Are Lapsing Customers Killing your Business?
It’s a well-known fact that it’s more profitable to retain a customer than find and convert a new one. Why is it then that large companies often fail to manage their customer database and, as a consequence, allow potentially lucrative customers to lapse?
It’s interesting that, over the past few months, we’ve been asked on several occasions to make calls to what clients call either lapsed or lapsing customers. Why would they ask us to do that you may ask? Surely, account managers and field sales teams should nurture clients to ensure they don’t lapse in the first place? And shouldn’t these types of customer that are at risk of abandoning ship, be an internal priority?
The reality is that, often in large companies, internal resource is deployed on key account management. That’s typically the larger ones and the ones that shout loudest. We’ve seen many instances where there is no bandwidth to keep track of customers that either order infrequently or that are perhaps classified as C, D or E clients as opposed to the A and B clients that get all the attention.
A Little Gentle Persuasion Reaps Rewards
The not so surprising fact perhaps is that many of these clients, that lack love and attention, can be quite lucrative. And, a little gentle persuasion through a customer service type call will encourage them to get back in touch and order again. There will always be some that have dropped off the map. Some will have gone out of business. Others will have inevitably migrated to competitors that perhaps do nurture them better.
Whatever the current status, it helps to validate, segment and clean the customer database so account managers and field teams can ensure that the best potential customers do receive the attention they need.
The calls we’ve recently made, into ‘lower value’ customers that in some cases haven’t been contacted for some significant time, have proven highly lucrative. In some ways, calling has proven to be a market research exercise, providing essential insight into the customer base and competitive situation. In other cases, very good order values have come out of this resuscitation and qualification exercise.
The fact is that many large companies just don’t have the staff headcount or they have the numbers but lack the time to contact customers with which they haven’t been in contact for significant periods of time. As a consequence, potentially lucrative opportunities slip away.
Customer Qualification is Crucial
Part of the requirement is to ensure that every customer is classified and qualified correctly. The challenge, of course, is how to do this. What criteria should you use? If we just go for the value of past orders, you could potentially neglect customers with huge potential but who just haven’t placed sizeable orders thus far. It pays therefore to do some segmentation work and it may also be worth appending data to your database to help with the classification.
However you plan to do it, once you have carried out the work, it will be important to pull together a contact strategy based on whatever criteria you’ve established. Those with significant potential may receive an email with an offer followed by a call. Lower value customers may just receive the email. And, it’s important not to ignore the fact that you may no longer have the correct decision-maker contact details. Over time, data goes out of date. People leave. Managers get promoted. New people arrive in positions of authority. Hence, it’s also important to validate your data either through a data gathering and cleansing exercise or, once again, through data appending where those job roles are available on an external list from a list provider.
Good Data Management Delivers Results
However you choose to handle things, whether that’s with internal staff or externally using an agency like GSA, a policy of good data management and data qualification is the key to continued success. We recently conducted a large campaign for a multi-national organisation across Europe and the USA where we found that 22% of the data was invalid. And, the contact details we were using was customer data. No one is personally to blame for that. It’s simply the natural outcome of a large amount of customer records and inattention over time.
Get it right and you can ensure that your sales pipeline is full and you don’t lose potentially lucrative customers to your competitors. They will be only too pleased to offer them the services that you were unable to provide through lack of a periodic call.
If you’d like to speak to GSA about how to manage your customer database, contact us now.
GSA helps businesses become more effective in their marketing and business development. We run outbound telemarketing campaigns and also, with our experience, provide telemarketing training to help sales teams improve their results. If you’d like to know more, give us a call.