The ultimate DTC winback guide

how to bring customers back and maximize LTV

While customer retention strategies focus on retaining existing customers who may be at risk of churning, customer win-back is about reacquiring customers who have already left.

It's a process triggered after a customer hasn't purchased in some time. The goal is simple: get them to buy again.

Now, you won’t get all of your lost customers back. In fact, you will lose most of them.

But there are three reasons why you should at least test high-quality winback:

1. Those customers already demonstrated a need for the product, making them better prospects than cold.

2. They are more familiar with your brand, so you can skip brand awareness and focus on making your offers attractive.

3. You have data about your customers that you could be using to craft much better winback campaigns.

Consider this. Over 10 years ago, in 2013, Time Warner invested more than $50 million on broadcast, print, online, and direct mail for a marketing campaign that specifically targeted ex-subscribers who had left for competitors, especially those who left for Verizon. It was a calculated move to disrupt competitor growth and regain market share.

Their campaign featured actual subscribers, explaining why they came back to the company.

Their offer to the ex-subscribers? A 30-day money-back guarantee. “If you don’t see that we’ve improved our service, we’ll send you your money back”.

Now that’s a strong offer.

Think about what kind of win-back message would you respond to.

A generic “We’ve missed you!” email with a 10% off coupon?

Or a personalized email that references your churn reason, shows how the problem has been fixed and includes an irresistible offer, too? Or all that in a personal video from the founder? Or in a handwritten note?

3 keys to winback

Winning back customers is like fixing a broken relationship and its success depends on three things:

• how good or bad things were before the split (your customers’ experiences, issues and feelings in the first ‘lifetime’).

• the direct reason of the split (the churn reason).

• the quality of an apology (the winback offer).

The quality of your offer directly impacts how long and profitable your renewed relationship with the customer will be.

Most companies use bland attempts of offering a generic discount that lack any form of personalization at all. You want to use the customer's name, reference why they left, and, if possible, incorporate both zero and first-party data to make your point.

In order to do that, there are three critical steps you need to be taking:

1. Collecting data from the first customer lifetime. This could be transactional, behavioral, or ideally, direct customer feedback.

2. Finding out why customer churns. It’s easier with a subscription model where you can ask for the cancellation reason. With one-time purchases, it’s more challenging. However, you should be sending post-purchase surveys, monitoring and analyzing customer reviews and feedback to identify patterns indicating dissatisfaction.

3. Estimating the optimal waiting time (the winback period). More on that later.

Profitability always wins

The goal of your winback emails is to convince an inactive customer to return to your website and make a purchase. To achieve this, you have to include attention-grabbing content in your email, encompassing your offer, subject line, copy, and design, to stop your customers’ scroll.

Sending weekly campaigns gets tougher when your customers have already seen something like 5 to 50 of your emails. It's even trickier when all those emails are pushing discounts. That's where many brands slip up – falling into the trap of 'spray and pray' discounting.

First of all, imagine all the money you’re leaving on the table by giving out a discount when the customer would have purchased anyway.

This is what we call margin erosion. It's a tricky issue, not directly visible in your financials, but it deeply impacts your profitability.

Remember, profitability is king. To truly understand the extent of this problem, consider holdout tests with control groups. This approach will show you how much your discounts are actually affecting sales.

In addition, by spray and pray discounting, you’re also teaching all your customers to buy at discount. This brings an even higher cost, one that's also invisible… the cost of losing the value of a discount offer. You can lose ability to win customers over when you really need them.

If you want to play the long-term game, think about these strategic questions:

1. How long will a reacquired customer stay, and how much will they spend? You can track the retention of won-back customers and predict their average duration of stay. Surprisingly, often customers who defected due to price often stay the longest. Measure the LTV of second-time customers versus their initial run to see the upside of win-back strategies.

2. Which people should get which offers? If you can, segment and personalize. For subscription brands, use at least cancellation reasons to inform your win-back campaigns. You can also segment customers based on their previous purchase history or preferences. You can send tailored offers to those who had high LTV, tried many products, left good reviews, or had satisfactorily resolved complaints.

3. Which win-back strategy is most profitable? Consider the costs and returns of each offer. One strategy might have a low success rate but the highest ROI. As we discussed above, profit is always more crucial than vanity metrics like the number of active subscribers.

The best approach will ultimately depend on your product, the zero-party data you have, the campaigns you’re running, your margins and discounting practices and more. Having said that, I want to include some best practices when it comes to email. Then we will move to direct mail and how it complements email when it comes to winback.

The 100M winback offer elements

Optimal Waiting Time

• Timing is critical. The ideal waiting period depends on your product and customer buying behavior.

