How to Win Back Lost Customers: A Comprehensive Guide for Businesses

December 14, 2023
17
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how to win back customers

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Customers are essential to any business. They provide revenue, promote the company, improve competitiveness, build customer loyalty, and contribute to long-term success. Attracting customers is challenging, and losing them is even more difficult. This often occurs due to poor customer service, deteriorating quality of services or products, or even seasonal factors. You can influence some things, but there are others that are beyond your control. Customers leave and come. Unfortunately, losing them is an inevitable aspect of running a business. However, this doesn't imply that you should give up and simply accept it. Not all of your customers are lost forever. It’s possible to regain half of them. Do you want to know how to win back lost customers? Continue reading to discover how. 

Here’s what we are going to look at: 

  • Why win back customers?
  • Winning back customers: who to win back and who to let go?
  • Why do customers leave? 
  • 5 ways to win back lost customers

Why Win Back Customers?

Losing customers is as hard as breaking up. You realize the significance of your customers only when they decide to leave. But, just like in relationships, there are times when it’s worth fighting for your customer and times when it’s not. Why do customers leave? Some customers may not need your service anymore, others might choose a different company, or they could be busy with other things. Not all reasons have to be negative. But whatever the reason may be, businesses typically anticipate the loss of customers. There’s even a metric known as the churn rate and it needs to be monitored. It represents the proportion of lost customers over a specified period.

Is it necessary to spend time, money, and effort on those who have left? The answer is yes. We should spend time, money, and effort on lost customers, but not all of them deserve it. 

Why should businesses address customer churn?

Losing customers can hurt your business because it directly affects how much money you make and how profitable you are. When your customers leave they take their money with them and some of them might represent high value. This is the main reason why you should address customer churn. 

When a business loses a customer, it’s not just the money they would have spent right away that’s gone. The business also misses out on the money that customers could have spent in the future and the new customers they might have brought in. 

According to research, losing a customer in the US costs $289 on average. Although 70% of companies acknowledge that keeping existing customers is cheaper than finding new ones, only 30% try to win back customers who haven't returned in a long time. By addressing customer churn, you also gain a competitive advantage. 

What is the purpose of working with lost customers?

There are three objective reasons that explain the necessity of working with lost customers:

1. They know about you

A customer who has been buying from you is likely to stick around and be loyal just because they know you. They know your brand, your product, and how it operates. They’ve learned the value of your products or services. What’s more, people trust what’s familiar. They become friendlier, less picky, and more focused on communication, creating a foundation for a strong and lasting relationship. Trust is the foundation of all relationships. So, if you’ve lost some customers, you still have the opportunity to win them back because they already know you. 

2. They might be waiting for you

When a customer stays and gives you a second chance, they may be waiting to see what you’ll do. Seize this opportunity fully, as you may never get another one. To overlook a loyal customer is a significant disadvantage for you. But if you can learn from your mistakes and take care of your customers, it becomes your competitive advantage. Show your appreciation for their support and trust, and not only will your customers thank you, but you’ll also foster loyalty that can lead to repeat business. 

3. They will promote the word-of-mouth

If you manage to get your former customers to come back, you can win their loyalty for life. They will share their positive experience with friends, family members, and colleagues, providing you with more effective advertising, as recommendations from friends carry more weight than traditional advertisements. These recommendations work better than paid ads, leading to five times more sales. What’s more, about 90% of customers are more likely to trust a brand even if it’s recommended by strangers.

Winning Back Customers: Who to Win Back and Who to Let Go?

Before we delve into this topic, let’s first answer the following question: 

What is a customer win-back strategy? 

A customer win-back strategy is a set of tactics and initiatives a business uses to reach out to and win back customers who have stopped using their products and services. This marketing strategy involves understanding why the customers left, addressing their concerns or dissatisfaction, and offering incentives and improvements to persuade them to come back and continue doing business with the company. The goal is to bring back your lost customers and restore their trust and loyalty. 

