A Lost Customer Is Not A Lost Cause
If you work in customer service in any capacity you should know that whatever your job title or role, you are a VIP. Companies spend a lot of money to get clients in the door and then they turn them over to you to win their hearts and make them happy.
But what happens when everything goes south and they walk away? Is it over forever?
The answer is no.
The truth is, winning back a lost customer can be a rich source of renewed revenue and customer loyalty for your business.
Winning back lost customers is like finding hidden treasure. So, consider this quick read a little treasure map.
1. Why Customer Winback Matters
It’s a fact: You have a higher probability of winning back a lost customer than converting a prospect into a first-time buyer. Here are some numbers to consider:
The chances of selling again to an “active” customer 60–70%
The chances of selling again to lost customers 20–40%
The chance of making a successful sale to prospects 5–20%
Source: Marketing Metrics
There’s more. Re-establishing a lost customer’s original buying behavior is far easier than you think. But before you learn how to do that well, first take a look at why so many firms miss this huge opportunity.
2. Why Customer Loss Goes Un-Managed
Every single day in many businesses nationwide customers leave in droves. There’s no exit interview, no clear understanding of why they said goodbye and no attempt, ever, to keep them or win them back. Companies let them walk and then go through all of the rigor and trouble of replacing them, with all of the associated costs.
And the cost of customer turnover, like employee turnover, is usually underestimated. A customer can cost as little as $10 or literally millions of dollars to replace, depending on the industry. Yet many companies spend “zero” to get these lost customers back. Those same companies spend big dollars to win new customers when they could and should spend those dollars in in retaining the customers they already have and winning back the ones who walked away.
So why do so many firms ignore their lost customers?
The key reason why customer loss goes un-managed is that it isn’t always easy to spot. That means it’s hard to fix, right? Measuring customer loss can be both tricky and misleading. For example, a defection rate of 50% can disguise itself as an 80% retention rate. How could that be?
Think of a college that retains 80% of the students in each class from one year to the next. This sounds pretty healthy doesn’t it?
But, if the college starts with 1,000 freshmen, an 80% retention rate means a sophomore class of 800, a junior class of 640, and a senior class of just 512.
The same analysis can be applied to customer retention rates. Assume in year one that you recruited 100 customers and your annual retention rate averages 80%. By the end of just four years, only 51% of these customers will still remain.
In other words, even if you have a steady and respectable retention level of 80% , the amount of time it takes for one-half of your customer base to be lost is only four years.
There are always noticeable clues that can tell you that your on the brink of losing a customer. Pay attention. Monitor closely. Act swiftly before the relationship sours.
The sooner you realize the customer is about to be lost, the quicker and better you can act to reverse it.
3. Quick Winback Actions
You sometimes have an opportunity to do a quick winback. In many cases, your company’s credibility is in serious question, and that’s they walks away in the first place. To save this customer immediately requires a trusted authority figure with skillful listening skills and the ability to say “we blew it.”
When talking with the customer:
– Listen carefully to her issues and acknowledge her pain.
– Be decisive about solutions. Avoid the “I’ll get back to you” scenario.
– Ask him what he would consider fair.
– Be generous in your resolution offer.
– Give her some options.
– Be equally gracious whether he says yes or no.
4. How to Ask the Lost Customer to Return
Years ago I was the Marketing and Sales Director for an all-suite start-up hotel with locations in Texas. Our competition was fierce. We lost the American Honda account, which represented $40,000 in annual sales for our property near the Dallas/Fort Worth airport. But we won it back, and here’s how.
My ace sales agent Rich Gevertz contacted the decision maker at Honda and asked, “What can we do to win back your business?” The Honda exec outlined the problems that influenced the company’s decision to leave us and told Rich not to call back until each and every one of the problems had been corrected.
Our hotel went to work. From changing transportation procedures and upgrading the amenities we offered, to streamlining billing procedures and creating customized hotel check-in information, we met Honda’s requirements and we won back the business.
Here’s what this customer winback taught me:
1. Start with, “What can we do to win back your business?”
2. Listen closely to what the customer tells you.
3. Meet the customer’s requirements. Communicate the changes you have made. Ask again for the customer’s business.
4. Be patient with the customer. Be open. Remember, some wounds heal slowly.
5. Stay in touch with the lost customer.
6. Make it easy for customers to come back to you. Avoid any “I told you so” conversations or attitudes.
7. When the customer does return, earn his or her business every day!