How to create an effective win-back strategy

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Tactics to help you streamline and grow your business.

At the forefront of any successful business is customer retention. 

After all, without customers (especially repeat customers) what keeps a business afloat? Of course, new customer acquisition enables you to scale, but it is 5 to 25 times more expensive to find new customers than it is to retain existing ones. Furthermore, according to Harvard Business Review, increasing customer retention rates by 5% increases profits by 25% to 95% on average.

Customer retention doesn’t just happen — it takes data and dedication. Whether it’s related to poor customer experience management, a lack of product market fit, overstauration, or an off-putting price point — there are numerous reasons your customers may not cycle through and refill your purchase funnel. 

What is a win-back strategy? 

A customer win-back strategy engages lapsed customers by offering incentives, rewards, or offers to encourage new and repeat purchases. This is used to re-engage first time customers who haven’t purchased again, potential customers who showed interest or abandoned cart, and even win back those who have canceled subscriptions or services in the past. 

A successful win-back strategy addresses your customers’ pain points by offering up potential solutions through a personalized, targeted experience, offer, or product. In order to get it right, you need to analyze and understand why your customers didn’t convert or come back in the first place, then test tactics to win them back and retain them effectively. 

In this article, we’ll explore three specific strategies you can implement to build a loyal customer base.

Build brand loyalty.

Loyalty and rewards programs are a great way to retain customers. Not only does the signup process give you access to customers on owned channels like email and SMS (plus push notifications if you have an app), it also helps build relationships and establish loyalty with them.

According to data compiled in article by Forbes, 15% of consumers are more likely to buy from a brand if they are part of a loyalty program and 79% of consumers say loyalty programs make them more likely to continue doing business with a brand. Furthermore, adding a loyalty program to your ecommerce platform can increase the average order value by 319%, according to Incentive Solutions.

There is a lot of power in marketing “members-only” exclusive offerings or product drops to your dedicated subscribers or program members. Discounts, early access, product drops, and free merchandise get customers on your site and interested in buying, even if they might not have been before. Swarovski offers access to exclusive products to their Swarovski Crystal Club. Along with free shipping, free product repairs and exclusive events, members have access to the exclusive SCS Collection of items. These items along with the other lucrative offerings entice more shoppers to sign up for the loyalty programs and become repeat customers. 

Offers like free shipping or point accumulation for members will drive many current or interested customers to join a free rewards program. With little to no risk involved (as opposed to signing up for a store credit card, for example), the average customer has no reason not to share their email address, phone number, or download an app to cash in on the benefits.

For example, DSW (Designer Shoe Warehouse) invites customers to join their DSW VIP rewards program. The DSW VIP program provides:

  • Free Shipping on All Online Orders
  • 5% Back in Rewards on Every Purchase
  • 20% Off Your First Purchase After Signing Up
  • Exclusive Member Discounts via Email and SMS
  • $5 Birthday Discount
  • Points for Shoe Donation
  • First Dibs and Exclusive Access Promotions and Events
  • Exclusive Free Gift with Purchase Campaigns

Beauty retailer Sephora has seen enormous success with its Beauty Insider loyalty program. Like most retail loyalty programs, the Sephora Beauty Insider Program allows shoppers to collect points that can then be redeemed toward future purchases or rewards. 

However, Sephora sets its program apart with a tier program that rewards its highest spending, most loyal customers with even more benefits and incentives to continue shopping. Rogue tier shoppers spend at least $1,000 per calendar year in the store and in turn, they earn the most lucrative perks. For example, they receive 4x the amount of points during multiplier events (as compared to 2x and 3x for other tiers), free shipping on all orders with no purchase minimum, and 20% seasonal savings (vs 10-15% in other tiers.) 

Sephora's beauty insider benefits.

Loyalty programs like DSW VIP and Sephora Beauty Insider can be a huge asset in increasing customer lifetime value (LTV) by helping your brand acquire and retain more customers. An effective loyalty program encourages your customers to spend more and buy more regularly to maximize perks gained and leverage benefits. 

According to research from Accenture Interactive, members of customer loyalty programs generate 12-18% more revenue for retailers than customers who are not members. These programs also lead to repeat purchases and the creation of overall brand loyalty. 81% of customers also agreed that a loyalty program makes them more likely to continue doing business with that brand. Focusing on driving membership, especially when they are free to join, can be incredibly beneficial in driving your overall revenue and customer lifetime value.

Offer incentives via email marketing.

Email remains one of the most cost-effective means of outreach and engagement for brands, driving approximately 20-30% of revenue for ecommerce businesses. Email driven win-back campaigns can be targeted to all kinds of audience segments including lapsed customers (those who have made purchases in the past but haven’t recently) or those who have signed up for your newsletter but never completed a purchase.

To effectively win back lapsed or inactive customers, emails need to provide value and pique a recipient’s interest. Subject lines are especially important — let them know what they can find inside to get them to open up your message and take a look. Things like coupons, discounts, free shipping, and exclusive sales are great ways to bring customers back to make a purchase.

Refer-A-Friend style email campaigns are another highly effective retention and win-back strategy. Your most loyal customers understand the value of your products or services and are likely to share their experience with those in their lives who may find the same offerings valuable. 

Emailing current customers to ask them to refer their friends in return for rewards, discounts, or benefits can make your brand top of mind for past buyers who had been repeat customers or even casual onlookers who never converted at all. For example, Rakuten offers $30 bonuses for users who get a friend to become active users and shoe brand Rothy’s offers at least $20 to shoppers and their referrals when they make their first purchase. 

Reach your audience with SMS marketing.

In tandem with email or stand-alone, SMS marketing has become a staple in ecommerce marketing — and for good reason. According to SMS marketing expert Eric Jung, clients can see a 20-25% click-through rate (CTR) via SMS as compared to only about 2-3% from email. SMS also has a 98% open rate compared to only about 20-30% in email. 

SMS campaigns can help you target customers with lucrative exclusive offers or start a  conversation to garner insightful feedback on how your customers (or lapsed customers) are feeling and what is keeping them from purchasing again. 

When trying to win back a customer, the more personalized the experience, the better. Geo-targeting via your SMS provider is a great feature for sharing location-specific information, deals, updates, and more to get their foot back in the door.

See how Hawke Media helped sustainable clothing brand Banks Journal reach an 1,804% ROI with SMS Marketing here.

Customer retention is necessary for the survival of any business. There are numerous reasons you may lose potential or past customers — and it may or may not have anything to do with your products  or customer service. But no matter the reason they leave, there are numerous tactics you can employ to win back those customers including those listed above. Every business (and every customer for that matter) is different, but finding what works for your audience is essential for your brand’s future growth.