Last editedOct 20212 min read
Every business owner worth their salt considers customer retention their highest priority. We’ve all heard the old adage that it costs around 5 times more to acquire a new customer than to retain an existing customer. While this figure is hotly contested, prioritising customer retention is just good business sense.
Increasing customer retention by as little as 5% can increase profits by anything from 25% to 95%. Selling to a customer you already know has a success rate of between 60% and 70%, compared with 5% to 20% for a stranger.
And don’t forget about those lapsed customers who no longer buy from you. They’re not necessarily gone for good and could be a much warmer prospect than brand new leads.
Here are 5 ways to win them back!
Start with an apology
Soliciting customer feedback is extremely important, especially if that feedback is negative. While it may not be comfortable for business owners, it may prove an invaluable learning experience.
So, open a dialogue that starts with an apology. Send out some prospecting emails to say that you’re sorry for their lost custom. Ask if there was something you could have done better, and invite them to give you another chance.
Inviting a customer to tell you why they’ve left helps them to feel valued, while also giving you a great opportunity to make operational changes.
Make them an offer they can’t refuse
Sometimes a lapsed customer isn’t your fault, especially in the post-pandemic era. Your customers' financial circumstances may have changed, rendering your price point less comfortable for their household finances.
So, make them an offer they can’t refuse. Tailor offers based on purchase history to give the customer what they want at a better price. Bundled offers can be particularly effective. While they have a higher cost per customer, they also have a 47% success rate.
Even offering to upgrade a recent purchase can be an effective way to regain a customer’s interest in a relatively affordable way.
Sometimes, being flexible in your rules can be a great way to go the extra mile for a lapsed customer. For instance, some companies routinely accept returns after the 30-day return period has expired.
Sure, you may have to take a slight hit on your margins. But it may be worth it to win back a lapsed customer.
Send them a freebie
You know who loves free stuff? Absolutely everybody! Especially if they’re getting something relevant to their needs. If you haven’t seen a customer for some time, you may want to send them a full-sized sample of a new product to show them what they’ve missed.
This can be a great way to show them that you care and maintain brand awareness.
Incentivise them to refer a friend
There may be nothing you can do to win a customer back. Not because their opinion of your brand has been soured. But because there’s simply nothing more you can offer them. They came to you for something specific, and now that they have it that relationship has ended.
Or has it?
While the customer may no longer have any need for your business, they might know someone who does. See if you can incentivise them to refer a friend, family member or colleague to your business. If your referral scheme is appealing enough, they might be receptive to having another look at your company.
We Can Help
If you’re interested in finding out more about retention and winning back lost customers, then get in touch with our financial experts. Discover how GoCardless can help you with ad hoc payments or recurring payments.