Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

It ain’t over ’til it’s over—winning back customers

It ain’t over ’til it’s over—winning back customers

A sales firm inevitably loses customers no matter how well it is doing—but is it worth trying to win them back?

A recent study by Dr Annie Liu from Victoria University of Wellington and Mark Leach from Loyola Marymount University in the United States evaluates customer reacquisition in business-to-business markets, and proposes a formula that sales companies can use to evaluate whether to invest time in wooing lost customers.

According to Dr Liu, a senior lecturer in the School of Marketing and International Business, previous research shows it is seven to 10 times more costly to gain a new customer than to retain one. “It’s very important to hold on to what you’ve got rather than invest energy in finding new customers.”

Sales executive and sales account managers from 98 New Zealand companies and 50 firms in the United States were interviewed to find out what methods they had found most successful in winning back customers.

“We found that only about 10 percent of sales companies have a formal procedure when they lose an account,” says Dr Liu. “Without guidelines, most account executives end up going with their instincts, but our research advocates a formal process.”

The first step, says Dr Liu, is to make contact with the customer and assess the likelihood of winning them back. It is important to know who or what is responsible for losing the customer, and to identify what type of customer they are.

“Generally there are four different types of customer: those who are unhappy because of negative experience or perception; those who have been bought away by another company; those who have decided to move to a competitor that is more aligned with their values; or those who don’t need your product or service any more.”

The approach of a salesperson should differ according to customer type. “For instance, unhappy customers may require an apology and a price discount to restore good faith, whereas those customers seeking different values may lead you to re-evaluate your strategy, which could lead to long-term success.”

Dr Liu says customers that are motivated by getting the cheapest deal may not always be the most desirable. “If they are easily bought away and can be easily bought back how much do you want to play this price war game? If they are a high maintenance customer that calls every day and wants everything customised, low price, and special delivery it might be better to let them go—however, if they bring in a lot of money for your business or connect you to other customers it’s worth going the extra mile.”

Dr Liu says active engagement with customers is essential, to resolve any issues before they reach crisis point. “It’s important to maintain good relationships so you understand your customer’s needs. Also, you need to be aware of their purchasing patterns—if you see a decrease you need to find out why before you completely lose them.”

Ends

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Rocket Lab: Launch Expected

Rocket Lab has delayed the roll out of the launch vehicle called Electron by one day, due to weather conditions. The planned launch attempt will now take place on Tuesday, May 23, 2017. More>>

ALSO:

Budget: Irrigate (Good Times, Come On!)

Additional grant funding of $26.7 million over the next three years plus a capital boost of $63 million towards irrigation investments in Budget 2017 will deliver economic and environmental benefits through better use of water... More>>

ALSO:

Silver Fern Farms: Proposal To Close Fairton Sheepmeat Plant

Silver Fern Farms has advised its people of the proposal to permanently close the site, and has discussed potential transfer options to its other sites in the region as part of the consultation process...
More>>

ALSO:

MPI: Myrtle Rust Appears In Taranaki

The nursery in Waitara (just north of New Plymouth) reported suspected myrtle rust symptoms on young plants to the Ministry’s 0800 number yesterday (Tuesday). More>>

ALSO: