How to Bring Back Lost Customers

Harry Trott

June 19, 2017

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There are a number of reasons why a customer may stop buying from your business. Bad customer service or high cost may just be two of the many reasons for defection. In a vast majority of cases, it may not even be the businesses’ fault for the customer switching to a different provider. So how does a business owner identify the reason for losing customers, and more importantly, what do they do to reverse this defection?

Tracking down defection

The first step towards reversing defection and making customers come back to your business is by identifying these defectors. Average buying cycle may not always be the right metric since different customers have different purchasing patterns. However, understanding a customer’s unique buying patterns helps identify potential defection. One way to do this is by looking into your PoS logs. Most point-of-sale machines provide you with the last four digits of a customer’s credit card. Businesses may use this data to map out the average buying cycle for a specific customer and will therefore know if they have stopped buying. Alternately, you can gather other details like mobile number or email from your customer. These details can help in identifying buying frequency and other metrics.

Identifying the reasons

The next step is to know why customers switched. Asking your customers directly helps. But this may not be possible in some industries like retail. In such cases, you could use as many external data points as possible to identify the root cause. For example, if you notice that you lost a large number of customers during a specific week, then you could look into promotional campaigns launched by competitors during this period. Your ERP inventory history could tell you if you were out of stock on an extremely popular item during this period. It is also possible that customers switched to an alternate provider and have been buying from this competitor since then. Make sure that you validate your hypothesis in order to avoid false positives.

Bringing back your customers

Once you have identified the customers you lost and also hypothesized on the possible reasons they defected, the next step is to devise a strategy to bring them back. Most online stores carry unique identifiable information about the customer (like their email or phone number) and you may offer attractive discounts specifically to these users who have switched. In case you do not have the means to uniquely identify your lost customers, then an alternate strategy is to launch a promotional campaign that will be attractive to customers you have lost. For instance, if your hypothesis shows that you lost customers because you were out of stock on pet food (or because your competitor was offering heavy discounts on pet food), then it is a good idea to launch a promo campaign for pet food. Check out this insightful article on Shopify that talks about reversing defection.

Test and repeat

It is important to understand that the reasons you have identified for losing customers is a hypothesis at best. Your marketing campaigns may not always address the real reasons a customer left and there is always a chance that you are not able to get your customers back. Tracking your customer logs helps a business know if a customer who has been tagged as lost has returned due to the campaign. Continue tracking your process for at least a couple of purchase cycles to know if the customer’s return was a one-off or if they continue to come back for future purchases.

In conclusion, one factor that has a huge impact on the success of this strategy is actually tracking the right customers. Without this, the rest of your campaign is moot. If you have not been able to track down your lost customers effectively, then this is an opportune moment to invest in tools and technologies that will help you do so in the future. You could, for instance, offer member cards to your customers for a marginal discount. Or, you could replace customer IDs with mobile number or email ID during the checkout process. Doing so would enable a business to track the purchase history of a customer more effectively and know for sure when someone stops patronizing your store.