How winning back lost customers benefits the bottom line [STUDY]
Service businesses can get a positive return from the time and money required to win back a lost customer, according to a new study.
Research published in The Journal of Marketing revealed that whether customers leave because of price or poor service, getting them back often benefits the bottom line.
This might sound pretty obvious on first reading: more customers should mean more revenue. But not all customers are created equal.
Not only do customers often contribute different levels of revenue to a business, the cost of servicing them may also vary dramatically.
In some businesses, focusing on finding more of the most profitable customers would have a much more positive financial impact than chasing lost customers who were particularly difficult or expensive to service.
Why you should try to win back lost customers
This new study looked at the experiences of a US-based telecoms firm. Telecoms is an industry where customer service is a significant part of the costs and many of the products are commoditised, meaning that customers always have the option of switching between suppliers.
The researchers found that even when customers left because they had found a better price elsewhere, the telecoms firm would usually benefit from trying to win them back.
“Lost customers, if won back, can be profitable to a company… customer win-back initiatives should definitely be regarded as an important strategy for service companies to use,” the study’s authors said.
“Even customers who left for price-related reasons are worth winning back. They may not be as profitable as customers who left for service-related reasons, but once they are won back, they tend to stay with the company longer.”
How content marketing can help
Content marketing can play a big role in helping businesses just like the one featured in this study to win back their lost customers.
Producing genuinely helpful and useful content rather than just plugging your products can help you maintain a connection with customers even if they’ve left.
Your content marketing activity gives you a chance to gently restore your standing with these ex-customers and make sure that when they reconsider their options that your business has remained in their minds.
Identifying your most profitable customers
For many service businesses there is a high cost associated with engaging new customers. As well as the cost of acquiring them, they tend to be difficult to service while the firm is learning about their particular requirements.
A law firm that has worked with an individual or a business for a number of years will go in to each new engagement already knowing a fair bit of useful background that won’t need to be re-learned. This can make older customers more profitable.
In other cases the opposite may be true. Long-established customers might be on historically lower rates. They may expect a discount for their years of loyalty or have higher expectations based on the money they’ve spent in the past.
Content marketing and your most profitable customers
Suppliers of professional services – just like any other type of business – need to properly understand what makes a customer more or less profitable.
Once you understand who your most profitable customers are, you can adjust your marketing efforts to target these people or businesses.
Separate research published earlier this year revealed that so-called binge customers can often be highly profitable. These are customers who are quiet for long periods but when they do buy they spend a lot of money.
Content marketing can also help you maintain relationships with these types of customers. During those long fallow periods, the regular, high-quality content you publish on your blog, send out in your emails and promote on social media helps keep your business on the radar.