Companies lose an estimated 10% to 25% of their customers each year, depending on which expert you talk to. These losses are often due to factors the business can control, such as the buying experience. Winning back lost customers can often be achieved by changing how employees interact with them.
According to customer service strategist Adam Toporek, 82% of U.S. consumers stopped doing business with companies for three main reasons: 73% encountered rude staff members, 55% experienced an issue that wasn't resolved quickly, and 51% were frustrated with uninformed staff members.
The good news is that losing a customer doesn't have to be permanent. Many can be wooed back with minor effort. Here are five tips for persuading former customers to do business with you again.
1. Find out why they left
The first step in stemming the tide of lost customers is figuring out why they're defecting in the first place. What was the problem? Why did they stop doing business with you? Ask both your customers and your employees for feedback.
Giving customers the opportunity to explain the problem also allows you to get all the information you need to provide a solution, owner Nathan Ripley of Maid Just Right explains.
Sometimes the reason customers no longer do business with you is beyond your control, such as your pricing was above their budget or they moved away. But in many cases, there are steps you could have taken to prevent the situation. Ask questions to find out what those were.
2. Acknowledge that mistakes were made
Owning up to your business's mistake is essential. Customers will never do business with you again unless you take responsibility for the situation, apologize, and relay what you've done to address the issue so that it doesn't happen again. The last step might include firing a problematic team member or implementing new technology, for example.
“Owning up to past mistakes is the only way to win customers back in a way that is genuine and effective," says Seth Kravitz, CEO of PHLEARN, which provides photography-related tutorials.
3. Offer an incentive to return
After you've convinced your customer that the company has changed and that they won't experience the same problem again, you need to give them a reason to give you another try—an offer they can't refuse. That might be a gift certificate to enjoy a free meal for two at your restaurant, a free haircut, or a free limo ride. Whatever the product or service was, try to replace it.
4. Be proactive
Even when you're not sure if you've lost a customer, make an effort to stay in touch. If you haven't seen them in a while, reach out to see if there's anything you can do to serve them. That's smart customer relations.
Jeff Moriarty's family business, Moriarty's Gem Art, uses a point-of-sale (POS) system synced with its email marketing system to help keep tabs on regular customers. “Any time we haven't seen a customer in over 90 days, either buying from us or coming in for any sort of service, an auto email is generated with a coupon code that goes out to them," says Moriarty. If an email isn't on file, the company sends out a physical postcard with the coupon. “Both strategies have worked fairly well in getting these customers back in our store," he says.
5. Stay in touch
Customer needs and situations may also change, so keep the conversation going so you can rekindle the relationship down the line.
Old customers are actually your best prospects, says V. Kumar, a marketing professor at Georgia State University, in Harvard Business Review. Former customers have already demonstrated a need for your product or service, are already aware of your brand, and are likely to be convinced to come back if you can develop a custom offer based on your existing knowledge of their needs. You can also zero in on your most profitable former customers so that you don't re-engage low-margin clients.
But sometimes the customer just isn't a good fit: not every lost customer is one you want to win back. Make sure the ones you've targeted to re-engage are worth the effort.