Successful Customer Recovery Measures
How to Win Back Dissatisfied Customers
Regardless whether they offer physical products, digital products or services, no company exists without customers. New customer acquisition is the top priority for many companies, as new customers are felt to be the most lucrative and generate most revenue for the organisation. But is that even true? Customer recovery is presumed to require very high efforts, but even simple measures can help to prevent customer fluctuation or recover lost consumers..
In times of customer fluctuation and saturated markets, customer churn is a pain that many entrepreneurs share. However, this should not be accepted as inevitable. It pays to look after lost customers, as in the best-case scenario, you win them back. After all, dissatisfied customers are not lost forever. With clever measures, it is possible to convince them of the advantages of your product or service.
Table of Contents
What do you have to consider when winning back customers?
Of course, it is better for everyone involved if there is no migration in the first place. For this it is important to develop a sensitivity for certain customer signals and to recognize the first signs of customer churn or dissatisfaction at an early stage – so trying to prevent customer churn is half the battle.
Ask for feedback regularly
In order to identify dissatisfied customers at an early stage, it is worthwhile to question your own customers regularly in order to capture their current mood. A suitable key figure for determining customer satisfaction is the so-called Net Promoter Score®. This provides information about how likely a customer would recommend your own brand, product ,or service.
The consumer can now give an answer on a scale from 0 (very unlikely) to 10 (very likely). Based on their answer, the customer is placed into one of three different groups:
- 0 to 6 – detractors (critics of the product)
- 7 to 8 – passives (neutral towards the product)
- 8 to 10 – promoters (proponents of the product)
In examining the risk of emigration and possible recovery measures, we are of course particularly interested in detractors. As a critic, they would rather not recommend the product or service. In the worst case, they would no longer buy the product themselves or even tell friends and acquaintances about their negative experience – but customer recommendations are extremely important for companies.
Thanks to the Net Promoter System, critics can be recognized at an early stage and an overview of the current situation and mood easily obtained. With an additional field in which customers formulate messages, wishes, and expectations, companies can learn more about their own customers and align their processes accordingly.
Find Out the Status Quo – How Many Customers Have I Lost?
If it was not possible to prevent dissatisfied customers from migrating, it is of course necessary to pull out all the stops to win them back. For this it is important to analyze the current situation and to gain an overview of how many detractors were lost and exactly which customers ended their business relationship. This is often not that easy, because in many industries there is no verbal or written notice. Many customers leave the company quietly and without further notice, which makes it all the more difficult to define a churn. It is important to identify so-called “sleepers”. These are not to be considered lost, more like “ready to be converted”, which is why they deserve special attention.
However, it’s not just the number of customers lost that matters. The respective value of the customer must also be taken into account. This value is also used to decide whether any recovery measures are worthwhile or not. The following questions provide an answer or assessment of the individual customer value :
- Has the customer made regular purchases?
- How big were their bills?
- How long has the consumer been our customer?
Of course, it is only worthwhile to win back those customers who appear to be long-term lucrative and profitable partners. There is no point in investing time and money in consumers who cost more than they ultimately bring in. This can be determined using the following indicators:
- Sales potential per year
- Analysis of customer recovery
- Costs of customer support
- Recommendations from the customer
Customer Recovery – It goes like this!
If these procedures are not effective and customer loyalty cannot be further consolidated or expanded, measures for customer recovery are needed instead. Customer recovery management starts at this very point. Everyone deserves a second chance, right? That is why it is all the more important to make use of them because there is almost never a third. It is now necessary to build a “second loyalty” and the reasons – this time – to stay should be better than the reasons to leave. The following elements are particularly important:
Reviving dead files
Cast out the return bait
Use the correct form of address
Make the first transaction
How Should You Reach Out to Departed Customers?
If a customer has canceled their contract, speed is required. Contracts often include notice periods, which companies can take advantage of by reaching out to the customer during this time. In most cases, the customer has not yet found an alternative and may be persuaded to return. The faster you make this recall attempt, the better. If companies react quickly to termination, this conveys an appreciation of the customer.
