NFIB

Winning Back Lost Customers
04/ 21/ 2004

by Jeffrey Moses

Small businesses are often shocked when adding up the cost of acquiring new customers. Advertising, creation and printing of marketing materials, salaries of marketing staff, phone expenses, mail, travel -- these and other expenses often result in every new customer being extremely expensive.

Because of this, it's vital to keep as many customers as possible. Inevitably, however, you will lose some customers. For one reason or another, they will begin purchasing elsewhere, meaning that the money you invested to get their business in the first place is down the drain.

The bright side is that winning back lost customers usually costs a lot less than acquiring new ones. Often, no more than a single phone call is required to attract them back to your business.

To start, make a list of former customers who have not purchased from you in some time -- three to six months or more. Find these customers by going through old sales receipts, sales lists or contact sheets. (This is one reason it's important to always ask for customers' phone numbers and addresses at the time of purchase.)

If the list of former customers is large, identify those who are most likely to purchase again, perhaps based on proximity to your location, size of previous purchase, type of purchase, any personal information about them that you acquired, etc.

Contact each customer individually by phone. A mailing to everyone on the list will produce a limited number of new sales, while a personal phone call to each will bring the greatest results.

Explain that you noticed they have not made a purchase recently, and tell them you're concerned that they may have had an unpleasant shopping experience. Find out why they didn't buy from you again. Was it price? Poor service? Limited selection? Difficulty in returning an item? It's important that you determine why they didn't buy from you again, and address that reason.

It's likely that many former customers will be reluctant to come right out and tell you why they didn't come back. When that's the case, approach the subject from another angle by asking if they have any specific suggestions on how your business can be improved. Assure them that their input will be extremely valuable to you, because they once shopped with you and were once a valued customer.

When you find out why they didn't come back, make amends. If a complaint is specific, assure them that they won't have the problem again if they decide to shop with you -- and make sure that they don't! You may find that many customers have the same complaint. There's no better way to find out how your service can be improved.

Before ending the conversation, ask them to consider shopping with you again. A direct call-to-action is vital for success of this approach.

Because they haven't been shopping with you, there's a good chance that they've become loyal to another store and may need an incentive to try you again. You may want to offer a discount on their first purchases or invite them to a special sale.

After a campaign to win back former customers, an increased emphasis on customer service is critical. It's wasted effort to promise someone they won't have a problem and then not fix the problem that alienated them in the first place.

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