If you dropped a penny on the ground, would you bend over to pick it up?

If you dropped a penny on the ground, you might not see picking it up as worth the effort.  Some might not even pick up a quarter.  Would you make the effort if it was a dollar?  Twenty dollars?  A thousand dollars?

It is probably safe to say that many people would pick up the twenty and most would make an extensive effort to retrieve one thousand dollars.  Yet, those same people might not make the effort to pick up a one dollar bill one thousand times.  Interesting…

I was recently reminded by a pastor at my church about the Biblical parable of the lost coin:

“Or suppose a woman has ten valuable silver coins and loses one.  Won’t she light a lamp and look in every corner of the house and sweep every nook and cranny until she finds it?  And when she finds it, she will call in her friends and neighbors to rejoice with her because she has found her lost coin.”

-Luke 15:8

So, in the parable, the woman makes the strong effort to find what was missing.  While the parable in the Bible is used to teach a spiritual lesson, I think it could also be used for a business lesson.

You see, most businesses lose between 10% and 40% of their customers each year.  The exact number depends on the industry and how good or bad your customer service is.  Let us assume that you are in a reasonably stable industry and you have good customer service- you may not be Disney or Nordstrom, but you have a fair price, good product, pleasant staff, and a clean, interesting place of business.  Your business will still statistically lose 10% of your customers.  And the chances are, you are not doing anything about it.  Remember the parable?  She lost 10% and did all she could to ‘get it back’.  Why aren’t you doing the same?

Even a good business person will say “What can I do?  I offer a great product and exceptional service.  I am fair and easy to do business with.  I cannot help it if a customer decides to leave.”

This is incorrect thinking.  You must remember that the majority of people who decide to stop doing business with you do not have a really good reason for doing so.  They may be bored, or more often than not, they feel you are indifferent towards them.  A simple reaching out to the customer may be all it takes to win them back.

“Use logic and emotion to keep your customers.  Give them the best products and service and give great value for the money.  However, always remember, your competitors will be doing the same thing.  The difference will be determined by how you communicate with your customers…”

Alan Fairweather, author

So, how do you win customers back?  Well, it all starts with finding the right customers in the first place. If you are trying to attract new customers through low prices and discounts, you are likely to end up with customers who have values based on price.  These are transaction buyers.  The kinds of customers you want to attract are relationship buyers.  Again, this runs counter to what the typical successful business person understands.  They have a sale or big discount and the line is out the door.  But remember, those same people in line will be down the street at the competitor’s when they offer a big discount.   A much better model is to differentiate your business – you can also offer something for free (free samples are good if that applies to your business) in order to get new customers through the door.  And once through the door, you need to offer a great customer experience and the more different and exceptional it is the better.

The next step is to use what I call the TAP method (Track, Analyze, and Promote).  How this works in win-backs is you accumulate all the data about your customer’s buying habits.  You then analyze that data to see the pattern.  And when the pattern is broken, you send a communication to the client who is in danger of going away for good.

We frequently used this method when I worked with a loyalty marketing firm and it always yielded a positive result.  Let’s use a restaurant as an example.  John goes to the restaurant once a month, if they do not see him for a month – that is normal.  But if Bill goes to the same restaurant once a week and they do not see him for a month, something may be wrong.  Bill has broken his pattern.  All the ‘Bills’ (those who broke their pattern of attendance) should be sent a WE MISS YOU card with an offer (like free desert) to come back.  Routinely, I have seen these types of campaigns get responses of over 20% (unheard of in regular direct mail).

The cost of doing this is an absolute bargain when you consider that it costs at least five times as much money to get a brand new customer than what it costs to keep an existing one.

So, you have customers that were ‘lost’ and now are ‘found’ and just like the parable, it is time to celebrate!  The reason you celebrate is not just because you saved some customers and the revenue they give you, but you have moved them more towards the direction of becoming a relationship buyer and a loyal customer.  A loyal customer is known to buy more often, buy higher priced items, are open to new products you might offer and have the capacity to give you referrals.  It is not unusual for a saved customer to be worth twenty times what you paid to ‘save’ them.  Kind of like picking up that dollar bill and discovering it is really A TWENTY!  Make the effort!

“An ounce of loyalty is worth a pound of cleverness.”

– Elbert Hubbard

Bob Salvas is a SCORE counselor, BNI director and marketing consultant for Minuteman Press’ Warwick and Providence locations.  He can be reached via email at bobsalvas@minutemanpress.com

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