Client WinBack - Benchmark Study Pre-Release Summary

This summary answers three core questions. 

1. What percentage of past clients typically return?
2. What's the ROI for winning back clients?
3. What are best practices for winning back past clients?

WHAT PERCENTAGE OF PAST CLIENTS TYPICALLY RETURN?

The study reported that on average, 26% of past clients returned as the result of winback campaigns. 

Most study participants reacquired between 20% and 35% of their past clients and a study performed by Marketing Metrics showed similar results. They reported the probability of winning back a past customer at 20% - 40%.

WHAT’S THE VALUE OF A RETURNING CLIENT?

Study participants reported that after a client was reacquired their lifetime value doubled or more. In other words, returning clients spent as much or more the second time around as they did during their “first lifetime.”

Here’s what the study found:

* 49% of returning clients generated about the same revenue after they were won back as they did during their "first lifetime"

* 4% generated less and

* 47% actually generated more revenue the second time around.

A winback study featured in the Harvard Business Review (March 2016) also reported customer lifetime value more than doubling:

"Second-time customers in the study had an average lifetime value of $1,410, versus just $1,262 during their initial run with the service—highlighting an important upside of win-back strategies."

WHAT DID IT COST TO WIN CLIENTS BACK?

Winback campaigns fell into three cost categories.

1 - No Hard Costs

Over half of the study participants (53%) reported no hard costs as marketing and sales consisted of email and phone outreach performed by existing staff.

2 – Low Hard Costs (Under $5K)

About a third employed low cost outreach vehicles such as direct mail and the campaign costs for this group totaled less than $5K.

3 – High Hard Costs (Over $5K)

The remaining 13% had significant hard costs which came in the form of additional staff, meals, entertainment and travel.

HOW MUCH REVENUE DID THE AVERAGE CAMPAIGN GENERATE?

The average winback campaign generated $242,700 in the first year.

Reacquired clients stayed for an average of two years which put total campaign revenues at $485,400.

Note: This study focused on winback for SMBs, i.e. companies with two hundred or fewer employees.

WHAT’S THE ROI OF A WINBACK CAMPAIGN?

The typical campaign generated high ROI due to the combination of low campaign costs and significant revenue generation.

Companies with high campaign costs (over $5K) averaged a 32X ROI and those with low costs (under $5K) averaged a 182X ROI.

Companies without hard costs had an extremely high ROI. It can’t be quantified because the investment side of the ROI equation is zero, but clearly it’s much higher than the 182X ROI reported by the “Low Cost” group.

Note: Even though some participants reported “No Hard Costs” there was an opportunity cost, e.g. staff could’ve been selling to new prospects instead of past clients. Also, ROI was calculated on first year sales only.

HOW DID WINBACK RANK AGAINST OTHER MARKETING TACTICS?

Over 71% of study participants said that winback generated the best ROI of any marketing tactic they’d implemented.

Strategic alliances came in second at 5% with podcasting and upselling each garnering under 2% of the votes.

Note: Most participants had implemented winback campaigns but may not have used the other tactics, so the data could be skewed in favor of winback.

BEST PRACTICES FOR WINNING BACK CLIENTS

1 - RESEARCH

Study participants researched their past clients to learn why they left and what was required to win them back. This was done with input from reps, CSMs and everyone else who had client contact.

2 - RE-ENGAGEMENT

Insights from the research were used to develop re-engagement messaging designed to bring past clients back to the table.

3 - REACTIVATION

This is where the selling started. For most participants this was done by email and phone but in-person visits, direct mail and LinkedIn were also used.

4 - RETENTION

Insights from the winback campaign, including direct feedback from clients around why they left and returned, were used to strengthen retention programs. These insights were cited by many as being extremely important in their battle to reduce churn.

INSIGHTS

Three of the exceptional sales / marketing leaders interviewed for this study offered insights into these core winback questions.

Why does winback work?

How do we fully monetize client relationships?

How do we optimize winback for different types of clients?

Andrew Loos - Andrew offers insights into why winback works in terms of human psychology. He’s an owner and Chief Strategy Officer at Attack! Marketing whose client roster includes Nestle, LYFT and Nike. Andrew is also the author of John Wiley & Sons, “Applied Marketing” and consults for brands and agencies around the US and Canada.

Jon LoDuca - Jon brings a unique perspective to winback and its role in fully monetizing client relationships. For two decades Jon has helped optimize growth for 400 of the top 1% income-earning entrepreneurs.

Bryan Mattimore - Bryan gives us a window into how client reactivation works in the gig economy. He’s one of America's top experts in applied creativity and his innovation projects have led to over $3 billion in new sales.

