Tips for Winning Back Lost Customers

The time and expense associated with attracting new clients is considerable. As a small business owner your time is money. Investing your time regaining former clients can be a far more effective way of growing revenue than trying to build new client relationships.

Ken Lineberger, president and founder of Waters Edge Wineries, a craft winery franchise agrees.  He said, “Acquiring new customers is more expensive than retaining existing ones, which makes re-engaging customers far more cost-effective than attracting entirely new business.” 

Reaching out to lost customers shows how dedicated you are to ensuring their satisfaction, believes Ricky Allen, marketing director for Ever Wallpaper, which carries mural wallpaper. “Focusing on retaining customers shows that you value them and their business," says Allen. "This can lead to increased loyalty, higher lifetime value, and improved brand recognition.”

Employing these strategies could help you re-engage lost customers and boost your revenue. 

1. Focus your efforts on the best former customers.

Not every customer is worth winning back. Those customers with a low lifetime value or who have proven difficult in the past are probably best left to your competitor.

Check customer data, including sales records to see which lapsed customers are worth re-engaging. Look for high-value clients that have purchased often.

2. Get feedback.

To know how to regain a lost customer, you must become educated on why they left in the first place. Re-engaging lost customers and asking for their feedback gives you the information you need to make improvements and persuade them to come back.

“When you understand why customers left, you can devise a retention strategy,” says Joe Tolzmann, CEO of RocketPlan, a software-as-a-service platform for property restoration professionals. His company discovered that customers were being turned off by their higher upfront costs, so they built a tool that showed potential buyers how much they would save overall by using their product. The approach proved successful.

Former customers are more likely to convert than cold leads. Learn how to engage with and start winning back lost customers.

Find out why customers have left by reaching out to them individually through surveys, feedback forms, and personalized communication. Send emails and text messages, and for particularly high-value customers consider making phone calls.

3. Adjust your offer.

Your lost customer research might uncover some information that you can use to create a new and winning offer.

Kiran Lachwani, head of marketing and operations at Power Your Curls, a hair care brand for curly hair suggests, "If a customer left for a better price on a rival firm, email them a coupon code for a discount on a future purchase. Even small, targeted offers can have a big impact on customer retention.”

4. Take responsibility.

Winning back lost customers may require that you acknowledge that you did not meet client expectations or perhaps failed to provide a high-quality of service. “If a customer left due to a disappointing experience with your company, acknowledge their dissatisfaction,” says Lineberger. “Apologize and explain the steps you’ve taken to ensure that they won’t be disappointed again. Customers appreciate transparency and taking responsibility shows maturity in your business dealings.”

Eric Jones, CEO of Couture Candy, a special occasion fashion e-commerce business, agrees. “If there were any shortcomings on your part that contributed to the customer's departure, take responsibility and apologize sincerely,” he says. “Acknowledge their concerns and show empathy. A genuine apology can go a long way in rebuilding trust and showing your commitment to improving their experience.”

5. Make it personal.

Customers often leave because they don't feel acknowledged or valued for their patronage.  A survey by Dynata found that rewards for delivering personalization well and cultivating brand loyalty scored highly with clients. The survey found 64% of consumers would rather purchase a product from a brand that knows them, and 34% would spend more money on the product to do so. Furthermore, nearly one in three (32%) are willing to overlook a single bad customer experience if they feel like a company is trying to understand them as a customer.”

When you reach out to past customers, make sure to address them by name and show you remember them by mentioning past interactions or purchases.

Lineberger says, “We send lost customers personalized emails or make phone calls, letting them know we recognize and appreciate their past business. For example, if they previously bought a particular type of wine, we’ll let them know about new arrivals in that line.”

6. Offer incentives or special deals.

Persuading customers back with attractive incentives and special offers is often effective. Consider providing discounts, free trials, an exclusive invitation to try out new features or products, access to your loyalty rewards program, and invitations to special events.

Slam Sarymamedov is founder of Ubunzo, a digital design studio. Last year his company offered complementary consultation sessions to lost clients, and the effort was a success. “The strategy worked really well and made them feel valued,” says Sarymamedov. “We showcased new works and projects that we thought might resonate with the clients and encouraged them to reconsider.”

7. Improve the customer experience.

Many clients leave over a customer service complaint. This is your opportunity to make improvements and let lost clients know you’ve dealt with issues causing them concern. When customers do return, live up to your promises by ensuring superior service.

“Make tangible improvements to your products, processes, and services,” says Jones. “Then let the customers know about these improvements to demonstrate your commitment to providing them with an exceptional and satisfying experience.”

The Takeaway

Rekindling relationships with customers requires planning and patience, but the results are well worth the effort. In addition to enjoying increased revenue, there are a host of other benefits to regaining customers.

“Winning back lost customers gives you valuable insights for improving products and services and improves your business’s reputation,” says Guy Marion, CMO at Chargebee, a revenue growth management platform. "By focusing on improved customer service and retention, your business can foster long-term loyalty, turning once lost customers into advocates.”

A version of this article was originally published on May 12, 2011.

Photo: Getty Images