If you heard that a good friend was out 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 rescue a customer who is leaving; what we all call lost business? They may not be beer drinking buddies but they certainly help pay for your 6-pack.
In business, the reality is that losing customers happens. However, that does not mean that you have to accept the action without putting up a “fight.” This effort is called winback. It is an integral part of the business growth cycle.
Every customer has been “acquired”, another name for participating in the seller/buyer process. Once the prospect becomes a customer, the selling business begins the ongoing retention process. This is where everyone does all the right things to create both satisfied and loyal customers. Over time, the seller decides to offer additional products and services to its customers in the upsell/cross-sell process that 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 winback.
The following graphic shows the relative cost of being successful in each phase with its associated relatively benefits.
Acquisition (selling) is so expensive because it starts with messaging and then adds the high cost of selling. The other phases start being off much less expensive because they are focused on existing customers, which is a major advantage. Both retention and growth also benefit from the fact that what they are doing in these phases is not only good business but also builds on work originally geared towards acquiring new customers.
Interestingly, winback has such a low cost because:
Generally, less than 10% of B2B customers leave in any 12-month period. This is less that 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.
- After many years of use, the item is declared to no longer meet requirements. When this happens is 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 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.
Before you can start a winback effort with a customer, there are three specific prerequisites that must be in place:
- Know when you lose a customer – 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 are less than the cost of winback then 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 but 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.
There is nothing magical in this process; 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 do a better job of retaining and growing your existing accounts.
As I said at the start of this post, when you suspect that you are losing a customer you should reach quickly. Sometimes you can salvage the account and other times you will learn a little more about why you lost the business. Either outcome is a good thing.
As we say “Good Selling”