There's gold buried in your lost customers.
The average customer winback campaign generates $485K. That's for SMBs, large organization typically generate millions.
The average customer winback campaign generates $485,000 for an SMB (small to medium size business). Larger organizations can generate millions.
Why does winback generate so much revenue?
You’ve got this amazing sales situation with:
1) a large number of sales opportunities,
2) a very high win rate which means a lot of those sales opportunities turn into returning customers
3) and those returning customers generate so much revenue that their lifetime value more than doubles.
Let’s take a closer look at each of these points.
So Many Sales Opportunities
Why are there so many sales opportunities with customer winback?
The average company loses about half their customers within 3-4 years.
That’s a lot of lost customers and virtually all of them are sales opportunities.
High Win Rate
So we have all these sales opportunities and what’s really amazing is that most of them are highly qualified prospects.
That’s because they had a need for your product in the past and they probably still have that need, or they’ll have it again in the future.
That means it’s relatively easy to sell to them and that makes the win rate really high.
It’s actually 5X higher than when you sell to new customers.
So how does this translate into the win rate for your own pool of lost customers?
The average win rate for customer winback is 26% according to the Customer WinBack Benchmark Study.
Other studies including one featured in the Harvard Business Review (March 2016) show the win rate to range between 20% and 40%.
In other words, about 1 in 4 lost customers typically return.
But to get these numbers you need a well-executed winback motion and we’ll tell you exactly how to do that a little later.
Customer Lifetime Value Doubles
So we have a lot of sales opportunities and the win rate is high so we make a lot of sales.
But what is each sale worth?
Returning customers generate so much revenue that lifetime value (LTV) more than doubles!
They typically generate at least 120% of what was generated the first time around.
That’s what I've found after winning back thousands of lost customers.
The Customer WinBack Benchmark Study found the same thing with hundreds of thousands of lost customers and a study of 40,000 lost customers in the Harvard Business Review also showed lifetime value more than doubling.
Here’s a quote from the article, "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.“
Doubling LTV is a huge deal, so it’s worth taking a look at exactly why it happens.
Why Does Customer Lifetime Value More Than Double?
These are the 3 core reasons why LTV increases so much:
1. Returning customers buy your core product which is typically your highest price offering.
2. They also buy upsells and cross-sells and they buy them at a much higher rate than new customers.
3. They are loyal customers and loyal customers stay with you longer and that means more revenue.
Why are they loyal?
When someone decides to come back it’s a considered purchase. They’ve seen you and they’ve seen the competition, and they chose you.
In all probability they’ve stopped entertaining other options so their relatively immune to attacks from the competition.
And a nice bonus is that loyal customers also deliver more referrals and more positive word of mouth and that translates into even more revenue.
WinBack Revenue Calculator
If you’d like to get an idea of the kind of revenue you could generate for your organization, check out the WinBack Revenue & ROI Calculator at winbacklabs.com/calculator.
Winback generates serious revenue because:
1) Most companies have a large pool of lost customers and that means a lot of sales opportunities.
2) The win rate is high so a lot of those opportunities become paying customers again and
3) When they return, they’re big buyers. They generate so much revenue that their lifetime value more than doubles.