Losing a new sales opportunity to a competitor stinks, because it means you've wasted time and money pursuing a deal that isn't going to happen, at least for you.

What's much worse, though, is losing an existing customer to a competitor. In this case, you've wasted the time and effort to win the account AND the time and effort it took to keep them happy.

There's more. Because it's easier and cheaper to sell to existing customers than acquire new customers, and existing customers are a potential source of easy-to-close referral sales, even a single lost customer can have a ripple effect that increases your cost of sales!

Not to worry. Here's a step-by-step process for winning the customer back:

1. Get the backstory first.

Before doing anything, find out what happened from the perspective of whomever was working with the account. If you've been intimately involved with the customer, you probably already have an opinion or a theory. However, if you're not close to the situation, get a reading from those who are.

Do not assume that whatever pops out of this process is the real problem, which might be entirely different when seen from the customer's perspective. What you need to know at this point is if there are any "landmines" that you might blunder upon when you call the customer personally. This information can help you prepare.

For example, if product deliveries to this customer were consistently late, it's likely (although not certain) that this is why the customer is leaving. In any case, you should be ready to explain how you plan to fix the problem in the future.

2. Contact the departing customer.

Meet (in person or on the phone) with a customer contact. Ideally this should be the primary decision-maker but if this person is not available (or does not exist because it's a consensus-driven organization), try to get in touch with the most senior contact.

Even if Step 1 uncovered series of horror stories, do not apologize at this point. Instead, ask two simple questions:

  1. Why are you leaving us?
  2. What would we need to do to keep you as a customer?

For you, these two questions are a no-lose proposition. Best case, customers will be so impressed with your curiosity and concern that they'll reconsider their decision to leave.  Worst case, you'll learn what's driving customers away so that you can make corrections.

3. Listen carefully and calmly.

To the first question, you'll get anything from an earful of angry complaints to a simple "we found a better price elsewhere." (BTW, statistically by far the most likely reason for customer defection is lousy customer service.)

Regardless of the answer, listen carefully and without getting defensive. Your job at this point is to learn what's really going on, not to win the customer back. If you're unclear on any point that the customer makes, ask for a clarification.

For the second question, unless the answer is akin to "Nothing, go stuff yourself," you'll get a sense of what you'll need to do win the customer back. Once again, your job is to learn, not to take action. At least not yet.

When you've heard the customer out, thank him or her for speaking with you. If you've heard complaints, apologize for the problem. In any case, tell the customer that you've definitely gotten some food for thought and politely end the conversation.

4. Decide if the root problem is specific or systemic.

You now know your company's internal view of the situation, the customer's external view of the problem, and the customer's requirements for winning back the business. Your challenge now is identifying the seriousness of problem.

Some customer problems are specific to the situation. Such problems include (but are not limited to) personality conflicts, one-time accidents, and management or operational changes with the customer's organizations.

The other type of customer problem is systemic to your own business model, such as pricing that's out of whack with the competition, consistent complaints about your sales practices or customer support, and so forth.

5. Decide if you really want the customer back.

You must now determine whether it's worth the effort to win the customer back, based upon everything you've learned. This will, of course, require you to fix the problem that caused the customer to leave.

As a general rule, specific problems are cheap and easy to fix. For example, if the customer doesn't like the rep assigned to the account, it's fairly easy to assign somebody else to that account.

Systemic problems, by contrast, are expensive and difficult to fix.

For example, suppose the problem is lousy customer support. If your business model depends upon providing low cost (and therefore minimal) customer support, you'll either need to change that business model or carve out an exception for this customer. Is it worth the effort and hassle?

Similarly, if the problem is a higher price relative to competition, you must decide whether you want to drop your price for this customer. Will other customers demand similar concessions?

There is no easy answer to these questions. However, it's better to make an informed, well-considered decision rather than just scramble to get a customer back, no matter what.

6. Revisit the departing customer.

Assuming you've decided that you can and will make the changes that you believe could win the customer back, email the customer and describe exactly and specifically what you're changing or plan to change.

Don't state that you'd like the customer back. The customer already knows that. Instead, use this communication to let the customer know that his or her inputs and opinions have changed the way you do business. Example:

Joe:
I really took the conversation we had the other day to heart. As a result of your input, we've decided to [whatever action you've decided to take.]  I can't thank you enough for calling this problem to our attention.
Jim

Wait a day or two, then place a call to thank the customer personally. During this conversation, point out that you've done what the customer said would cause them to remain as your customer.

Most of the time, the customer will remain loyal. If not, you're still ahead of the game, because that (now former) customer will have a "good feeling" about you and your firm and be willing to change back to you the minute their new vendor makes a mistake.

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