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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

Annual gross profit: $192.00 · Gross profit over retained years: $576.00 · Profit after offer cost: $516.00 · Payback on the offer: 3.75 months · Return per $1 spent: 9.6x

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Inputs

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.

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