One of the biggest and most dangerous fallacies of business is the belief that once your customer has vanished, there is no way that youll get them back. However, that could not be any further from the truth. If a customer makes the decision to cancel your service, then use this opportunity to your advantage by not only preventing them from leaving, but by also improving your reputation, saving money and winning more customers.
In this article, you will find out every method that you can use to keep your current customers as well as every approach you can use to win back your customers. This piece is essential to those who dont want their company to bleed out because you will learn how to both identify at-risk customers and learn when the time is right to let them go.
Dont ignore customer defection or be apathetic about winning them back.
Since the market is full of potential customers, often times, business owners think that there is no need to waste their energy on the ones that they have lost. After all, how does the loss of one customer compare to the number that youve gained? Well, the flaw with this mentality is that the number of customers that you hold onto over a period of time, also known as the retention rate, could be misleading.
For example, suppose there is a college that retains 80 percent of its students from each class every year. Despite how good of a percentage it may seem, if that college begins with a class of freshmen with 1,000 students, then there will be 800 students during their sophomore year, in their junior year there will be 640 students and then in their senior year, the class will drop to 512 students.
Firms do not understand how big of a loss is associated with customer defection and how great of a benefit it is to them to be able to win back their customers. Losing one long-term customer means that a company has to exhaust their resources such as marketing materials and sales personnel costs to gain a new customer to compensate for lost revenue.
On the other hand, losing a customer is a great learning experience. Figuring out why the customer left in the first place can help you not only win old customers back, but also hold on to your existing ones. You may even gain new ones in the process!
On the contrary, though, business do not take advantage of their lost customers. They just see them as dead opportunities, people who would under no circumstance ever come back to their company. With that kind of mentality, it is no wonder that they dont even make the effort to try to win them back.
However, this isnt entirely true. According to some studies, the average firm is 60 to 70 percent likely to sell successfully again to active customers whereas the average to sell successfully to lost customers is 20 to 40 percent. New prospects, to compare, average from 5 to 20 percent when trying to strike a deal.
Its time for your company to establish customer loss and win-back initiatives.
It is not a secret that every company will lose some customers at some point or another. However, some companies are prepared for situations such as the re-recruitment of lost customers with special programs or strategies
The first stage to winning them back is the termination phase. If a member decides to opt out or cancel their contract, be sure to ask them why and provide them with alternatives that counteract their reason. During this time, well trained representatives will need access to all relevant customer data in order to offer good alternatives.
DoubleDay Direct works with as well as manages book clubs all around the world. If a member, for example, calls to cancel, they always ask for the reason. If they say that they are bothered with the abundance of emails from DoubleDay Direct, then the representative can offer to suspend the mailings. Although this kind of customer service would be an additional cost, you would get your moneys worth because you current customers give you more profit than new customers do, especially since you would need to pay for advertising to win them in the first place.
However, if the customer still wants to go through with the cancellation, then evaluate the customers value to your company. If they do not benefit you much, then you can cancel their contract and thank them for their business.
Stage two is the revitalization phase. Here you contact your lost customers to try to reactivate their membership. Since they are familiar with your products and services, you do not have to put in too much effort into the re-recruitment process. Doubleday proved this by sending out two different mailings with the same offer to externally acquired leads and expired members. In the end, the expired members were more profitable than the external list.
Customer retention strategies have two phases: the termination phase and the revitalization phase.
Treating an illness is much easier if you catch it in its early development. The same goes with winning back customers. If you recognize the symptoms that could cause them to leave, then youll have more luck keeping them.
Try using CPR: comprehend, propose and respond.
In the comprehension stage, you can identify at-risk customers, decide their lifetime value and try to solve the problem that they have. Begin by asking yourself the amount of revenue that the customer has generated versus the cost of serving them. Afterwards, carefully listen to the customers problem and make them feel that their request is being taken seriously. It is good for representatives to rephrase the customers issues to make sure that the problem is understood. Before proposing a solution, ask the customer what it is that they need in order to stay with the company. Occasionally, they dont want anything whatsoever. All they want is to feel that their issues are cared about. If that is not the case, then they will tell you exactly what they need in order to stay with the business.
Lets suppose that a high-value customer calls to cancel their internet service because they cant use WiFi. By offering them a replacement wireless modem, the customer stays and both sides are content. Unfortunately, it is not always that easy. You may deal with customers who respond to your offer negatively. As a result, customer service employees must be trained to be able to handle such conversations. Should the customer want something more substantial than a replacement wireless receiver, the representative could prolong the discussion. They would make the decision of letting them go or offering them a nicer deal depending on both the customers demand and their value to the company.