You can also use strategy to get back in touch with first-time customers who haven’t made a second purchase, prospective buyers who abandoned their shopping carts, and even bring back old customers who have previously opted out of their paid subscriptions. 

Which lost customers are worth winning back?

  • Those who buy often and in large quantities. If a customer used to place good orders but then disappeared, reach out to them and try to win them back. Reconnecting with these customers and winning them back is valuable due to their high contribution. 
  • Those customers who refer your business to their friends, family members, colleagues, and people they know are worth winning back. Even if they make inexpensive purchases, they still matter because they promote you everywhere. People tend to trust the opinions of people they know and respect. Positive reviews, comments, and even simple recommendations to friends, family members, and neighbors can ultimately bring you more profit. Compared to other marketing channels, customer referrals might result in a 30% greater conversion rate. These customers can help you increase customer loyalty and spread the word about your business.  
  • Win back the customer if the cost of their reacquisition is advantageous for you. At the same time, consider the Customer Lifetime Value (CLV). This metric shows how much money a particular customer has generated for your business throughout their time as a customer. You can make a forecast of the entire potential profit that can be obtained from a customer throughout the entire relationship cycle.  

Suggested reading: 5 Customer Loyalty Metrics to Focus On in 2023

Which lost customers are not worth pursuing for business?

  • As we’ve mentioned before, trying to win back all of the customers is most definitely a bad idea. It will cost you time and money. Don’t bring back customers whose return cost would exceed the profit. Winning back a former customer can be achieved through various paid methods such as offering discounts, providing extra bonuses, giving away free products, and including additional services, etc. There are free methods, too. For example, you can call your customers, send newsletters, and message them on messengers and popular social media networks. But these methods won’t guarantee 100% success. Imagine wasting time and money only to find out that your customer won't come back. 
  • The customer is not always right. People are different, and not all customers are equal. Some may exhibit toxic behavior; others can be unreasonable and rude. Some are racially and sexually abusive, while some merely seek attention. You have every right to say no to these customers. These customers always complain, leave bad and negative reviews, and argue with managers, all while making small purchases. You should cut off relations if their regular behavior involves bullying or demeaning your employees. Showing your team that you value them is incredibly important. Stand up for your employees.
  • Unreasonable customers aren’t worth your time, money, and effort, too. This is a special type of customer who wants it all at once while paying less. These customers want discounts, free bonuses, and even home delivery. All for free. Moreover, having paid less than others, they are still dissatisfied. They can also request a refund of an item they’ve purposely used and damaged. Say no to these customers but always be respectful. Your company should have a strategy for dealing with such customers. Distinguishing an unreasonable customer from a freebie seeker is easy – just observe the nature of their requests. Then you need to integrate communication tips for dealing with such individuals into the standard customer interaction protocol. 

Why Do Customers Leave?

Before thinking about how to win back a former customer, it’s important to understand the reasons for their departure in the first place. 

1. Poor customer service

According to statistics, 96% of customers said they would switch to a competitor due to weak customer service. Poor customer service is the top reason why customers leave. That’s why customer service is so important. Weak customer service includes every way a customer interacts with a company, starting from the first contact to the help they receive after making a purchase. It can be a lengthy order processing, delayed repairs, and employee rudeness. For example, your manager proved to be incompetent and failed to provide proper information about your product. Lacking knowledge about its features and benefits. The customer pledged never to buy from your online store again. It may sound horrible, but you can still win your customers back. You just need to know how to do it right. 

2. Unreasonable pricing

One of the main reasons why customers leave is price. For them, price tags are almost the primary consideration when making a decision. Most people know how much they want to spend. If your products cost more, fewer people will be interested in buying them. Although it might be tempting to immediately lower the prices or offer discounts to match or beat the competition, this isn’t always the best strategy. Before deciding on price and promotions, it’s critical to carry out in-depth market research. If you find out that a competitor is offering lower prices, it’s wise to understand the reasons behind their pricing strategy. Are they running a special promotion? Is this a new competitor trying to attract new customers? Or they might be lowering their prices because their products and services may not be the best. Having this knowledge can help you make a better decision. Meanwhile, companies often over-rely on price adjustments to address issues caused by weak customer service or outdated products. 

