The foundation upon which any business � traditional or e-business � prospers and grows is its client base. Customers come and go, but one key to success is winning back some of those who have previously left.
In a one-on-one interview with Jill Griffin, author of the internationally-published, business bestseller � Customer Loyalty: How to Earn It, How to Keep It and co-author of the soon-to-be-released Customer Win Back: How to Recapture Lost Customers and Keep Them Loyal, we examine the often overlooked opportunity of winning back customers.
According to Griffin, most companies today focus on acquisition and retention of clients. "This is unfortunate," explains Griffin. "Approximately 10% to 40 % of a company's customers depart each year. Very few companies have a tracking system in place to monitor this exodus and win back these customers. Companies consider 'lost' customers 'dead' customers, and this simply is not the case."
Marketing Metrics, a Paramus, N.J.-based consulting firm, estimates that the probability factor for successfully selling to active customers is 60% to 70%. This same factor is a mere 5% to 20% when selling to prospects. The untapped potential lies in "lost" customer clients, where the closing potential reaches 20% to 40%.
Griffin and co-author Michael Lowenstein describe this win back process in their new book, in which they explain that acquiring, retaining, and winning back clients is an interconnected process. The more a company knows about the needs and purchasing habits of its clients, the better it can service each customer. Knowing why a customer is no longer an active customer is as important as understanding the decision-making process a new client went through to ultimately purchase the company's product or service.
It is through the application of this knowledge that a company can tailor its sales approach. Knowing why the client may potentially leave down the road helps to meet his needs today. Recognizing the "red flags" allows a company to intervene before a customer makes the decision to sever the relationship. Moreover, understanding the "why" behind the customer loss is the first step in developing a successful win back strategy to regain this defected customer.
"Unfortunately customer loss is not a pleasant subject," explains Griffin. "It is more fun to acquire new clients. It is an issue of human nature. We shy away from loss. We take it personally." A customer may leave because of poor service or a bad experience. Sometimes a customer simply takes its business elsewhere, and this is not a direct reflection on the company's product or service, just a lack of appropriate customer attention that can keep the customer on the active list.
According to Griffin, some of the most successful programs on customer win back, to date, come from the telecommunications industry, where there is a 5% chance of acquiring a "new" customer and a 15% to 20% chance of success in winning back a customer that is currently purchasing a competitive service. We have all been consumers of this industry, with temptations and offers arriving weekly in our mailboxes and across telephone lines.
This same attitude toward clients can be extended beyond traditional "customer relationship" thinking. The processes involved in acquiring, retaining, and even winning back "direct clients" can be extended to internal clients (employees), indirect clients (distributors) and partners (suppliers).
"In business, we are all customers on some level," explains Griffin. "This is such an important, yet overlooked area of customer service, that we have devoted a separate chapter to earning staff loyalty. Managing an employee life cycle is no different than managing the life cycle of a customer. The needs of employees differ. The new employee has needs that differ from the established employee.
"Recognizing 'employee red flags' can only benefit a company. To keep talent in a company, the company needs to help the employee to excel and develop. If the company fails to recognize this need, the employee will leave � just like a customer. The employee needs to view himself as a long-term player. Similarly, clients need to view themselves as long-term clients, a part of a company's success."
With the technologies available to assist companies with customer relations management efforts, the next level of customer loyalty will be "win back." The information for tapping into this potential is already in hand. Now it is time to apply it. It is the opportune moment to learn from past mistakes, recognize signals that indicate a potential defection and service the client to the highest level. The Internet has created an ease of entry for meeting the needs of clients � potential, current and lost. Companies are no longer competing with neighboring businesses for clients; they now compete with the world. The number of CRM tools available today to assist companies with their customer efforts grows daily. But they can only be used successfully if there is a central focus � and the focus is still the customer.
Jill Griffin will be a guest "chatter" on SearchCRM this fall, at which time she will answer questions submitted by registered users of the site.