Far too many SMEs are missing out on a huge potential source of new sales. It’s not only sitting right under their nose, but is also one of the most cost-effective ways to achieve extra sales. Surprisingly, these ‘new’ sales come in the shape of former customers.
Lost customers can take a huge toll on businesses, particularly those that rely on bills being paid on a recurring basis. Churn can be a killer if it gets out of hand, with many businesses spending a fortune marketing to new customers in an attempt to replace those they’ve lost.
Winning back old customers cheaper than chasing new
However, a new school of thought suggests that you may spend less and have a better chance at winning back lost customers, than successfully chasing new ones. Here’s why. Customers that have already been identified and shown a need for your product or service are infinitely easier to find and target. You already have their information so half the job is done for you. It also beats randomly targeting prospects on a cold-call list.
Save money on brand awareness
Another reason it may be more cost-effective to target former customers is that they already know about your brand. The costs to market to them will be significantly lower than if you had to educate new customers unaware of your brand or product offering.
Use your customer intelligence
A third reason is that most businesses now have the technology to gather an incredible amount of information on how their customers use products and services. This customer intelligence can be invaluable. If you know how and when they used your product, it puts you at a distinct advantage over competitors.
Refine targeting and tailor offers
It also means you can fine tune your targeting to only pursue the more profitable customers who left, rather than chase every single one of them. Plus, you can tailor specific offers based on their usage to win them back. Focusing on the customers more likely to come back will save you time and money.
Work out who is more likely to come back
A former customer’s propensity to return can be largely based on why they left. Naturally, their service experience is critical. A bad experience will probably put them off for good, while customers who didn’t complain about your service or had a complaint resolved satisfactorily may be more receptive. Price switchers aren’t particularly loyal, so a better offer could lure them back.
So what are some of the strategies you can use to win back lost customers? Some of the simplest ways are by offering a service upgrade or better deal. This can be done separately or, if appropriate, as a bundle.
Find out why they left
The key is learning why they left. Let them know you’re personally interested in finding out why they took their business elsewhere. It could be as simple as they didn’t feel valued or felt like a name on a list. A little extra after-sales care or attention can do wonders for retention.
Admit your mistakes
There’s also merit in taking responsibility for your actions and admitting mistakes. Assure them that you’ve identified system breakdowns and that things have changed. Just make sure you have these in place, or they’ll walk away pretty fast and be burnt forever.
Share news and updates
If you do things differently, tell them about it. Keep them updated on what your company is doing, your innovations, efficiencies and how doing business can be profitable for them. It says, that despite them not being a customer, you’d still like to maintain a relationship with them.
Taking steps to target the most receptive lapsed customers can save you time and money. At best, you’ll be reunited with an old profitable customer. At worst, you’ll be in a great position to pick up the business should the new supplier drop the ball.
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