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Winback Flows: Increase Your Profit 20%+ in 3h

Published or Updated On: 
April 1, 2023

If you own or work for a DTC ecomm business, you should have layered winback flows. If you aren’t doing anything like this with your current marketing, it’s the easiest way to increase your profit by 20% or more. This is a strategy I wish someone had told me years ago. It's crazy to me that guides on how to do this aren’t all over the first page of Google. In this post, I’ll break down what winback flows are, why they’re important, and how to set them up with just a few hours of work.

This is simple stuff. It’s not complicated. It just isn’t well explained anywhere else (that I’ve seen). Let's fix that.

🥞 What are layered winback flows

Unless you have a subscription model business, most customers probably only buy from you 1x. For my activewear business Paragon, about 70% of customers only buy from Paragon once. Our repurchase rate is about 30%. This is normal - actually on the high end of normal, because we make such great products.

Layered winback flows are a retention strategy designed to get 1 time buyers to purchase again, and to keep purchasing. The strategy involves delivering touchpoints, automatically, via email, SMS or direct mail at specific times. Your first layer of winback touchpoints encourages the buyer to go from one purchase to two. Your second layer is another set of touchpoints that get them from two purchases to three. And so on.

You could say that layered winbacks are the question mark in this timeless strategy:

💡 Why they’re important

1. 🤑Profitability

People who have paid for your products are your most valuable audience. They’ve proven that they’re game to do the most important thing for your business: open their wallets. On the temperature scale, they’re hot.

You’ve already paid to acquire them. Maybe you paid $30-$60+ to make them a customer, to get them for that first transaction. Now they’re sitting in your CRM, just waiting to give you more money. Marketing to someone already in your ecosystem is practically free by comparison to initial acquisition costs.

Let’s take a look at how this math breaks down. These numbers are simplified for the sake of illustration. Say that last year you had 13,000 new customers with an average order value of $75. That gives you a clean $1M in revenue from new customers. Let’s say you spent $500k to acquire them (after all, acquisition is expensive). Let’s also say that your typical gross margin per order is 65%. That gives you $650k gross profit before your marketing spend, which drops down to $150k after you add that marketing spend in. That’s your net profit for the year, $150k. 

Say none of your customers come back next year, and you have the same revenue performance, just continually acquiring new customers. You’ll get another $150k net profit. OK, that doesn’t sound so bad.

Now let’s look at the math if you can keep up the same acquisition performance, but you also get 30% of your past customers to come back and buy again next year. That’s an additional 4,000 people buying again. At a $75 AOV, that’s $300k in additional revenue. Because they’re already in your ecosystem & it costs very little to send emails, your cost to market to them is only $50k (vs $500k you spent to acquire them). You’ve got the same gross margin, so you’re talking about $195k gross profit. Then you factor in your $50k marketing spend and now you’re at $145k additional net profit. If you can get 30% of your customers to come back and buy again, you’ve literally almost doubled your net profit from $150k to $295k.

Retention is highly leveraged. Small changes to your repurchase rate can have a big effect. Say you’re already at 30% repurchase rate. What if you can get that to 35%? Instead of 4,000 people back, you’re getting 4,500. Just 500 additional people buying again gives you an extra $24,000 in net profit. Getting that extra 5% could just be a matter of A/B testing your winback emails once you’ve got them setup. Easy stuff.

So in short, the math looks great. 

2. ⏱️ They're automatic

This section is going to be a lot shorter than the profitability one but it’s just as important.

I like lazy solutions. I want to set it and forget it. Email and other ecosystem CRM tools are how you build systems that run on automatically and deliver perpetual benefit

Think about the return on time investment here. Consider the hours & mindshare required for a team to host regular meetings, twiddling their thumbs & thinking about what campaign to run next, vs setting up a system once that makes you money on autopilot after. It’s a no-brainer, but a surprising number of brands are sleeping on this approach. Think of it as building a conversion machine.

👷 How to set up layered winbacks

📊 Get your data

First, you need data to understand what the organic purchase frequency is. Here are the questions you want answered, for a given time period (I suggest at least 1 year, but you might modify this if you changed flagship products, as we did, or if you just haven’t been around that long):

1️⃣ What percentage of people come back to buy a second time?

2️⃣ If someone is going to buy a second time, how many days after the first purchase do they usually do it?

3️⃣ Same question for third purchase and fourth purchase.

I used an app called Lifetimely to get this data. It’s available as a Shopify app and has a free trial. I’ve used other apps, like Peel Analytics, and I’ve tried to calculate this stuff myself by hand. Don’t bother. Lifetimely is incredibly easy (literally clicking a few buttons) & it’s built around giving you the data you need, rather than making you extract it/drowning you in shit you don’t care about.

Add it to your store, then forget about this project for a day while the data syncs in. Once the data is ready, we can start to answer our questions above.

The Repurchase Rate page gives you the answer to question 1️⃣: 31% of people come back to buy within 365 days. OK cool. This is our baseline to reference. We want to get these numbers up, and make it all happen sooner. On to the next question.

The Time Between Orders page shows the answer to question 2️⃣. You use this data to set the timing of your winback marketing.

I can see that my average time between orders is down to 39 days. I can see that by 45d, around 70% of the people who are going to make a second purchase will have done so. Repeat this for 2nd to 3rd order, and 3rd to 4th order. Note: Remember how I mentioned Paragon modified our flagship product? I’m most interested in how customers behaved after that happened, so I changed up my time window here for this piece.

✍️ Draft your plan

Create a spreadsheet of your planned touchpoints, timing, and what you’ll send. The formula I followed was content email, offer, reminder, offer, reminder. Here’s what mine looked like, based on our repurchase data.

Choosing your specific timing is more art than science. Hit people with offers too early, and you risk giving away margin to people who would’ve bought a second time anyways. Hit them too late, they’ve become cold & are less likely to purchase. I’m trying to make some big moves here & am comfortable risking giving away margin so I drew the line at 70% of cumulative repeat orders, which meant my first offer went out at 45d from the first purchase.

Don’t overthink this. You can always change your timing later. I’d also say skip the content email for now & just offer a discount to start, unless you have some ready to go.

📧 Build it out

Next, login to your email provider. I’ll assume you know your way around your that & just outline the basic steps:

  • Create the appropriate segments.
  • Create a new flow for your first winback layer.
  • True to the 3h approach, start with text-only emails. Here’s a draft. Set it up, then duplicate the flow for your other layers & tweak the copy.

“Hi {{ first_name|default:'there' }},

Heads up that we’re offering a quick flash sale for our store. You can use code {% coupon_code ‘WINBACK1' %} for 15% off your order of $99 or more. It’ll only work for the next 48h though! 

Hope you’re having a great day,

- Your brand"

🚀 Push it live

Turn the flows on, then pass instructions to your email/graphic designer to make the emails beautiful, if desired. And I'd suggest drumming up a few content emails to serve up before your first offer, to make your brand a little less transactional & potentially get another sale without an offer. That’s it! You’re done.

If you want bonus points, I recommend mirroring this process for direct mail (with an offer only, one per layer). We use an app called PostPilot and it’s bomb. PostPilot is like Klaviyo for direct mail. Just give the PostPilot team your winback timings and they’ll set everything up for you, including mailer design. Very straightforward.

Enjoy your profit!

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