal marketing emails in the same study saw a conversion rate of only 1%.

So far, we have mostly looked at what everyone else is doing to win their customers back. But as Mark Twain said many, many years ago “Whenever you find yourself on the side of the majority, it is time to pause and reflect.” Let’s do that now and look at how the same objective can be achieved without using “We miss you” emails.

A Different Approach

CNET is a well-known technology news website that publishes reviews, articles, blog posts, podcasts and videos on technology and consumer electronics. The media company also publishes an email list called CNET Insider.

The first thing that’s different about CNET is that in addition to creating a user persona based on the fact a reader has subscribed to a newsletter and is clicking through, there are 14 additional dynamic segments that are automatically updated based on other user behaviors. In this case, based on the type of articles that the user is reading.

It’s a smart system that is constantly moving subscribers around as their behavior changes. Just reading one article about Apple is not enough to include that person in a particular segment, there need to multiple connection points.

This system is similar to what I previously described as having different subgroups within the overall crowd of customers who have stopped buying. It’s just more advanced.

While CNET had all this setup for readers receiving the newsletter, their win-back email was pretty typical for inactive users:

Image via MarketingSherpa

As a result, the average re-engagement rate with this tactic was typically eight to 10 percent.

Then the CNET marketing team had an idea that they wanted to test out. Instead of including the usual “We miss you”, “We noticed you haven’t read our email in a while” type of language, they went with providing more value.

The team had all this data on what people liked and had segmented them based on that. So, they decided to use those segments, and the most popular piece of recent content for that segment, as the win-back email. Essentially, they were just giving subscribers more of what they really wanted -- relevant content that mattered:

Image via MarketingSherpa

By doing that, they achieved a re-engagement rate of 26.48%, or more than double what it had been before.

Now, you’re not in the business of publishing news, but you can still learn things from CNET. A similar win-back campaign in ecommerce would take advantage of the different subgroups described above, plus their buying and browsing behavior.

If a subgroup has shown an interest through browsing and is also buying high-end makeup accessories, then your email should showcase your latest accessories. In addition, it could possibly include a sweetener in the form of a coupon code. That way, you’re keeping them in the loop of what’s new and giving them a discount at the same time.

Boden, a British fashion retailer, is doing something similar by sending a “Look at what you’re missing” email instead of the usual “We miss you” to win-back customers:

Image via Ometria

An Easier Method

One of the easiest and yet most underutilised way to re-activate customers is to simply ask them why they stopped buying. I mean like straight up sending past customers an email and asking:

“Hey, why did you stopped buying from us?”

It might seem too simple and maybe even stupid but it really works. A couple of years ago, AppSumo used a simple 4 question survey to save their newest product “How To Make a $1,000 a Month Business” from certain death.

They knew the product was good; their test groups loved it and it was delivering exactly what was expected. And they had a 30,000 strong highly targeted email list. What could possible go wrong?

Well, a lot. When it was all set and done, only 30 people bought it on the official launch. Sh*t.

Something was clearly wrong. Instead of trying to read minds, the guys at Appsumo decided to just go out and ask why people on their list didn’t buy. To make it more relevant, they targeted people who had opened the first email and clicked through to the landing page, but for whatever reason didn’t convert.

The survey itself had four simple questions:

  1. Were you at least interested in buying? YES or NO?
  2. Be specific about the answer.
  3. What’s holding you back from starting your business?
  4. Should we make our support sumo do a dance video?

The answers gave the team enough insights to completely redesign the landing page and answer genuine questions and fears that people said had kept them from buying. This one “survey literally changed the product overnight.”

Where to Begin for Your Business?

In ecommerce, you can start by emailing your highest value customers first -- the ones with a high average order size but who haven’t purchased anything for a while. And again, this can all be automated in your email marketing solution. Simply setup the parameters, prepare the email(s) and you’re done.

The great thing about automated feedback systems is that you can use them for other purposes as well. How about contacting your other customers groups and asking them how you can help them, or if there are any problems that could possibly make them stop buying from you in the future?

You already have all the data about your customers buying habits, order size and more. All you really need to do now is come up with questions that will give you valuable insights. I hope I’ve convinced you that it’s worth the investment. Good luck!