3. Poor-quality products or services

Although your customers may find your pricing appealing they may not like your products or services. And if they are not satisfied with your offerings, they’re more likely to navigate away from your store. Providing discounts and reducing prices may retain them temporarily but it’s not a long-term solution. Quality matters. As time goes on, your product or service might no longer meet your customers’ expectations. The competition is high nowadays and finding a better alternative won’t be an issue for your customer. Sometimes customers are willing to pay more if the products are of better quality. How many times have you heard from friends to buy an iPhone? I’ve heard enough to buy one for myself.  

4. Few incentives to come back

While attracting customers initially is crucial, the journey doesn't end with the first purchase. If there aren’t enough incentives, customers may look elsewhere, which may ultimately result in their leaving. When customers don't see incentives, they may feel underappreciated and thus are more likely to explore competitors' offerings. This lack of incentives also signifies a missed chance for businesses to differentiate themselves in a crowded market. Furthermore, the lack of incentives or exclusive offers may give the impression that a company is less responsive to consumer demands and less dynamic, which may turn off potential buyers.

5. Contact issues

When your customers have questions about your products or have problems how can they get in touch with you? Contact issues often lead to customer loss. Customers may become frustrated and dissatisfied when they have trouble contacting you due to poor customer service, slow response times, or unclear communication channels. Lack of accessibility may leave customers feeling ignored and disrespected prompting them to seek alternatives with more responsive and customer-centric communication. That’s why it’s essential to answer the following questions: Can they contact you by phone? Email? Live Chat, Social Media (Instagram, Facebook, WhatsApp, etc). In today’s competitive market, efficient and reliable contact mechanisms are crucial for customer loyalty and retention.

5 Ways to Win Back Lost Customers

According to a Client WinBack Benchmark Study report, win-back campaigns result in 26% of clients returning and staying longer, doubling your customer lifetime value (CLV). Furthermore, compared to the 5-20% possibility of selling to a new customer, you have a 60–70% chance of success when selling to inactive customers again.

Today, it is widely recognized that retaining and winning back customers is crucial for any business. Retaining customers is 5 times cheaper than acquiring a new one. So, if your business is losing customers, you can still re-engage with your lost customers. Here are 5 effective strategies to win them back:

1. Provide great customer service

Before creating a plan to recapture lost customers, you need to understand why they left. We have already discussed that one of the main reasons why customers leave is customer service.

According to 60% of business leaders proving excellent customer service enhances customer retention. When customers have a positive experience with customer service, 94% of them are more likely to make another purchase. 

Therefore, it makes sense to deliver excellent customer service. Even if you offer an amazing product or service, customers might leave if they don’t feel like they’re getting excellent customer service. According to Salesforce Research, 88% of customers state that the experience a company offers is just as crucial as its products and services. 

Customer service complaints often result in clients leaving but you must remember that there’s always room for improvement. Make the most of these complaints. Use them as a spur to improve your offerings and deal with the root causes. 

Some benefits of negative feedback include:

  • You can deter a dissatisfied customer from churning
  • Identify the problems your customers are facing
  • Enhance customer engagement with your service team for a stronger, more personal brand relationship
  • Cultivate a positive brand image

After you’ve made changes, get in touch with the customers you lost and let them know what you’ve done to address their issues. When these customers decide to give your business another chance, it’s critical to deliver on your promises. This way, you can regain their trust and demonstrate that customer satisfaction is your top priority. 

For more insights on this topic, check our related article: 5 Key Pillars of Customer Service

2. Build Customer Loyalty

If customers have left, offer them a compelling incentive or an exclusive offer for a comeback. This not only helps rekindle their interest but also shows your commitment to their satisfaction. But how do you do it?

