Small biz: How to woo back lost customers

It's estimated that the average company loses about 20 percent of its customers every year.

The reasons they leave vary, from purely economic to just plain customer dissatisfaction.

While customer churn is inevitable, the good news is that many of these lost customers can be wooed back. The key is understanding why they left and finding the right value proposition to entice them back and keep them, say experts.

"It's all about perceived value," explains Michael Lowenstein, co-author of "Customer Winback" (Jossey-Bass; $29.95) and executive vice president of Milwaukee-based Market Probe, a market research and consulting firm. "It's a case of restructuring the value perception."

Value recognition. Perhaps they've become dormant because they're getting better value from a competitor or feel like they've gotten diminished value from your existing relationship, he notes.

You have to understand what the customers are thinking, why they've become dormant and what their perception of your company is, says Lowenstein.

But before you can do that, you need to first identify which customers went dormant, says Myra Golden, co-author of "Beyond WOW" (Performance Institute; $29.95) and president of Myra Golden Media, a Tulsa, Okla.-based customer service public relations consultant.

Keeping a good database will help you assess not only lost customers, but also the rate at which you're losing them, says Golden. Once you've done an assessment, you can then survey individual customers to start gaining insight into why they went dormant.

If you're a small enough company, you can pick up the phone or just visit a client and ask why they stopped buying. You might say, "We enjoyed a wonderful relationship with you for X years, and we've noticed that dropped off. Did we fail you in some way?" suggests Golden.

Or you could even call to follow up on a previous engagement, says David Fagiano, chief operating officer of Dale Carnegie Training in Hauppauge. For example, if an organization had specific goals in mind, you might call and ask if it accomplished those goals.

If you have a new service or announcement, that could be a good ice breaker as well, says Fagiano. For instance, earlier this year Dale Carnegie launched a new iPhone app, which provided an opportunity for its sales people to rekindle old relationships by offering to demonstrate the new app.

Rebuilding relationships. Often, just following up and calling clients again is enough to rekindle the relationship, says Fagiano, noting the two reasons its clients have cited for going dormant are that the sales representative stopped calling or they were unaware of the company's range of services.

"You want to get back in front of them," he says.

Optimally, you never want customers to fall off the radar for too long, says Adrian Miller, author of "The Blatant Truth" (Lulu; $14.95) and president of Adrian Miller Sales Training in Port Washington. Understand their purchasing patterns so you can see a drop-off early on, she says.

"Identify clients that are about to go dormant before they actually do it," notes Miller.

If you're too late, try creating tailored and targeted incentives that might entice them back, she says. You might even ask them what it would take to win back their business, Miller suggests. If it's something unreasonable, you can always decline, but oftentimes it's something feasible that goes beyond just price.

"Pricing is only one part of value," says Lowenstein. "It's all in the experience."