Bringing back lost customers
first glance, the company didn't look like the kind of client anyone
would want back. The records in the accounting department showed
it was no longer a customer because it hadn't paid their bill. But
the advertising director of the Austin Business Journal had a hunch
that the former advertiser might be worth bringing back into the
fold. He went to the business for a chat.
The company hadn't stopped advertising because it
couldn't pay its bills; it didn't pay the bill because the paper
had run the wrong ads and the wrong dates. When company officials
complained, they were assured the problem would be fixed, so when
the bill arrived, they withheld payment because they were waiting
for the amount to be adjusted. No one told the accounts receivable
staff, which began sending past due notices. Now seriously annoyed,
the construction company stopped doing business with the newspaper
With the new information in hand, the ad director
managed to convince the customer to give the paper another try.
Lost customers -- an ignored opportunity
The Austin Business Journal's story, shared in
the new book Customer
Winback: How To Recapture Lost Customers -- and Keep Them Loyal,
is a rarity in American business. Most companies today don't know
how many customers they've lost, much less attempt to bring them back.
The average company, the authors estimate, loses 20 to 40 percent
of its customers each year. Nearly half of them don't even know why
the customers left.
Co-author Michael Lowenstein says most small businesses
ignore former customers in their zeal to gain new customers and
retain the ones they have.
"They never go back to former customers to find out
why the left and they don't identify customers at risk," Lowenstein
says, "because there has always been the feeling that a customer
who is gone is gone. They see lost customers as dead opportunities."
Well, aren't they?
Not by a long shot. According to research from Marketing
Metrics, a Paramus, N.J.-based consulting firm, your chances of
successfully selling to a former customer is 20 to 40 percent. That's
significantly higher than the 5- to 20-percent chance of selling
to a new prospect. Your chances are better, Lowenstein says, because
former customers already know you and what your products or services
can do. Plus, you know them. You have access to their past buying
behavior, so you have a significant advantage over a competitor
who doesn't know they bought a thousand blue widgets last year --
but not a single red one.
No pain, no regain
Another reason many companies don't try to win back former customers
is simply because there may be some pain involved in the process.
No one likes to hear that they've screwed up.
"These signals come up early, but our natural tendency
is to ignore them because they're uncomfortable," says Daniel Pitlik,
a California-based management consultant who works with companies
trying to save major accounts. "I think fundamentally there's fear
behind of all of it. There is a certain level of, 'Am I not measuring
up? What does it say about me?'"
The process of winning back customers begins with
finding out why they left. Britt Beemer, CEO of America's Research
Group, a leading retail research company, says customer relationships
break up for the same reasons personal ones do.
"It's all based upon communication," Beemer says.
"Too much isolation means divorce. The two ways you can end the
relationship is do something they don't think is trustworthy or
you quit talking."
Two out of five ain't bad
Lowenstein has identified five basic reasons companies lose customers,
and three of the five categories are probably not good prospects
for win-back. Those are:
- Customers you intentionally push away because they
suck the life out of your business;
- Customers who jump ship any time they find a lower
- Customers who physically or demographically
leave your marketplace.
The customers you have the best shot with are those
you unintentionally pushed away because of a glitch in the process,
such as delivery, billing or service problems, and those who are
pulled away by competitors who offered them what they perceived
as a better value.
Conduct exit interviews with former customers. It's
an excellent way to find out why they left and attempt to win them
back. Marketing Metrics found that at least half of former customers
will agree to an exit interview and about 30 percent will tell you
what you can do to earn their business again.
"Ask intelligent questions, like, 'What was it that
brought you here in the first place? What did you want? What's changed?
Where have we disappointed you?'" Lowenstein says. "You need to
be a good researcher. Listen and ask intelligent questions. If you
don't do that, you're letting a good opportunity pass you by."
Your chances for a win-back also depend on your timing.
Lowenstein's co-author, Jill Griffin, heads a research firm that
focuses on customer and staff loyalty. She's found that customers
may be reluctant initially to give their real reasons for leaving.
Contacts made 30 to 60 days after customers leave lets them know
you haven't forgotten them and the door remains open to come back.
It's also given them time to assess the competition.
Listen, then ask
Pitlik agrees that sitting down with clients to discuss the issues
that made them leave is critical. Sometimes it may be as simple
as a salesperson left your company without passing along vital information
about an account. Sometimes, though, there are real problems that
need to be addressed. Avoid the temptation to make rash promises
you can't keep. Listen carefully.
"Demonstrate that you've listened -- it's the customer
who's not being heard who goes ballistic," he says. "Having one
person who is listening is so powerful."
Then, finally, just ask for their business.
"We have presidents who stand up and say, 'Give me
another chance,' and we give it to them," Pitlik says. "Businesses
will give you another chance if your work has been good in the past."
Pat Curry is a freelance writer
based in Georgia
-- Posted: May 7, 2001