All is not lost: The road to winning back lost customers


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Customer Retention

If you’re organization is focused solely on customer acquisition and retention, you are missing out on a potentially excellent source of new sales opportunity and that is lost customers.

Loyal customers are the most profitable, and customers that are referred generate the best return on marketing investment, which is a known fact. What’s interesting, though, is that a lost customer has a greater level of value than a new prospect. In fact, a study conducted by Marketing Metrics shows that a company has a 20-40% chance of winning back a lost customer, versus a 5-20% chance of converting a prospect into a customer.

So, clearly, it makes sense for an organization to deploy strategies to win back lost customers. The question is how does one go about doing it?

1. Determine whether you want to win back that customer or not

The first step in winning back lost customers is figuring out whether the customer in question is worth it because not all customers are the right fit in your organization. If the person in question was hard to work with or took up too much of your time versus the revenue they generated, they might not be the right customer to win back.

As with most organizations, it’s likely the Pareto principle applies: 20 percent of your customers generate 80 percent of your revenue. If the lost customer was part of the 20 percent, then you probably will want to win them back. If they were part of the 80 percent, though, you might want to do a little more analysis into whether it’s worth your organization’s resources.

If you do find that it doesn’t make sense to win a customer back, wasting time and money here is not advisable. Rather, channel your efforts on those customers who have a higher chance of converting and will also recommend your brand to friends/family in the future.

2. Figure out how likely it is for the customer to return

Once you’ve determined that you want that customer back, it’s time to figure out whether that customer is likely to come back or not before you start throwing marketing dollars at them.

Remember, the idea behind winning customers back is that it’s more cost-effective and efficient to go after a lost customer than a new prospect. At the same time, if the customer isn’t interested in coming back, you could end up tipping the scales in the other direction.

This is why you should first analyze said customer’s behavior to determine if they are predisposed to returning to the fold. Researchers have discovered that a customer who has referred other customers, or who’s had complaints that were resolved properly in the past are generally the best option. Likewise, a customer who left because they perceived the price to be too high is more likely to return than a customer who defected due to a poor customer experience. A customer who left because of both price and poor service is extremely unlikely to return.

3. Find out why you lost the customer in the first place

This step should be somewhat concurrent with the previous one because it will help you determine the likelihood of that customer returning. Furthermore, finding out the reason they left will give you insight into what you need to do to get them back onboard, if they make the cut.

Even if that customer is one you can’t win back, you’ll have still collected valuable information that you might be able to use to save another customer. For example, if you discover price was an issue, you might want to take another look at your offer and how you present it because there could be an issue regarding value perception.

4. Fix the problem

If you lost the customer because of a mistake you made, you are going to have to find out what you can do to make them happy. That means that you have to fix the issue without placing any conditions on the customer, such as forcing them to come back. Remember, you want to make them happy and conditioning the fix with a requirement for them to return will alienate them more than anything else.

The good news is that even if they choose not to return, there is still a good chance they will recommend you to others because their last experience with you was better than expected.

5. Tailor your offers and incentives

Many companies take a one-size-fits all approach to wooing back lost customers, which can be problematic because the same incentive won’t work for all your lost customers.

For example, offering a customer who left because of poor service or customer experience a discount isn’t exactly going to make them jump for joy to return, but it would be a good strategy to employ for someone who left based on price. A customer who left because of a poor customer experience might be easier to entice back through added value, such as offering an upgrade on their service/experience.

So, if you want to improve your chances of winning back lost customers, then tailor your offer and/or incentives to the customer in question based on the reasons they cited for leaving.

6. Choose the most efficient strategy

The strategy you use to win back a customer will depend in large part on what went wrong and why they left. However, you have to take a more analytical approach and also determine which is the most profitable option. After all, the goal of winning back customers is to improve your bottom line and if the strategy you employ will cost you more than you can make, in terms of revenue, from that customer, then it’s seriously not worth pursuing.

Lost customers might be more valuable than cold prospects, but, just like prospects, some are worth more than others. Don’t make the mistake of trying to win back all your lost customers because it will be an exercise in futility. Start off by identifying the customers who are most likely to return and then tailor your strategy accordingly as this is the approach that will generate the best and most efficient results over the long term.

Maansi Sanghi
Maansi is the VP of Global Business at CloudCherry Analytics, a Customer Experience Management Platform. She's also a part of the founding team at Hotelogix. With over 11 years of experience in product, building teams from scratch and putting processes in place for data-driven marketing, sales and customer success, she's donned quite a few roles. An avid believer in customer-centric culture in organizations, she regularly writes on Digital Marketing, Customer Experience and Hospitality. An avid reader of fiction and business books, she's also a huge fan of DC comics!


  1. I’m DELIGHTED to see some attention given to profitable customer recovery. My colleague, Jill Griffin, and I wrote a book about this – Customer WinBack – in 2001 in which the issues you’ve addressed are covered, and a good deal more. One of the things Jill and I counseled is having a decision map and financial plan for guiding recovery activities. It;s also essential that SLTV, or Second Life Time Value, be understood as part of this program.

    You’ve correctly quoted the Marketing Metrics stats comparing the probability of successfully selling to lost customers vs. making a successful sale to prospects. It should be noted, though, that these findings were first reported over 20 years ago (D. Pruden, “How to Win Back Lost Customers”, Direct Marketing to Business Report, October, 1995, p. 7). What has always impressed me is that the vast majority of companies, industry-to-industry, invest few resources to recover customers relative to what is devoted to prospecting and retention.

  2. Michael, thanks for your email. Who would know our Customer Winback would take three long years to write. We found little written about the topic and had to roll up our sleeves and dig deep for insights. I am as proud of the book and the concepts we presented today as back in 2002. Thanks to Sanghi for her fine article that shows the principles live on!


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