Ever wondered what is more cost efficient: customer acquisition or retention? And where should you focus your marketing budget? If the studies by The Harvard Business Review are to be believed, on an average, businesses lose 50% of their customers every five years and the impact of this is much higher than you might imagine. Here is an eye-opener from the book, Leading on the Edge of Chaos, by Emmet C Murphy and Mark A Murphy:
- Acquiring new customers is five times more expensive than satisfying and retaining current customers.
- A 2% increase in customer retention equals decreasing your company costs by 10%.
- Based on the industry you serve, reducing your customer defection rate by 5% can enhance your profitability by 25 to 125%.
Tips on Winning Customers Back
Here are some useful tips, such as customer engagement, that can help you win back lost customers:
1.Scrutinize your losses
Customers rarely leave you without a reason. Begin your reclaiming journey by determining the cause of leaving. Identify the lost customers, track their purchase pattern and, based on the results, list out the customers that significantly impacted your sales. Begin by sending a personalized mail with a direct approach, such as “We miss you and want you to come back” or “Tell us what we did wrong. What can we do to win you back?” Request detailed information about the reason for leaving so as to have clear strategy to fix it. To reduce their time on feedback, you can link a customer feedback form or some interesting new offers. Based on the reasons your customers cite, prepare a strategy to win them back.
If your customers left because of some genuine issues with your products or some service related issue, then offer a sincere apology. Take responsibility for the error and tell your clients your plan of action to rectify the situation.
3.Make up for your loss with a special offer
It isn’t practical to offer discounts to every lost customer. However, there are a few who are worth every effort. For those clients, you can offer a discount card or a special gift, along with your personalized mail. Remember, in the age of impersonal mass marketing, a little extra effort on individual attention and appreciation can bring unparalleled customer engagement.
4.Stay in touch
Not all customers will respond positively to your attempts to win them over. Nevertheless, you must keep trying to drive customer engagement. You can keep those valuable customers on a special emailing list and based on their previous purchasing pattern, keep sending them offers that might interest them, on an occasional basis. It is an easy and cost-effective way to make amends and maintain the bond with your valued customers. Make sure to include the unsubscribe option in all your promotional emailers, so that if your customers find your offers uninteresting, they can opt out of it. It may be a loss for you, but respect their decision and move ahead.
Remember to have a preventive action plan in place to take care of your customer complaints, rather than losing them and going through the effort of convincing them to return to you. Remember, according to the White House Office of Consumer Affairs, “For every customer who bothers to complain, 26 other customers remain silent.” So, the first complaint is an alarm signal. Attend to it before you lose your valuable customers.