In this guest blog post, Jill Griffin, the loyalty maker answers frequently asked questions about customer win-back. Plus, 7 ways to keep them loyal.

What is customer win-back?
Win-back is a process for recoverying lost customers.

Most firms consider the lost customer a lost cause but research shows that lost customers represent a rich source of revenue for any firm.

What is the difference between a win back and a save?
You win back a customer who has stopped buying your product or service completely. You save a customer from defection who is still buying from you but is showing signs of possible defection. We devote a complete chapter to save strategies in our book, Customer WinBack.

When a customer is lost, what are the criteria for determining whether that customer should be regained, and if she should be regained, how do I determine her priority in relation to other lost customers?
Two key concepts – second lifetime value (SLTV) and reason for defection are important to answering your question. First , a word about SLTV. The term originated with Dr. Bernd Stauss, a professor at Catholic University in Germany and Christian Friege, marketing director at Doubleday Direct, and means the value of the relationship once the customer is regained. Generally speaking, you’ll want to give customers with higher SLTV more win back priority in regard to investment than those with lower SLTV. However, SLTV is not the only criteria for setting win-back priorities. You will also want to pay attention to reason for defection. There are a number of reasons why customers leave and you want to target lost customer who are less likely to leave you again. We look at 5 different reasons for defection in our book, Customer WinBack and explore best strategies for each.

After you have determined that the lost customer is worth winning back, what’s next?
1. Ask the customer this question: “What can we do to win back your business?”

2. Listen closely to what customers tell you.

3. Meet the customer’s requirements and when you’ve corrected the problems that led to the defection, communicate the changes you have made. Ask again for the customer’s business.

4. Be patient with the customer. Be open. Remember, some wounds heal slowly.

5. Stay in touch with the lost customer.

6. Make it easy for customers to come back to you. Avoid the “I told you so” stance.

7. When the customer does return, earn his or her business every day.

What are the financial rewards related to win back? Is it worth the effort?
A study by Marketing Metrics has found firms have a much better chance of winning business from lost customers than from new prospects. The research found the average firm has a 60 to 70 percent probability of successfully selling again to ‘active’ customers, a 20 to 40 percent probability of successfully selling to lost customers, and only a 5 to 20 percent probability of making a successful sale to prospects. Bottomline, win back can bring big rewards.

Are there benefits to win back beyond the bottom line?
Win back programs can help you…

1. Uncover improvement opportunities. Dialogue with customers who are on the brink of defection or who have already defected can help you pinpoint opportunities to improve product and service delivery, correct miscommunications and identify new product opportunities.

2. Develop an at-risk profile. By analyzing lost customers, you can develop a profit for detecting at-risk customers.

3. Limit negative word of mouth. A lost customer recovery program can help you limit negative word of mouth from unhappy customers who defect and encourage positive word of mouth from the customers who are regained. Conversely, if their concerns are left unaddressed, defecting customers can be a deadly source of informal negative publicity.

Why is now a good time to focus on winning back lost customers?
1. Never before have technological tools for winning back lost customers been more available or affordable. From e-mails to off-line direct mail services ordered online, a host of new tools are emerging to help you reconnect with lost customers.

2. In any market space, there is a limited number of best customers so you need to keep yours close. In All Customers Are Not Created Equal, Garth Hallberg points out that “for most categories (of business), one third of the buyers account for at least two-thirds of the volume. The ‘high-profit segment’ generally delivers six to ten times as much profit as the low-profit segment. Moreover, they are critical, not only because of their profit contribution, but also because of their relatively small number.”

3. Win-back programs can give you a real competitive edge. A combination of strong acquisition, retention and win-back programs can help you bullet proof your firm against competitive attacks. Conversely, if your competitor gets strong win-back programs in place before you do, your chances for recapturing and keeping the best customers are reduced considerably. In many things in life, there is true advantage to being first. Win-back programs are no exception.

