March, 2007

How to Respond to a Lost Customer

Losing a customer hurts, but careful courting and patience may bring him back into the fold. 

By Bill Lee

Over the course of my career, I have lost key customers on a couple of occasions. Through that, I have learned that customers rarely make an impulsive decision to leave one supplier for another. Instead, they usually make a change only after a lot of careful thought.

In hindsight, I was usually the one who had dropped the ball in the relationship somewhere along the way. (At least that was the customer’s perception, and the customer’s perception is all that counts.)

I don’t ever recall losing a customer because of price; customers jumped ship because of either a service issue, or worse yet, because they felt as if we had taken their business for granted.

Taking Action

When you first learn that you’ve lost a key customer, pick up the telephone and ask for an appointment. You need to learn firsthand what the reasoning was behind the customer’s decision.

Avoid discussing the issue over the phone. You need to ask for a face-to-face meeting. Nine times out of 10, a formerly loyal customer will grant you an audience.

Before you meet the customer, sit down with a couple of your managers and a salesperson you respect and make a list of the questions that need answers. You must be well prepared since this customer meeting is very important.

First, decide if you want the customer back? All things considered, how profitable was the customer? Did the customer fit your company’s ideal customer profile? What percentage of your total business did this customer represent and what percentage of your time was required to service his business?

It may also be wise to invite a company executive to join you at this internal meeting, depending upon the customer and his relationship with your owner or general manager.

When you meet with the customer, expect him to have his guard up. Since he has probably been wrestling with the decision to move his business for several weeks or maybe even months, he’s not likely to reverse his decision on the spot. Consider this a fact-finding mission. What are the issues? How firmly are his feet set in concrete?

Reselling the Lost Customer

1. Don’t overact. Don’t show up on the former customer’s doorstep every day. Understand that regaining this customer’s confidence is likely to take time. Don’t make the mistake of trying to “buy the customer” back by firing off a series of low-ball prices.

2. Stay in touch, but unobtrusively. I call this technique “drip irrigation.” Stay close, but not so close that the customer feels pressured. You want the customer to feel missed, but avoid a full-court press.

3. Be patient. Drop the customer short notes from time to time. Do little favors, but ask for nothing in return. Accept that the customer will probably want to give your competitor a chance to prove how well they can service his account.

4. Communicate with subs and other confidants within the lost customer’s organization. Try to find out through the back door how happy your former customer is with his new supplier.

5. Act when the timing is right. Perhaps three to four months after you’ve lost the business, ask the customer for another meeting. Come prepared to make some key commitments, and in return, ask your former customer for a second chance.

As Henry Ford, a man who failed and went broke five times before finally succeeding, said, “Failure is the opportunity to begin again, more intelligently.”