Lost customer
If you heard that a good friend was hiking in the local mountains and had gone missing, wouldn’t you offer to help and rescue him? Sure, because that’s what friends do. Why would you not attempt to save a customer who is leaving? They may not be beer-drinking buddies, but they help pay for your 6-pack.
In business, the reality is that a lost customer happens. However, that does not mean you must accept the action without putting up a “fight.” This effort is called win back. It is an integral part of the business growth cycle.
Every customer has been “acquired.”, another name for participating in the seller/buyer process. This is where everyone does everything right to create both satisfied and loyal customers. Once the prospect becomes a customer, the selling business begins the ongoing retention process. Over time, the seller decides to offer additional products and services to its customers in the upsell/cross-sell process, which is critically important to long-term growth. Finally, some customers will decide to move their business elsewhere – not all, but many. Efforts to change the decision and retain the customer are called win back.
Cost to get, keep or win back a lost customer
The following graphic shows the relative cost of success in each phase with its associated relative benefits.
Acquisition (selling) is expensive because it starts with messaging and then adds the high cost of selling. The other phases start off much less expensive because they are focused on existing customers, which is a significant advantage. Both retention and growth also benefit from the fact that what they do in these phases is good business and builds on work initially geared toward acquiring new customers.
Interestingly, reacquiring a lost customer has such a low cost because:
Generally, less than 10% of B2B customers leave in 12 months. This is less than 1% of your customers per month. So you are dealing with small numbers.
In many cases, you learn about the loss well after you have a chance to influence the outcome. You will quickly determine that there is a zero chance of winning the defecting customer back for reasons well outside your ability to control or influence.
For example:
- After many years of use, the item no longer meets the requirements. When this happens, is it designated for disposal, but technology has moved ahead of your company, and you do not have any suitable replacement products or services.
- M&A happens. Acquirers frequently standardize on a limited number of suppliers and force newly acquired companies to quickly dispose of perfectly good products and replace them with the corporate standard.
- Processes that worked fine in the past get replaced with new products or processes used by an acquirer or business partner, and your offerings no long solve a business problem.
Win back a lost customer
Before you can start a win back effort with a customer, three specific prerequisites must be in place:
- Knowing when you have a lost customer – is not always easy since your business may have infrequent, sporadic communications with customers
- Know how much each lost customer is worth (customer lifetime value). If a customer’s future purchases exceed the cost of winning back, the effort may not be a good investment.
- Know the value proposition of your services or products – you had better know this before trying to sell anything. Still, many companies are active in the marketplace and totally in the dark about why someone would buy their products or services.
Once you identify a likely candidate for re-entry, the process is not very complicated:
- Act quickly – time is of the essence since they will have to replace your company, and once they select a new supplier, you do not stand any realistic chance of recovering the business
- Talk to them – this is the same step that works for all customer/supplier interactions. Don’t guess; find out:
- Why did they leave?
- Where did they go?
- Did they understand your value proposition?
- Why was it not compelling enough?
- Can the decision be reversed?
- Apply your retention strategy if you believe there is a reasonable chance of retaining the account.
This process is not magical; it just takes some serious work. And you cannot lose. Even if you cannot save the account, the lessons you will learn from all the talking will help you better retain and grow your existing accounts.
As I said at the start of this post, when you suspect you are losing a customer, you should reach out quickly. Sometimes you can salvage the account; other times, you will learn more about why you lost the business. Either outcome is a good thing.
As we say, “Good Selling.”
About Middlesex Consulting
Middlesex Consulting is an experienced team of professionals with the primary goal of helping capital equipment companies create more value for their clients and stakeholders. Middlesex Consulting continues to provide superior solutions to meet the needs of its clients by focusing on our strengths in Services, Manufacturing, Customer Experience, and Engineering. If you want to learn more about how we can help your organization win back lost customers, please contact us or check out some of our free articles and white papers here.