How to recover revenue by recapturing lost customers
Profitability and growth are dependent on a firm’s ability to successfully acquire and retain customers. And if a high net-worth customer defects, the firm needs a proven process for winning the customer back.
Customer winback is the strategic process of going after defected customers with the goal of winning them back. This process enables companies to recover revenue and recapture market share. Studies show that companies can successfully win back 20% – 40% of lost customers when they try. (Griffin & Lowenstein, 2001)
Any customer retention strategy needs to include a fiercely focused plan for winning back customers who have defected to the competition. Following is a simple 6-step customer winback strategy designed to help firms recover profits by recapturing defected customers.
1. Track customers who leave.
Research by CustomerSat shows that 41% of companies do not know how many customers they lose per year. The first step of a win back program is to know how many customers you are losing. Begin tracking customer defection on an annual basis.
2. Develop an at-risk profile.
Once you begin tracking customer defection, the next step is to analyze lost customers and look for common denominators, patterns and trends among the defected group. For example, one bank found that more than 20% of its lost customers were over 55, had been with the bank for more than 10 years and had held multiple accounts. This valuable information must then be disseminated to the group responsible for customer retention so loyalty-marketing efforts can focus on communicating with current customers who match the profile of high defectors so those (at-risk) customers can be protected from defection.
3. Identify early warning signs of defection.
In many industries, customers on the brink of defection can be detected by one or more factors. For example, a banking customer who has stopped her automatic drafts and direct deposits and whose average monthly balance drops significantly might be tying up loose ends and heading to a competitor. Discover what factors suggest your customers are on their way out so you can proactively communicate with them and entice them to stay.
4. Choose win back candidates.
Determine which defected (or on the brink of defection) customers the company wants to win back. You won’t want to attempt to win back all lost customers. There are some customers you’re not positioned to create superior value for. By selectively choosing win back targets, you can focus and maximize your efforts by going after only your best-fit customers.
5. Go get ‘em!
Develop and hold regular customer win back “campaigns” in order to win back customers and learn why customers are leaving. Put together a team to personally call your best customers who have left and survey those customers. (What’s prompted you to leave us? Where are you going? What attracts you to___?) Next, invite the customers to come back. Overcome objections they give you and assure customers that you can and will deliver the level of service they expect and deserve.
6. Follow-up with all win back candidates.
When you win customers back, follow-up 30, 60, and 90 days after reuniting to ensure you are delivering the level of service they expect – service that will keep them for life. For the customers you don’t win back, follow-up and thank them for their past business and for the information they provided you via survey after leaving.
Research by CustomerSat recently found that 62% of companies that fired a key supplier reported choosing a replacement supplier that offered basically the same product or service. This tells us that customer’s needs remain the same when they defect and these needs could easily still be met by the original firm. This is a golden opportunity for companies to work to win back the defected customer.
When companies combine acquisition efforts with strong recovery and win-back strategies, they can literally lead their companies to a position of market dominance based on the strength of their service strategy.
When your team is fiercely focused on delighting and keeping customers, your company will retain more customers and increase profits
Myra Golden Media helps organizations retain more customers and improve corporate reputations in the eyes of consumers. Our clients include corporate giants such as McDonald’s, Frito-Lay, Michelin Tires and Coca-Cola, major nonprofits such as American Medical Association and National Association of Division Order Analysts, and specialized firms such as Ihloff Salon & Day Spa, Mullin Plumbing, and Discount Debt. Learn more about Myra Golden’s consulting and training services: http://www.myragolden.com/
Griffin, Jill, Lowenstein, Michael W., Customer Winback, Jossey-Bass, San Francisco