Customer Win-Back Value
Decide whether chasing a lapsed customer pays. Enter their average order value, how often they used to buy in a year, your gross margin, how many years you expect to keep them if they come back, and what the win-back offer or campaign costs you. It returns the gross profit that customer represents, how long the offer takes to pay for itself, the profit left after the offer cost, and the return per dollar spent.
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Worked example
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Inputs
- Average order value $
120 - Orders per year
4 - Gross margin %
40 - Expected retained years
3 - Win-back offer / campaign cost $
60
Frequently asked
Why gross margin and not revenue?
Revenue is not what a customer is worth to you — the margin on it is. A $480/year customer at 40% margin is worth $192 a year, and that is the number the offer has to beat.
What should I use for retained years?
Whatever your own repeat data supports. If you do not know, use a short, conservative figure — one or two years — rather than an optimistic one, since the whole point is to avoid overpaying for the win-back.
Does this include the cost of serving them?
Only through your gross margin. If fulfilment, support, or delivery costs are not already inside that margin percentage, lower the margin you enter so the answer stays honest.