The psychology of winning back lost business

Want to win back that juicy piece of business that just walked out the door? Get ready for some serious mind games, because a win-back is as much about psychology as it is cost and benefits. Step one is to admit that you have a problem—or, rather, to admit that getting that customer back is probably going to be a big problem.

“It’s very difficult to win a customer back, because customers seldom leave the first time there’s a problem,” says Michael Rosenbaum, president of performance consultancy Quadrant Five. “They have thought long and hard before leaving, and it wasn’t because someone offered them a 3% discount. They leave because they’re unhappy with you.”

Steer clear of price wars

Don’t race to offer discounts and other financial incentives to lure a client back. More important than the usual profit-motive reasons is the fact that price probably wasn’t the reason they left in the first place. Rosenbaum explains this crucial piece of Client Psychology 101: it’s not about price, especially if they say it’s about price. “Happy clients don’t leave over price, unless it’s a 50% discount or something similarly ridiculous,” he says. “If they say price was the reason, it means they’re not comfortable telling you the real reason.”

What does that leave? Experience and attention, for starters. “You can win a customer back from a competitor with a less-expensive product not by dropping the price, but by indicating that the relationship is special, with preferred customer status or concierge service,” says Paul J. Hanges, professor in the Department of Psychology at University of Maryland. “Less-tangible benefits are a way to recognize a special relationship.”

Seek clarity from within

The fact is that few defecting clients will actually post an honest, complete, and accurate list of grievances to your front door. You may be lucky to hear a few mumbled words about budgetary considerations handed down from on high, or a vague platitude about the need for a fresh voice. Without honest collaboration and input from the account team, it can be difficult to get at the truth. Unfortunately, people in a position to see the situation unraveling won’t be comfortable speaking their minds unless you explicitly protect and encourage them.

Psychologists call it a climate for psychological safety. “That’s the perception that if you expose a weakness, you will not be punished or harmed,” Hanges says. “And you need to offer people time for reflection. How many companies make time for a review of how they lost a customer that doesn’t turn into a blame session?”

Once-loyal customers often leave because they feel their vendors have become complacent. “It’s a common problem—you rely on a client, but you also take them for granted,” says Gail Golden, psychologist and principal of Gail Golden Consulting. “You stop being innovative and attentive, you give them the same-old, same-old.”

Take a hard look at the quality and enthusiasm behind the service the departed customer was receiving in the run-up to their departure. With a new commitment to treating them with all the excitement and eagerness of a new customer, they may be willing to return—with qualifications. Golden warns that customers who feel disregarded may be willing to renew acquaintances, but at a smaller scale and at a lower priority. “They’re going to test you with a smaller project, and you have to be willing to go back in and prove yourself again.”

Look for patterns

Don’t beat your brains out trying to find the one major misstep that caused the client to walk away. Often, it’s actually a series of small inconveniences or glitches, compounded over time, that drive a customer away. (Dare we call them micro-aggressions?)

As you piece together the reasons for the client’s departure, ask your other strategic customers if they feel the same way. And if multiple clients, past and present, tell you that it takes them too long to reach somebody on the phone, the fix is a lot less expensive than the hit from losing more business. “You pick up the phone more often, or you hire a receptionist,” Rosenbaum says. “They’re not always really major things that cause you to lose a client, just minor things that happen repeatedly.”

Take a slow, gentle approach

Don’t hit a departed customer with a win-back message too soon, because they won’t be ready to hear it. “Let them have experience with a new vendor and get past that honeymoon period,” Rosenbaum says. “Give the new guys time to wear out their welcome before you make a concerted effort to get the customer back.”

When you do make that call, keep any sort of transaction or financial commitment out of the discussion. Invite another dialogue about the reasons for making the switch, or invite the customer to participate in a new educational experience you’re offering to key customers or prospects.

Do nothing at all

Are you trying to win the customer back because you simply can’t stand being dumped? Not every customer is worth winning back. Do a profitability analysis and ask whether the advantages of having the customer back on the books outweigh the costs of pursuit and whatever tangible or intangible incentives would need to be offered.

Even a strategic or named account might be replaceable by someone bigger and better. Or their business model and direction may simply have diverged from your core strengths and the fit isn’t as good as it was when the relationship began.

If the customer truly is a valid priority, you still might be best served by letting time heal the wounds. “If it is truly just money and you provide a quality service, in my experience it’s not unusual for clients to come back after trying the bargain-basement approach,” Golden says. “Treat them with respect and friendliness on the way out the door, and then wait and see.”

Post by Jason Compton

Jason Compton is a writer with over 15 years of experience covering marketing, sales, and service. Based in Madison, WI, he is a regular contributor to Direct Marketing News, previously served as executive editor of CRM Magazine, and has been published in over 50 outlets.

Leave a Reply

Your email address will not be published. Required fields are marked *