HUMAN PSYCHOLOGY AND WINBACK

“I often draw a parallel between a business relationship and that of a personal relationship, I honestly don't think they’re as different as people see them.” Andrew Loos, Owner at Attack! Marketing

As humans we’re naturally attracted to the new, and often a client is lost for no other reason than they’d like to experience a new vendor. At the other end of the spectrum, a client could leave because of a negative experience.

In both cases the key to winning them back is the same ... wait a few months and then reach out. By simply letting time pass, human psychology steps in and helps us in two ways:

1. The new vendor loses their aura of “new and better.” 

2. With the passage of time negative feelings soften, and oftentimes even heal.

There’s another big benefit to giving a lost client space. They’ll see if the new vendor can actually deliver the goods.

Andrew Loos checks in after 4 to 6 months because for his business, that gives the client enough time to see if they are truly happy with the new vendor.

“A lot of times, this benefits us greatly. We’ll discover after checking that past clients are, in fact, not satisfied with their new partner and now see the value we brought to the table in much better focus.”

Andrew went on to say ...

“We also found that most past clients aren’t necessarily going to pick up the phone, call us and say they want to come back. We have to check in with them, if we hadn’t, that particular client would’ve been lost.”

We heard this from other study participants and human psychology is also at play here. For example, clients who left just to try a new vendor often felt guilty about leaving and were uncomfortable about reconnecting, even if they wanted to return.

To win back a past client it's our job to reach out, make them feel that all is okay, and let them know that we’d love to welcome them back.

FULLY MONETIZING CLIENT RELATIONSHIPS

“If you want to grow 10% you actually need to do 14% because while you're busy growing, you’re going to lose 4% out the back door.” Jon LoDuca, Founder at PlaybookBuilder

These days companies need to run really hard just to generate net new business. Why? Because they not only need to find new clients, they also have to beat the attrition rate.

Combating the problem starts with fully monetizing existing client relationships. That means more than upselling and cross-selling. You need to reduce attrition by creating truly great customer experiences and you also need processes to win past clients back.

But many people believe that when a client leaves, they’re gone for good and there's no point in trying to get them back. But the fact of the matter is that many will return if approached well and that alone will take you a big step closer to full client monetization.

CLIENT REACTIVATION IN THE GIG ECONOMY

"Gig oriented firms reactivate clients while companies with longer term relationships win clients back, and that difference impacts how you approach past clients." Bryan Mattimore Co-Founder, Growth Engine the Innovation Agency

The way to leverage existing client relationships in the gig economy is similar to the way that you do it for companies that have ongoing client relationships. They both require strategies for re-engaging and reactivating past clients, but there are also significant differences.

For businesses with ongoing relationships the name of the game is to win back those who went to a competitor. In the gig economy, the client wasn’t lost, the job was simply completed. So then one strategy to reacquire past clients is to offer a new product or service.

This means you need to create especially powerful re-engagement messaging because you not only need to sell a brand-new service, you also need to demonstrate that it's in your wheelhouse.

Businesses with ongoing client relationships don’t have these issues because they’re selling the same service again and again.

Having an existing relationship makes account access easier and since you’ve seen inside these companies you can usually find viable opportunities to sell other services. But it’s also challenging because clients tend to think of you for just one thing.

Study participants told us that in the gig economy, successful client reacquisition campaigns depend heavily on very personalized and highly relevant messaging.

The messaging was often centered around a specific client pain point and delivered insights into solving the issue that, like breadcrumbs, led back to the new service being offered.

The messaging also included a high level of personalization and Bryan Mattimore took it one step further, he made the messaging hyper-relevant by going beyond the general needs of the company.

“The CEO, the CMO, the brand manager and so on, they all have different responsibilities within the firm and your message needs to be aligned with the needs and interests of their title and areas of responsibility.”

Creating highly customized messaging requires considerable time and effort, but it delivers results.

Bryan sent a mailing out to 40 past clients just before our interview and in very short order he received 16 responses and booked six meetings.

Note: Gig and longer-term businesses leverage client relationships differently in a number of other ways and future articles will address this topic in depth.

Is WinBack For You?

What kind of sales and ROI could winback deliver for your business?

WinBack ROI / Sales Calculator

This calculator simulates the potential sales and ROI that you could realize with a well-executed winback program. The calculator is based on key factors affecting winback sales and ROI that were identified and validated in the study.

ABOUT THE STUDY

The data and insights presented in this study are based on survey results and interviews with founders, CEOs and heads of marketing / sales, most of whom had implemented successful winback / reactivation campaigns.

The study focused on consulting, SaaS, accounting, sales, finance, publishing, media and training companies with two hundred or fewer employees.

The author of the study is Dan Pfister, the founder of Strategic WinBack Services (strategicwinback.com), a company that specializes in winback campaign creation.