Bring ‘em back alive

A famous lion tamer by the name of Frank Buck put on a circus act in the United States during the 1940s. His theme, “bring ‘em back alive,” came from Buck’s adventures into the various jungles where he would journey to bring his animals back alive for people to see.

Visit most businesses and you might think their theme is “there’s more where they came from.” Treating customers like a commodity and not caring if they return can be a very dangerous practice. Caring enough about customers to bring them back is your key to greater repeat sales, referrals, and a more profitable business.

So how effective are you at bringing back dissatisfied customers who leave your business? Do you know how many are lost in the competitive jungle, and do you have a plan to lure them back? Or do you simply hope or wish they’d return on their own?

If you have a bucket that leaks 20 percent of the water, you would consider it a problem. However, customer defection rates typically range between 20 to 40 percent. Customer defection is probably the least recognized dynamic in a business because it is not measured or typically noticed until the leak is greater than the amount going in the bucket. If a business loses 20 percent of its customers in a year, but gains 30 percent more customers, the business owner may have a false sense of security and say business is good.

A 20-percent defection rate means an 80-percent retention rate, which means that in about four years a business will be dealing with about half the customers it started with (100 x .8 x .8 x .8 = 51). That’s a huge profit drain that cannot simply be countered by brining in new customers.

Research by the Marketing Metrics found that the average company has a 60 to 70 percent probability of successfully selling again to “active” customers, a 20 to 40 percent probability of making a successful sale to lost customers, and only a 5 to 20 percent probability of successfully selling to a new prospect. In other words, the odds are about twice as good for your business to sell to a lost customer than to replace the customer with a new one, and it will take a lot less effort to make a sale to your loyal, repeat customers.

Lost customers are people who were once satisfied with your service and products, but for whatever reason have stopped buying from you. In a simple scenario, it may just take a letter or call to ask how the customer is doing and encourage a return visit. In more complicated situations, you may need to rectify a situation and make an apology. In some cases, you might have an outdated or poor policy that drives customers away. Your employees may want to do the “right” thing, but the company policy forbids it. Think of the number of times you have heard, “I’m sorry, but that’s our policy.” The customer silently replies, “I’m sorry, but I’m your new lost customer.”

Of course, the best time to keep a customer from getting lost is to catch ’em before they escape. Some companies know the value of their customers and have individuals tasked to make sure their customers are pleased with the service they receive. This is especially important for those customers you consider your very best. Losing one of them would cause a major “leak” in the bucket. One way to keep track of those customers, so you can take action before they are lost is through “exception reporting.” This refers to a method that shows when a customer begins to deviate from their normal purchasing pattern. If a customer usually makes a purchase every four to five weeks and for some reason a purchase is not made for ten weeks, then this would be an exception to the normal purchasing pattern. Maybe nothing is wrong. However, if a competitor is trying to woo them away, you might like to know about it. When this exception is noticed, you or your representative should contact the customers to let them know they have been missed and ask what can be done to keep their business.

Avon cosmetics once discovered that 20 percent of their sales representatives dropped out and stopped ordering products in a given month. To remedy the situation, Avon monitored the orders and called every Avon salesperson who did not place an order within five days after the close of each ordering period. This simple tactic reduced the 20 percent monthly drop-off down to 8 percent.

One of our clients had a competitor move on island. We knew their strategy would be to offer lower prices to lure in customers. Instead of getting into a pricing competition or risk losing customers, our client maintained his prices and focused on adding greater value for his best clients. Not only did he keep those customers from escaping, his overall sales also improved. Even if you lose a customer to competition, don’t despair. Consider it a temporary loss; then do what it takes to bring ’em back alive.

(Rik is a business instructor at Northern Marianas College and Janel is the owner of Positively Outrageous Results. They can be contacted at: biz_results@yahoo.com)