The Single Easiest Way to Grow
Winning Back Lost Customers
June | 2009
The Single Easiest Way to Grow I Winning Back Lost Customers
Companies often fail to tap into and benefit from the data they possess. Possibly
the single most ignored information pool is that about a company’s ex-
customers. Such data, if used properly, could lead to the acquisition of a
significant number of customers and the generation of significant revenues.
Companies typically lose 50% of their customers every 5 years
Companies have a 5 – 20% chance of turning a prospect into a customer
Companies have a 20 – 40% chance of winning back an ex-customer
The facts speak for themselves. What’s baffling is that most companies do not
actively address these facts. Sure, many companies have some formal type of
retention effort in place, trying to actively reduce churn, but how many actively
try to win back customers? It is a company few and far between that has
employees dedicated solely to winning back customers. In light of the above
facts, one wonders why.
It’s relatively easy, and, relatively cost-effective. Whereas acquiring new
customers involves significant media spend to get their attention, winning back
lost customers could be as easy and cost-effective as making a few phone calls.
Further (depending on the sector in question), new customers need to be on-
boarded, with numerous additional interactions to sign contracts, inform them
about products and policies, etc. Lost customers that return, on the other hand,
can usually be brought up to speed in a much quicker manner due to their
familiarity with the company and its offerings and methods.
Winning back customers is essentially an art that needs to be fine-tuned through
a trial and error effort. At play are three factors that need to be tested:
Audience – Not all customers can be won back, or even should want to be
won back. In defining the customer segment to tackle through win back efforts,
the lost customer’s information completeness (their contact information, their
product / service preferences, their reason for leaving in the past) and past /
potential profitability need to be considered.
Those customers who cost more to service than the revenues they generate
should automatically be excluded from the win back effort, as should those
customers you have little to no information about. Logic dictates the more
information the better, as when the pitch is made it can be tailored to that
specific lost customer’s preferences and reasons for leaving. Trial and error
efforts will ultimately determine what information is a must have in trying to win
back customers, with the win back ratio (% of customers pitched to who accept
the offer) then deciding the specific segment(s) of customers to focus on.
Contact Method – Customers will have a different reaction and acceptance
rate based on the channel used to make the win back pitch. Traditionally four
methods have been used to try to woo lost customers – face-to-face, phone,
mail, and email. In a given company’s specific situation, lack of customer contact
information may dictate the method used. Depending on the pitch itself and the
audience, different success rates will be realized through different channels. It is
important to test the numerous variations possible to ensure the most effective
(cost and win back ratio-wise) method is used before ramping up the win back
effort from a pilot to a full-scale engagement.
Those companies lacking information about their lost customers must
immediately begin addressing this fact. With no way to get in touch with the lost
customer, a win back effort is almost impossible to conduct. In sectors like telco,
finance, and travel, lost customer information is traditionally on file (or should be
captured when the customer is churning – at a minimum, contact info like
mobile phone number and email address). Sectors like retail and energy rely on
loyalty programs to not only capture customer information but to also track their
Offer – Often the most difficult part of the win back effort to design and get
right, the offer plays possibly the biggest role in determining your success rate. It
needs to both address the reason why the customer left in the first place as well
as offer them something not traditionally given to any average existing customer.
For example, if the reason the customer churned was due to poor customer
service, the pitch could possibly include some type of apology as well as the
offering of a highly trained and dedicated customer service representative. If it
was due to price, on the other hand, it could include some type of discount for a
given amount of time.
When the churn reason is unknown, analyzing the customer’s product / service
usage patterns is one way to customize the offer. For example, a customer who
churned from a bank who conducted money transfers at least 4 times a month
can be won back with an offer to give up to 5 free money transfers a month for a
The more fine-tuned the offer is to the needs of the lost customer the higher
likelihood he or she will accept it. Again, a trial and error effort will go a long
ways to determining the right offer to each customer segment.
It is worth noting here that a lost customer should be viewed as foregone
revenues – any type of profit generated from such a customer is acceptable. Not
to say that the offer should be such that the company barely breaks even with
the won back customer, but giving back generously to lost customers will
ultimately be worth it.
Other factors to consider include timing and frequency. Depending on how long
it has been since a customer churned, different results may be realized in the win
back effort. Based on the trials, the ideal length of time following the churn
event to reach out to the customer with a win back offer should be identified
(i.e. 3 months after churning a win back offer should be presented to the
customer). In regards to frequency, the customer may reject the initial offer – a
follow up a few months later should be considered. However, there’s no sense in
beating a dead horse, and thus, if a customer rejects two to three offers to
return, he or she should be considered as “unwinnable,” with no further effort
spent pursuing the win back.
Finally, it is critical to incorporate win back efforts into a “business as usual”
model, with targets set and premiums offered to the various agents who will
contact the lost customers. Just as there are targets around acquisition and
retention, so should there be around win back efforts. The more the activities
are considered and treated like a part of everyday business, the more successful
the efforts will be.
Using existing data about lost customers, a company can quickly increase their
revenues as well as their overall customer base. Marketing and Sales need to
work hand-in-hand to tackle this worthwhile effort, as both have an important
view on the issue – Marketing the expert on what the customer would like and
on conducting trials, Sales on how to pitch it. Such an effort can be designed and
rolled into a test phase within weeks, and can pay for itself within days.
About Forte Consultancy Group
Forte Consultancy Group delivers fact-based solutions, balancing short and long term
impact as well as benefits for stakeholders. Forte Consultancy Group provides a variety
of service offerings for numerous sectors, approached in three general phases -
intelligence, design, and implementation.
For more information, please contact
Forte Consultancy Group | Istanbul Office