Reward your customers by implementing loyalty programs. As a marketing tactic, a loyalty program provides rewards to customers who make regular purchases from you or spend a certain amount of money. Discounts, free merchandise, free delivery, coupons, points, or other advantages that entice customers to return and make bigger purchases can be used as incentives. You can create loyalty programs as basic as you like. A well-designed loyalty program increases customer loyalty and retention. Thanks to loyalty programs, you can collect valuable customer insights. By doing so, you can refine, as well as adjust, your offerings and strategies accordingly. What’s more, these programs can turn first-time visitors and inactive customers into repeat customers. Exclusive rewards promote upselling, cross-selling, and product exploration. Finally, loyalty programs reduce customer churn and attrition. 

The top-performing loyalty programs increase annual revenue from customers by 15-25%. What's more, more than 83% of customers claim that being part of a loyalty program affects their choice to make another purchase from a company, while 84% of customers are likely to stick with a brand that offers a loyalty program. The reason for this loyalty is significant.

Start using loyalty programs to win back customers. A well-designed loyalty program is a great win-back strategy. It can encourage your customers to continue buying from you, potentially leading to increased customer loyalty, more frequent purchases, higher overall spending, and improved brand awareness. 

Customer retention is a primary goal for ecommerce businesses rather than acquisition or conversion. To effectively win back customers for your Shopify store, consider integrating Growave into your online store. Growave offers points-based loyalty programs, referral programs, and tiered loyalty programs that engage customers in your Shopify store. 

Growave's admin panel

Here’s an example of a successful loyalty program from STARBUCKS. 

Source:

Suggested reading: 12 Examples of the Most Creative Loyalty Programs

3. Present Alternatives, Upgrades, and New Offerings

Offering alternatives, upgrades or new products is an effective win-back strategy. You can successfully re-engage your customers and show that you’re dedicated to changing to meet their demands. By presenting these options you show that you care about your customers and are dedicated to providing high-quality and innovative solutions. This strategy not only helps you regain the trust of your former customers who may have had a bad experience in the past, but it also establishes you as a competitive and progressive player in the industry. Furthermore, satisfied customers may become brand ambassadors if they have a great experience with new or improved offerings. This might result in a return of customer loyalty. This tactic highlights a business’s commitment to customer-focused service and continuous improvement. 

For instance, if you notice that an email subscriber isn’t engaging anymore, it’s a good idea to recommend less demanding ways for them to stay in touch. Consider switching to a more concise email format, such as a weekly summary, asking them to follow your Facebook, Instagram pages, or blog so they can receive regular updates, giving them a free eBook as a thank you, or encouraging them to get in touch with you on social media. This approach allows your customers an opportunity to choose how they want to receive content. 

For a more engaging approach, you can create a community around your brand. This gives your customers a platform to engage not only with your content but also with each other. It fosters a sense of belonging and active participation, which can rekindle their interest and make them feel more connected to your brand or message. 

Source:

The Lego community serves as a perfect example of effective brand engagement. For seven decades, the Danish toy manufacturer has experienced unparalleled success. Through initiatives like Lego Ideas, Lego actively incorporates its community in the creation of new products. This platform allows fans to vote and propose new ideas. Participating in the creative process boosts customer loyalty and emotional investment. What’s more, Lego always makes sure to find existing communities. They gather feedback from these communities, share knowledge among organizers, and support local and branded events. 

4. Seek and Use Feedback 

Once you understand why customers leave, you can develop the most effective win-back strategy. Asking them why is the simplest way to do it. Collect customer feedback to identify the main reasons why they have discontinued using your product. By using feedback, you can gather real insights about your customers that can help you win them back. While gathering feedback may seem like a lot of work, it is worthwhile due to the benefits it brings. 

What are the benefits of gathering feedback? 

Getting feedback is the best way and the most direct way of getting insights from people who are most familiar with the advantages and disadvantages of your products and services. They can share what they like about your product, point out areas for improvement and most importantly, surveys can reveal the real reasons why some customers stopped using your products or services. This way you show your customers that you value their opinions and care about them. 

