Sending winback campaigns can become a very profitable activity.
Winbacks are a set of messages that try to get a lapsed customer to come back and buy again. They are the "We missed you" emails you see now and then.
Typically sent over email or SMS, the transaction cost to send these campaigns are minimal, so low as to not worry about.
The real cost comes from what incentive you offer.
- Offer nothing, just a bit of content and they are effectively free.
- Offer a discount like 10%, now your profit is reduced.
- Offer a freebie item, you have to pay the cost.
Many stores will cheap out here trying to save everything they can but that might be a mistake. Spending a little bit of money might make you much more.
Winbacks should be considered more of a customer acquisition strategy. When sent to customers who haven't ordered in a long time, these customers are gone unless you do something about it. So you're effectively trying to acquire them again.
Customer reacquisition if you will.
That means you should look at your customer acquisition costs and budget to determine how much you could spend for winbacks. Say a new customer can be acquired by spending $10, then you should budget $10 to winback a customer.
(There's a bunch of formulas to figure out your CAC, CTR, and various conversion rates for acquisition. Just reuse them for winbacks)
$10 to winback a customer might mean you give a discount or you can give them a freebie with a cost of $10 or any other incentive. You can also use a discount ladder strategy (1st offer is for 0% off, 2nd is 5%, 3rd is 10%, etc).
You have lots of options you can experiment with.
It doesn't matter in the grand scheme if you acquire a new customer for $10 or you winback a customer for $10, assuming they order the same. In reality it's probably better to reacquire a previous customer (e.g. better repeat buying behavior, easier to convince to review, etc).
The beauty of winbacks is you're not limited by the platforms. You already know who your customers are and you can find lapsed customers easily (like by using my app), so it's just a matter of building the campaign and sending it.
Eric Davis
Learn what your customers are actually doing instead of just guessing
One of the best ways to build a sustainable business starts by getting your customers to come back. Mastering that simple process can be difficult, but builds a lifelong business.
Repeat Customer Insights can help you understand your customer's behavior. With its collection of behavior reports, you can see what they're actually doing instead of guessing and having your efforts fall flat.