“Referral Power – Reach Further. Spend Less” Chapter 6
You’ll be receiving each chapter via email over the next few weeks. Keep an eye out for Chapter the last chapter, #7 in your next email from BOSS.
Table of Contents (for previous chapters)
- Section 1: Client Referrals
- Chapter 1: Make Asking for Referrals a Part of Your Process
- Chapter 2: Following Up on Referral Commitments
- Chapter 3: Set Referral Goals
- Section 2: Building Powerful Referral Alliances
- Chapter 4: Tap into More Markets with Less Marketing Money (Forge Business Referral Alliances)
- Chapter 5: Filling in the Sales Gaps
Section 3 – Reclaiming Lost Clients
Chapter 6 – Why Bother with Lost Clients?
Say your goal is to gain 30 new ongoing clients within a calendar year.
However, you lost 20 ongoing clients throughout that year, something you take as the normal cost of doing business.
The problem is that you now have to actually gain 50 new clients to reach your goal of the 30 new clients added to your overall number of clients.
Getting those clients back reduces the amount of work you have to do to reach your goals.
But isn’t it more work to sell to people who have left your business?
Surprisingly, the answer is no. Companies have a 20 to 40% chance of selling to lost customers, whereas they only have a 5 to 20% chance of selling to new clients.
Restarting a Lapsed Relationship
Customers or clients will generally stop buying from you for one of three reasons:
- Something unrelated to you happened in their life, or they just forgot about you (like when we forget to renew a subscription). They might mean to sign back up with you but they just never quite get around to doing it.
- Your product or service is no longer of any benefit to them.
- You screwed up and left them with a feeling of dissatisfaction.
There’s a good chance that if your business has client relationships that didn’t go sour but simply lapsed it’s because you entered into an out-of-sight out-of-mind relationship with that client.
Since your business is all about adding some kind of benefit or value to your customers’ lives they’ve had to live their lives at a disadvantage without you being there at their side. It’s possible their lives may even have been affected negatively if they’ve dealt with your less-than-stellar competition and their inferior offerings.
By reconnecting you’re going to be doing them the service of making their lives better.
Reclaiming an Unhappy Client
Let’s take a quick look at some stats about customer dissatisfaction. (Source)
- 78% of clients or customers who leave a sales transaction before completion do so because of poor service.
- Only about 4% of customers who leave you will ever tell you why without any sort of prompt.
- Loyal customers are worth an average of up to 10 times the amount of their first purchase.
- Existing customers have a 60 to 70% chance of buying, whereas potential first-time clients only have a 5 to 20% chance.
- If your customer or client has a negative experience, they’ll need about 12 positive experiences to set things right with them.
- Bad word of mouth spreads to twice as many people as good customer service.
- It’s 6 to 7 times more expensive to gain new customers as it is to keep current ones.
- If you have a customer who does bring up complaints it’s likely that you have 26 more who aren’t saying anything but still have a problem with your business.
What all of this boils down to is that you don’t know why you’ve lost customers.
Without finding out why, you’re not fixing the problem, and that is leading to the loss of more customers.
In most of the cases of customer attrition there’s a very good chance that the problem is fixable.
So by paying attention to what your customers are saying you can fix your company’s service problems thereby stopping further attrition and show that you’re a company that cares about its customers. That caring will be your way to bring those lost customers back.
The very act of contacting them will build good will. Expressing this contact as your desire to have them help you build a better service will invest them emotionally in your company (they will have helped in forming the newer, better version of you).
They’re also going to tell their friends about how a company went out of their way to get their opinion… and that is a form of referral.
If the attrition occurred not because of a lack of service or problem on your end but because they’ve had some kind of major life event that leaves them with no use for your product or service, then congratulate or commiserate with them.
If the person left you but it was due to a happy event in their lives don’t be afraid to ask for referrals.
The best way to build a well-oiled referral machine is to genuinely care about your customers.