The simplest method, which usually only generates a small return (maximum 10-20%), is the written survey. For this purpose, customers who have terminated are sent a questionnaire in which they can share their reasons for termination. Another measure is a telephone consultation. Although this requires more time and therefore money, you usually get much better and informative insights.
Customers usually perceive it very positively when a company makes this effort and enquire about the exact reasons for termination. With a personal call, one proves appreciation of the customer, which then makes the recovery much easier. Here the tone of the call makes all the difference – the communication quality of the conversation should be taken into account. Sales staff should always react confidently and in no way acidic or offended. What is important is a balanced relationship between speaking and listening, empathy, and the solution-oriented, friendly behaviour of the employee.
Note: Companies must be careful not to violate the legal restrictions on establishing contact under Section 7 UWG (law against unfair competition). “Persistent” contact by phone or email is therefore considered to be harassment.
Successful Customer Recovery Calls for Self-Criticism
Return rewards, counter-advertising, marketing, or loyalty bonuses – these are only effective if you deal intensively with your own weaknesses in advance. Companies need to identify their sales process and their own service level in a differentiated way. Only through understanding customer motives, can one develop effective measures for customer recovery.
Customer Recovery Checklist
- Identification of lost customers: Who actively canceled and who has not made a purchase for a long time?
- Analysis of the reasons for loss: What were the customers` motives?
- Recovery measures: Emotional, material, and financial approaches – in this order
- Check the success of the measure to optimize the procedure
- Prevention: Proactive measures help keep customers
Successful Measures for Detractor Recovery
Measures for customer recovery differ depending on what caused the exodus. If it is inflexible customer service, long delivery times, or impersonal customer communication, then sales and marketing should be made aware. However, if reasons can be successfully defined, it is worthwhile developing appropriate measures for customer recovery and applying them to ongoing processes with the knowledge gained:
|Product quality defects & poor quality of service||Gaps in the delivery network||Competitors have lower prices|
|Customer apology letter||Direct delivery||Point out special performance features that justify higher price|
Special delivery service
|One-off return offer|
|Compensation (plus possible loss compensation)||Cooperation with local partners||Promotions|
|Guarantees for the next delivery|
Summing Up: That’s Why It’s Worth Addressing Churning Customers
At first, it may sound easier to convince new customers to buy than to iron out negative experiences. However, acquiring new customers is usually much more costly. In addition, with the loss of previously loyal customers, you also lose a certainly guaranteed turnover. It is therefore worth rolling up your sleeves here and developing and implementing suitable measures.
- New customers vs. recovery – save costs: A rule of thumb is that replacing a customer with a new customer costs almost seven times as much as keeping existing customers. For this reason alone, it pays to retain the existing customer base as best as you can.
- Admitting mistakes – converting detractors into promoters: First and foremost, dissatisfied customers should not be seen as a problem, but as an opportunity. Critics often no longer have high expectations of a company, which is why you can often convince with small measures and little effort. If a company shows an understanding of the customer’s situation, this can often be used to revise the negative impression.
- Prevent snowball effect – The accumulation of negative experiences can lead to dissatisfied customers completely separating themselves from the company. Quick action is required to prevent the molehill from becoming a mountain. In addition, detractors are twice as likely to report negative experiences as promoters of positive experiences with their company.
Even if it is initially uncomfortable for many companies to deal with their own weaknesses, it is essential in order to prevent customers from churning. Self-reflective action, admitting mistakes, and working out individual solutions are particularly important here. If it has been possible to identify vulnerabilities, it is necessary to address them in order to prevent future customer churn. If it is possible to keep strong and loyal customers, this has a positive effect on the budget in marketing and the effort in sales. If an exodus could not be prevented, it makes sense to invest in suitable recovery measures, because lost regular customers often carry underestimated potential.