A short defence of the customer who leaves and comes back.
The returning lapsed customer is, in most app companies, one of the largest sources of monthly active users and one of the most under-served categories of user in the entire lifecycle. A short essay on why that is, and what to do about it.
The mental model that most marketing teams use for customer lifecycle has, broadly, three states: new, active, and churned. The work of the marketing team is, in this model, organised around moving customers through these states — acquiring them from "new," activating them from new into active, and trying to prevent the transition from active into churned. The model is tidy. It is also, in our experience, substantially misleading about how mobile-app customer lifecycles actually work.
The most important state that the three-state model leaves out is the state I want to call "returned": the customer who was previously active, then lapsed for a period, and is now back. This state is, in most of the published data we have looked at, a meaningfully large fraction of the total monthly active user base. It is, by almost any measure of unit economics, the most valuable state to be in. It is also, in most marketing teams' actual operational practice, almost entirely ignored.
Why the returned customer matters
I want to put some numbers on this, with the usual caveats about the limits of small samples. In the published data from the mid-stage app companies we follow, the returned-customer cohort typically accounts for somewhere between fifteen and thirty per cent of total monthly actives, depending on the category. The variance is large because different categories have different rates of natural lapse and return. The base rate is, however, never small.
The returned customer is, on the unit economics, considerably more valuable than the equivalent newly-acquired customer. By the data we have seen, returned customers have higher second-month retention, higher willingness to pay, lower support cost, and a markedly lower rate of subsequent churn than newly-acquired customers in the same cohort. The differences are not marginal. In several of the companies we have looked at, the returned customer is worth roughly twice the new customer in lifetime value terms.
The cost of producing a returned customer is also, on average, considerably lower than the cost of producing a newly-acquired one. The returned customer was previously a customer; the relationship existed; the marketing work required to bring them back is, in most cases, a much smaller intervention than the full acquisition cycle would require.
Why the returned customer is ignored
If the returned customer is so much more valuable, why do most marketing teams effectively ignore them?
The answer, as far as I can tell, is structural. Marketing teams are organised around the three-state model, and the three-state model has no place for the returned customer. The teams that work on acquisition do not, by their job description, work on the returned customer; the customer is, by their definition, not "new." The teams that work on activation do not, by their job description, work on the returned customer; the customer has, by their definition, already been activated previously. The teams that work on retention do not, by their job description, work on the returned customer; the customer has already churned. The returned customer falls between the categories that marketing teams are organised to serve.
The result is that, in most companies, the returned customer is treated by default — usually by a combination of the standard activation flows (which were designed for users who have never used the app before, and which the returned customer therefore finds either confusing or insulting) and the standard active-user lifecycle (which does not know that the user was previously lapsed and therefore misses the opportunity to acknowledge the return). The returned customer is, in effect, processed by systems that were not designed for them.
"The returned customer is the most valuable customer in the lifecycle. They are also, in most companies, the least well-served by the lifecycle marketing apparatus. The opportunity is enormous."
What to do about it
I want to suggest, in this short essay, three things any marketing team can do — without significant organisational change — to start serving the returned customer better.
The first is to measure them. Most marketing analytics systems do not, by default, distinguish between newly-acquired and returned customers. The first step is to add the distinction: a returned customer is a user who had been active in some prior month, then inactive for a defined gap, and is now active again. The exact definition of the gap is less important than the consistency of the definition. Once you can see the returned cohort separately, you can start understanding how it differs from the new cohort.
The second is to build a returned-customer flow that is distinct from the new-customer flow. The returned customer does not need the standard onboarding; the returned customer needs a different kind of welcome that acknowledges the previous relationship, reminds them of the things they previously valued, and possibly offers a small piece of new information that has been added since they were last active. The flow does not need to be long. It does need to exist.
The third is to think about the conditions under which a lapsed customer returns. The standard "win-back" email — a discount, a reminder of the product's value, an appeal to come back — is, in most cases, not actually what triggers the return. What triggers the return, by the data we have seen, is most often a change in the customer's external circumstances that re-creates the need the product originally served. The marketing team's role, in this framing, is less about persuading the lapsed customer to come back and more about being available, and easy to find again, at the moment the customer's circumstances re-create the need.
What this implies for the broader marketing function
The returned customer is, in our view, one of the clearest examples of how the three-state model of lifecycle marketing is leading teams astray. The model is, in many ways, a holdover from an era when most marketing happened around single discrete transactions: a customer either bought the thing or did not, and the marketing team's job was to maximise the rate of purchase. Mobile apps are not single-transaction businesses. They are recurring-relationship businesses. The model needs to catch up.
The teams that have started thinking explicitly about the returned customer are, in our experience, in the early stages of a broader rethink about how their marketing function is organised. The returned customer is the most visible example of a category of customer that the three-state model serves badly; there are others, including the customer who is partially active, the customer who has signed up but never used the product, and the customer who uses the product through a third-party integration without ever touching the company's primary surface. Each of these categories is, in its own way, evidence that the standard model is no longer adequate.
The rebuild is, on the available evidence, going to take several more years. The teams that start now — even with the small, low-cost interventions I have described above — will be substantially ahead of the teams that wait. The returned customer is, in my view, the best place to start.