Lost customers are often ignored over time, mainly because companies often believe they are permanently lost. They consider it a waste of time trying to win back lost customers. Lapsed customer survey results and outcomes suggest otherwise.
Did you know…
The average company has a 20-40% probability of successfully selling to lost customers, compared with just 5-20% when it comes to new prospects.
Source: see below…
Win Back Lost Customers
Let us ask you this:
What are you doing currently to keep tabs on your lapsed customers?
How much do you know about why your past customers parted company?
When was the last time you re-approached a lapsed customer to win them back?
How much has your business evolved since you lost certain customers?
Are your lapsed customers aware of your company’s developments since you lost them?
Are you aware of your annual % of customer loss?
Many companies have no idea how many customers they are losing each year and it’s probably more than they realise. Close to 50% of Marketing Managers and 30% of Sales Managers could not identify the percentage of customers lost annually. Those who thought they knew their company’s lost client rates believed the average to be approx. 8% per year. However… research shows that companies lose on average 20-40% of customers per year.
Source: Customer Winback: How to recapture lost customers and keep them loyal. By Jill Griffin & Michael W. Lowenstein
Are lapsed customer surveys and customer win-back campaigns a worthwhile investment?
Lets say it was between 20-40% of your customer base as the research above suggests. Think for a moment what effect this could have on your bottom line. If your customer losses equate to a higher percentage than you’d like, there’s no need for concern. A study by Marketing Metrics has found companies have a much better chance of winning business from lost customers than from new prospects. The research found the average company has a 20-40% probability of successfully selling to lost customers, compared with just 5-20% when it comes to new prospects.
What this confirms is that lapsed customer surveys and customer win-back campaigns can deliver attractive rewards. The key thing to understand is why your customers parted company in the first place. Armed with this insight, in many instances you can address the issues and win the customers back.
Source: Jill Griffin – The Loyalty Maker 2009-2011
The majority (96%) of customers won’t tell you all the reasons (obvious and not so obvious) why they ceased being a customer… unless of course you ask. Research suggests that for every customer who takes the time to voice their complaint, there are 26 more who remain silent (therefore in the interests of brand protection and business evolution, you need to proactively chase and address feedback rather than sit and wait).
Source: Direct Selling Educational Foundation. “Customers Mean Business….Survey Shows You Have More Dissatisfied Customers Than You Think.”
If you believe that your efforts investing in winning back lapsed customers may not be worthwhile, think about this…… 82-95% of unhappy customers will come back if impressed with your win-back efforts and are performed in a timely manner. Add to that… those customers will go on to refer on average, five new customers.
Source: US Department of Consumer Affairs
Increasing customer loyalty
Using the feedback from lapsed customer surveys to drive change can help to lower future defection rates. This can have a massive impact on profits. A 5% reduction in customer defection rate can increase profits by 25-125%, depending on the industry. Put another way, a 2% increase in customer retention can have the same effect as decreasing costs by 10%.
Source: The Loyalty Effect, By Frederick F Reicheld, Harvard Business School Press. Chapter 2 – The Economics of Customer Loyalty
Understanding why customers part company
Defections happen for all sorts of reasons. It could be due to a competitor’s pro-activeness or a company’s neglect. It could be due to poor service, indifference of attitude or maybe price. However, for price to be a driver of supplier change, the price difference needs to be significant (more than 15%). All companies providing products and services to customers need to understand these driving influences of change in order to build loyalty among their customers and in doing so, stabilise and increase sales.
Sales Accelerant market research services
What Sales Accelerant can do is deliver a lapsed customer research survey to help your company:
– Win back lost customers
– Better understand why customers switch suppliers and the triggers that cause the changes
We can help your company to understand what actually drives your customers to a new supplier (e.g. impulse or rationally planned), as well as finding out who is driving decisions and what has caused the switch.
Lapsed Customer Survey Benefits
A Sales Accelerant lapsed customer survey will help your company to understand:
- How price and your treatment of lost customers around price affects their desire to leave
- What role your competitors play in your customers deciding to jump ship (i.e. pull versus push factors)
- How you could win back customers that have left
- Which of your competitors your lost customers are going to and why
- Whether the competition has so far delivered on promises and expectations affecting your lapsed customers who’ve joined them
- If a certain profile of customer is more likely to leave your company to join the competition
- Whether the reasons stated for leaving change over time
Ultimately your company should carry out lapsed customer surveys at least every 6 months so that vital information can be gathered to improve company performance and to win-back customers.
Contact Sales Accelerant NOW on 01273 358170 or Email Us. Begin the process of winning back lost customers and increasing existing customer loyalty.