• Start by analyzing your historical order data to determine when customers typically exit the purchase lifecycle. This is where you get your first clues.

• Next, set up conditional splits in Klaviyo to test different times and see which ones really click with your audience. For a lot of products, especially consumables, starting with a 60-90 day mark is a good bet.

• Take a look at when most of your customers usually come back for more – about 75% of them. Find that sweet spot, then time your win-back campaign right around then.

• Dig deeper and check the following: what is the average timing between 1st and 2nd purchase? Get even more segmented by looking at specific products/combinations. Then check what is the average timing between 2nd and 3rd purchase.

Effective Subject Lines

• The first point of engagement, subject lines must be concise (preferably under 40 characters), attention-grabbing, and convey urgency or exclusivity. Personalization, such as including the recipient’s name, can significantly increase open rates.

• Continually A/B test different elements of your emails, including subject lines to CTAs and content.

• Get familiar with Klaviyo’s open rate stats:

  • Win-back emails with subject lines similar to “It’s been a while” earn average open rates of 27%

  • Win-back emails with subject lines similar to “We miss you” earn average open rates of 24%

  • Win-back emails with subject lines containing “Discount” earn average open rates of 20%

• Play on the fomo:

  • Everyone’s raving about this

  • Only 5 must-have, celeb endorsed, xxx left!

• Make it feel like your brand is saying goodbye to the customer

  • This is the last email you’ll see.

• Keep it simple and straightforward and immediately tell subscribers that there’s an incentive to buy

  • We miss you. Here’s $20.

Actionable CTAs

• Your CTAs should be clear, compelling, and easy to act upon. They should guide customers towards the next step, whether it's revisiting your website, taking advantage of an offer, or providing feedback.

• Use dynamic coupons with time sensitivity to add urgency.

Social Proof and Customer Feedback

• Incorporate positive reviews and user testimonials to leverage the power of social proof. This approach can significantly enhance trust and credibility.

• You can also proactively seek feedback to understand churn reasons and improve future campaigns. Incorporate feedback surveys in your emails to gather insights and show customers that their opinions are valued.

Balancing Frequency and Relevance

• To get the most out of your win-back series without risking your sending reputation, send 2-5 emails.

• Balance the frequency to avoid overwhelming or annoying your customers. Tailor the content to remain relevant and engaging over time.

• If you notice revenue per recipient starting to drop after the first win-back email, that’s a good indicator that you can pull back on the number of emails you’re sending.

Alternative Shopping Options

• Suggest alternative purchasing options if direct orders are declining. For example, directing customers to purchase through partner retailers or alternative platforms.

• Extend engagement beyond the digital realm. Invite customers to interact with your brand in physical stores or through community events.

Direct mail winback

Email and direct mail aren’t competitors; they’re complimentary channels in a smart DTC playbook.

Email is cheaper and faster to send. Direct mail has more engagement.

I will write a separate piece on direct mail as a channel, but for now let’s focus on how to integrate it with email winback.

Let’s say you’re a subscription brand and you tailored your email flows to different cancellation reasons.

Then you can simply use the same segments as you do for the email winback, but send postcards only to people who didn’t open the emails (which could be 50%). It can be done easily with Klaviyo + PostPilot for example.

Each segment can get a unique postcard with offers and messaging aligned to the cancellation reason. If customers had too much of a product, the postcard can be send a bit later and has an invitation to replenish. Those who cited "too expensive" as a reason can be nudged to restart their subscription with a 20% discount etc.

Segments to test with direct mail

1. The VIP winback not engaging [customers who bought 3+ times, LOD (last order date - depends on the product) 60+ days ago, not engaging with email].

2. The VIP winback lapsed [customers who bought 3+ times, LOD 90+ days ago].

3. The VIP winback recent [customers who bought 3+ times, LOD 31+ days ago]. The more recent the campaign, the better it is to do a holdout test with a control group / check attribution by eliminating retargeting and Klaviyo UTMs from the final list of buyers.

4. Email optouts winback [customers who bought 1+ times, opted out of the email list, LOD 31+ days ago]. It can have a lower ROAS, which makes sense because people don’t want to hear from you, but it’s the only way to reach to those customers so I strongly recommend testing it, and they are still a better audience than cold traffic.

5. Lapsed subs winback - for subscription brands, I recommend targeting one-time-buyers (and experimenting with the last order date) with an offer to subscribe with a site-wide discount.

I recommend testing all of these segments with the same offer, to see which of your brands’ customers are the most responsive to direct mail. If your segment size allows it, do a holdout test. If not, try to at least check the “pure” direct mail conversions that are not affected by retargeting ads or emails by excluding UTMs.

Until next time,

Marcin