85% of small and medium-sized businesses report that customer feedback has been helpful for their operations. 91% of people think businesses should focus on their customers' ideas for innovation, while only 31% believe hiring experts is the way to innovate. 

That’s why Lego is actively incorporating its community in new product creation. It reflects a modern, customer-centric approach to innovation. This strategy builds a deeper connection between the brand and its customers. This collaborative process boosts customer satisfaction, increases customer retention, and distinguishes the company from its competitors. Customers are the reasons why people start businesses. They should be the central focus of your company. By understanding and responding to what customers truly want, you can create products that provide value, ensuring long-term success. 

Asking the right question to the right customer can help you in obtaining effective feedback. Asking the following questions to your lapsed or inactive customers will be helpful. But first, who are lapsed or inactive customers

Lapsed customers, also known as inactive customers are people who have previously purchased goods or services from your business but have not made any purchases for an extended period of time. 

So, here are a few questions that you might want to ask your lapsed customers:

Customer survey questions

Pro tips: 

  • Provide a direct link to a survey with an obvious call to action to make it simple for people to submit feedback.
  • Make your survey brief and straightforward
  • Always leave an empty field so that participants can add any special information not addressed elsewhere
  • Give away a discount or other prize as a reward for finishing the survey. This will give them the motivation to finish the survey
  • Don’t ask for feedback too often 

Your customers' feedback helps identify strategies to keep them coming back for more. This will also help you reduce your churn rate. 

By knowing why customers leave, you can use these insights to improve their experience, leading to increased sales. 

5. Make it Personal

Personalization matters. Customers now expect businesses to be aware of their specific wants and preferences in the post-pandemic era. Since most businesses now also sell online, the internet provides an opportunity to personalize their experience. Personalization implies being aware of your customers’ requirements and preferences, and problem-solving needs. That’s why collecting feedback is so important for your business. You need to first understand your customers. Only then can you personalize their experience. This will help you win back your lost customers.  

After having a personalized shopping experience, 60% of customers say they will return. When marketers use personalization in their campaigns, 89% of them see a positive ROI. 

By dedicating time and effort to demonstrate personal care for your customers, you increase the chances that they will return the favor by investing their time and effort in your business. It's a two-sided street, where mutual investment fosters a stronger relationship. 

By giving people the possibility to sign up and make a personalized account. By asking the right questions, using customers’ names in emails and social media posts, by knowing their birthdays, and offering them gifts or discounts, you can get enough data to create content and show offers you know they’ll love, every time they visit your store. This will give them an incentive to return. 

Personalizing email content is one of the simplest methods to establish credibility with your target audience. This approach enables you to connect with your customers on a more personal level, making it one of the most effective win-back strategies employed by many marketers.

Here’s a good win-back email by ASOS:

Source:  

Everything about this email campaign is perfect. The opening line “It's not you, so… it must be us?" is an effective win-back strategy. It shows the brand’s willingness to acknowledge and take responsibility for any shortcomings, which can be a powerful tool in re-engaging lapsed or inactive customers. ASOS humanizes the company by utilizing humor and a well-known phrase, which makes it more approachable and relatable. This message can leave a good impression and perhaps inspire old customers to reevaluate their former relationship with the company and start using its products or services again. Offering a 20% discount with a promo code as an incentive for feedback is the icing on the cake. This is how you encourage re-engagement while acknowledging a potential mistake on your part. 

Conclusion

Although winning back takes time and preparation, the rewards are well worth the effort. You can enjoy increased revenue, as more people talk about your brand, spreading positive word-of-mouth. Additionally, winning back customers fosters a sense of loyalty, contributing to a stronger customer base. This, in turn, enhances your brand's reputation and can lead to sustained growth in the long run. Even if you cannot persuade every customer to return, successfully re-engaging with half of them can be a significant victory. Employ the strategies outlined in our article to regain lost customers with the same precision and determination that Iron Man used the gauntlet to revive half of humanity and the lost heroes.

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