Business growth: Getting back lost customers
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“The true purpose of a business is to create and keep customers,” said management guru Peter Drucker. As a business owner or manger, if you lose them, don’t excuse them. Get them back!
There are several good reasons your business should concentrate on being intentional about re-acquiring lost customers. In a significant study of fifty-three thousand customers who left a particular telecom company, Professor V. Kumar in an article for the Harvard Business Review, provided several observations on the ‘why’ companies should strive to regain customers who have left.
Pre-Qualified Customers: “These people have demonstrated a need for the service (or product), making them far better prospects than random names on a cold-call list” Kumar said. The efforts most companies have to make in order to gain awareness of their product or service is significant in both the time and money expended to obtain or convert a prospect to a customer. In all cases, having once been a customer, businesses should not have to re-educate or re-introduce the products or services being offered to a previous customer. That issue alone, should warrant or cost justify trying to win back past customers.
Company Relationships: As the saying goes “We have a history”. At some point in time, there was a connection or a relationship between the two companies. The lost customer knows your company, in many respects eliminating the need to expose them to the company culture and/or sales connections that existed before they left.
Historical Performance: Kumar stated “Most important, recent technology…allows companies to draw on information about how people used their service the first time around to craft more-successful win-back offers and to identify and go after the most profitable defectors.” Identifying the history of product or service purchases should not be understated in their importance. Analyzing that history should give you the necessary insight into not only how the customer engaged with your company, but it could also give you a preview into why they left in the first place.
As part of the historical performance aspect, you should consider identifying your lost clients by looking at their sales history. Review the purchases they made and when they made them. Consider seasonality as a factor. Once you have identified lost customers and their sales history, determine what they used to purchase and the impact of that loss on your company. Take into consideration how long they were a customer and how long it has been since they were a customer. Finally, be sure you quantify and monetize the loss your company incurred, ranking the highest dollar amount loss first, in descending order for a set period of time.
All of this preliminary work is intended to help you identify which customers are worthy of contacting, but more so, you are establishing a priority with which to contact them. Typically, the lost customer who represents the largest dollar volume lose in sales over the shortest amount of time should be the one you contact first. It can also be very helpful to review any or all of the customer relationship management system (CRM) information you can gather.
Ultimately, before you contact the client, you should have developed a good idea about the history of this client and their relationship with your company.
All of this information leads up to the proverbial ‘elephant in the room’ or asking the question of WHY did they leave?
The next and final step is developing the win-back strategy for each lost customer. According to Kumar and the results of their study, “Customers who cancelled because of price are more likely to come back than those who left because of poor service, and people who cited both reasons for quitting are the least likely to return.” In the Kumar study, customer retention was also researched. While most people would consider a customer who was lost and regained to be more likely to leave again and leave sooner, the research showed the opposite to be the case. “In fact they generally stayed longer, and customers who defected because of price— behavior suggestive of fickle deal seekers— stayed the longest of all.”
All of these observations, research findings, and ultimate suggestions for an approach to win-back lost customers, are exceptional thought provokers, but in the final analysis, each business is unique. Not only unique in their business model but unique in how they can and should go about in getting back those clients they have lost.