Wednesday, October 12, 2011

Closing the Deal

Finding your 'lost customers' – recovery tactics to rebuild relationships

By Lisa Dennis, president, Knowledgence Associates

If a former customer falls in the woods – do they make a sound? More importantly, how did they end up there in the first place? A lost customer is always a customer, whether they are currently doing business with you or not. Yet frequently, we let lost accounts stay lost. Why? Economic imperatives have focused us on new business and customer retention. There is often reluctance to speak with former customers that no longer buy your product or services. When asked why, companies state the following reasons:

•    Can’t compete on price
•    Key contact left the company
•    Bad customer experience
•    Don’t know why

But if you asked the customers themselves, you might hear:

•    Vendor stopped calling us
•    Didn’t grow with us
•    Unwilling to be creative
•    Only heard from them at renewal time
•    Unresolved bad customer experience
•    Someone else wanted the business more

The differences between these two sets of reasons point to a key communication gap. Recently I completed a series of customer interviews for a client. The goal was to speak to three types: current, new, and former. The most interesting conversations were with former customers. One owner told me, “I never hear from them, and someone else appeared who took more time with us. So we went with a new outfit.” When asked if they would consider doing business with their old vendor again, he said he would certainly consider it, but wasn’t sure that his business was important to them.

So think about it: what if you could recover 10-20 percent of your lost customers? It would likely have a significant revenue impact for you not only this year, but in future years. Because we’re so focused on generating net new business, recovering old accounts is usually not a priority. But it’s a great revenue strategy to identify recovery targets and develop an action plan to go get them. Here are some steps to get you started:

1.  Research your customer database for all customers that have not done business with you for one year or more.

2.  Segment the list into groups of one year, two years, three-plus – and then sort by sales territory.

3.  Review each list with customer service and the territory sales rep to see if they have any intelligence on why the customer left.

4.  Check in with other key personnel who have been with your company for a while and have had customer contact, to see if there is any anecdotal information.

5.  Categorize the reasons for leaving and work with marketing to construct tailored messages for the major categories.

6.  Create a multi-touch field campaign to start to re-engage – holding out those you know had a service issue.  The goal is to get agreement for a preliminary live conversation with a sales rep.

7.  Do NOT try to sell them anything in the first live meeting. This is only step one in earning back their business.

8.  For service-issue customers, re-engagement requires a personal touch. Determine what the nature of the issue was, and what you can offer them now that might be worth reconsidering you as a vendor.

For this to work, you need patience and consistency. So make Customer Recovery a key aspect of every monthly sales meeting. Track and report on the process of recovery for each of the identified targets and make sure everyone in the company knows what is happening, and when you win them back or why you didn’t. Once a lost customer is found again, immediately focus retention activities on them. Showing gratitude over time for their willingness to reconsider you is crucial to keeping them in the fold. Going forward, if a customer gets lost in the woods be sure that you have a search party ready to lead them back. Your profitability depends on it.
 

Lisa Dennis is president of Knowledgence Associates in Cambridge (www.knowledgence.com). "Closing the Deal" is a new weekly feature in MHT where sales experts share their advice on technology sales.