Want more on loyalty? Check out Jilll’s books, Customer Winback, Customer Loyalty, Taming the Search-and-Switch Customer: Earning Customer Loyalty in a Compulsion-to-Compare World

(Note from Karen) Oddpodz loyalty expert Jill Griffin was featured in Deliver Magazine. The US Postal Office publishes this great publication which is worth checking out. You can subscribe on line to receive a mailed copy or read it online. It’s free and full of direct mailing and marketing insight. Jill’s latest book Taming the Search and Switch Customer addresses how Google and online search are changing the game of customer loyalty.

The article was written by Pamela Oldham

Loyalty marketing has significantly evolved in the last two decades — and there are pitfalls to not keeping up. Marketing guru Jill Griffin, author of the best-selling Customer Loyalty: How to Earn It, How to Keep It, explains how changing your approach to loyalty can help you win more business from the customers you already have.

1. Evolve with Your Customers
Customer needs are changing, constantly evolving, be it business-to-business or business-to-consumer. “Customers can help you stay on top of the ‘value curve’ and help you find ways to deliver exceptional value,” Griffin says. “But you can’t depend on them to spell it out in a focus group. You have to dig for that info.” Find the behaviors of your best customers, understand why customers are walking away from you when they do and put together the pieces of the value puzzle.

2. Keep Up with Loyalty Marketing Trends
Right now, it’s less about redeeming for merchandise and more about access and enhancing experiences — for example, a credit card company giving customers the ability to get great tickets for a major rock concert before they go on sale to the general public. “Bigger retailers are recognizing that customization of experiences is a big deal,” Griffin says. “And the payoff is that customer spending increases significantly over the months following an event.”

3. Identify and Monitor Your Best Customers
Don’t just amass customer data, truly wade through it and make it strategic.Look at spending. But don’t stop there. Also look at future lifetime value and share of wallet. Marry geographic and income data with that to see if that person has a larger wallet and a larger potential to spend long term. “You want to invest in that potential,” Griffin says. “It’s not just who’s spending the most money with you right now.”

For more loyalty tips from Jill, visit her Web site Loyalty Solutions.

I spent the summers of my college years on the coast of South Carolina as a waitress. I learned a variety of skills including how to balance and carry out five steak platters on my arm, how to gracefully dive under a table to retrieve a baked potato when it rolls onto a customer’s shoe, and how to pacify a table of anxious, hungry diners who have already waited 30 minutes for their meal when I’ve just been advised by the kitchen that their order ticket is missing.

Sure, there were some hair-raising times, but for the most part, I loved every minute I spent waiting tables. Why? Because it was a fast-paced, customer-intensive job that provided instant gratification (by way of tips and smiling faces) when the customer experience was well delivered. Perhaps my biggest education was learning the art of the “customer dance” – recognizing when to lead the customer and when to follow. Over time, I learned to pick up subtle signals that helped clarify the customer experience I needed to deliver. Were they there to eat and run? Did they want to linger over coffee and dessert? Were small kids at the table in need of a fun distraction? I watched for the customer clues and then tailored my services accordingly.

Ace Hardware has taken the delicate dance of “lead and follow” to a whole new level with its addition of “customer quarterback” positions in its 4,600 U.S. stores. This technique was born out of the $3.8 billion hardware cooperative’s year-long initiative of analyzing ways to best serve customers, during busy stores times, without adding extra staffers. When store traffic is heavy at the Cape Coral, Florida store, for example, customer coordinator, Linda Gillard, gears up to “call the play.” She talks to incoming shoppers, analyzes their body language and then alerts store staff on how to best serve them: Mission shopper with no time for small talk? Browser? Shopper gearing up for a big project? Gillard makes the assessment and then, using an earpiece, radios ahead to staff so they are ready in the aisle to help, when the customer arrives. Gillard knows the danger of too much contact too early and is quick to warn the team, “Browser entering Housewares. No immediate assistance needed. Give them at least 5 to 10 minutes before you approach.”

Loyalty Lesson: Customers come to us with a mindset shaped by a host of factors. We must learn to read their clues and then sculpt our service delivery accordingly. Often times, this will invove a number of staff members. That’s why systems, such as the one Ace Hardware mobilized, provide important pathways for helping frontliners “lead” and “follow” in the all-important customer dance.

Now, about that baked potato that landed on my customer’s shoe…