You can save at-risk customers by using CPR: comprehend, propose and respond.
The CPR method is great for holding on to your customers as soon as they have articulated their issue, but how do you identify the at-risk customers before you get to that point?
One solution is to use customer research surveys. With them, you can find out valuable information about how customers feel about your product or service. In 1998, the Royal Bank of Scotland had received worrisome feedback from a survey that they had conducted. 69% of their customers had agreed with the statement, I dont have a relationship with RBS; all I do is pay money. Having realized that these were at-risk customers, management contacted every customer to offer them opportunities to get more value from the service that they were already using. They also asked if they could assist with any other financial services. As a result, 86% of RBS customers felt appreciated. They also agreed to take part in regular follow-up calls from a bank representative.
Another thing that you can do is collect information about your customers from your customer-facing staff during phone calls or chats. These staff members represent a great opportunity when identifying clients who are at risk since they are in contact with customers very often.
USAA, the San Antonio-based financial services giant, had come to the realization that their telephone sales team and service representatives could collect information about their customers due to their unique position. As a result, they created an information collection system called ECHO. It collects data such as feedback, complaints, competitive threats, market trends and new product opportunities. When, for example, the system finds an issue that puts a customer at risk of leaving, then an internal action representative is assigned to quickly resolve and recover the customer. As a result, this program results in a 98% customer renewal rate.
Surveys and frontline staff can identify at-risk customers.
Winning back a customer is not often as easy as it is to make a single phone call. Occasionally more time and effort is needed.
If you want to win them back quickly, then you can only do so when your customer wants to cancel or right after. Since the companys credibility will be at risk, youll need to take action without delay during those periods. Both listen and acknowledge your customers difficulties. Although it is important for you to be benevolent in your resolution offer, regardless of whether you win them back or not, you need to be gracious. Additionally, you customer service representatives need to have the power to act immediately without the approval of the manager.
There will be a few times when the customer will either terminate their contract or discontinue your service, so there is no way to win them back right away. In those situations, you would need to move onto plan B, which is a longer-term plan. If this happens then you need to accept your loss and let your customer go. Let them know that you are confident in their choice and dont forget to wish them the best of luck. Remind them also that you hope that they will consider your company in the future. Even though they wont be using your service anymore, they could suggest you to others because of good customer service.
For instance, suppose you are a golf club manager. One of your members had to cancel their membership because of arthritis. You cant convince them to continue paying for a service that they cant use anymore, so you just have to accept the outcome. Treat the person with respect and let them go without making a big deal out of it. Maybe theyll recommend you to a friend and that is definitely a long-term win.
When you want a lost customer back, separate the immediate from the longer-term win-back opportunities.
If youve been in business for a while, then you know that winning back a customer isnt always as easy as making a single phone call. Sometimes it takes time and a more deliberate plan of action.
The quick win-back opportunity is only possible in the moments your customer wants to cancel, or immediately afterward.
During these periods, your companys credibility is at risk, so youll want to take immediate steps to save the customer relationship. Listen to their issues carefully and acknowledge the customers pain. Be generous in your resolution offer, but be equally gracious regardless of whether you win them back or not.
Your customer service reps need the power to act immediately. No waiting on managers for approval!
Sometimes, however, when a customer terminates her contract or discontinues your service, there is no opportunity for an immediate win-back. In those cases, youll need to switch to a longer-term plan B.
This plan involves accepting your loss and letting the customer off the hook so that they will recommend you to others despite the fact that they wont be using your service anymore.
Tell them that youre confident that theyre making the right decision, that you wish them the best of luck, but you hope theyll reconsider your company in the future.
For example, if youre a golf club manager and one of your members has to cancel her contract because of arthritis, then you just have to accept it. Theres no point trying to convince her to continue paying for a service she cant use!
Instead, treat her with respect and let her go without a fuss. This way, shes more likely to recommend you to a friend, and thats a long-term win!
Final Summary
Trying to get new customers is a lot more expensive than holding on to existing ones. As a result, it is crucial for businesses to do everything in their power to recognize the signs of an at-risk customer so that they can win back their loyalty and keep them around for longer.
Applicable advice:
Never give up on the customers that you believe you have lost.
Add your expired customers to the mailing list the next time that you send out a special offer to some prospects. They are much more likely to be susceptible to your services and may even make the decision to return or to buy again because they have already been acquainted with your products and services before.