You can only achieve sustainable operational success if you regularly win new customers, establish close customer loyalty and focus on winning back customers. Read here how to reactivate previous buyers.

You benefit in several ways from winning back customers

The change of some of the customers to the competition is part of everyday business life. But many of these buyers can be won back. You benefit in several ways from this type of customer loyalty and customer recovery: On the one hand, it is cheaper because you no longer have to completely convince customers of the efficiency of your business.

In contact with former buyers, you can also ask why they are no longer buying and take appropriate action. Last but not least, many customers you want to win back are pleasantly surprised that you continue to look after them. They may pass on their experience to other people so that you can even get new customers without expensive acquisitions.

Related: Increase customer loyalty with these effective measures

4 steps to winning back your customers

Step 1: Get an overview

First, check your need for action in terms of customer loyalty. Make a sales list for the past 2 to 3 years. Filter out those customers who have not bought from you in at least the last 6 to 12 months. Which time period you specifically choose depends on how much time is typically between 2 orders in your industry. If you sell televisions or other long-lasting products, or if you are a craftsman, it can often be several years before you see a customer again. If, on the other hand, you sell tools or do gardening work, the intervals may only be a few weeks.

But are customer loyalty measures worthwhile? Sort the breakaway customer’s list by sales. For customers who have a turnover of less than EUR 400 to 600 per year, the effort is usually not worth it.

TIP: Determine the customer’s contribution margin

It is even better if you can determine a customer’s contribution margin (DB). The DB is obtained when you deduct the variable costs directly caused by the customer, such as materials or external services, from the customer sales. The higher the DB, the more profitable the customer is for you.

Divide your alumni into important and less important customers, i.e. according to previous sales or contribution margin.

Step 2: Here’s How You Can Win Back Existing Customers

The following measures for customer loyalty and customer recovery have proven themselves:

• Get in contact. Send or hand over the latest catalogs, flyers, or product samples with a coupon for a discount on your next purchase or think of a small gift when you visit.
• Send emails or letters that are as individually designed as possible to less important customers and draw attention to yourself again with catalogs or flyers.
• If you appear at trade fairs or other events or hold workshops in your rooms to promote customer loyalty: Invite former customers as well. Here, too, it is advisable to provide the invitation with a small incentive.

TIP: Contacting again if there is no response from the customer

If the recipients don’t respond within a certain period of time, for example, 30 days, you can send them a postcard or flyer once or twice with similar promises as the first time. If there is then no response, the customer is very likely to be permanently lost.

When winning back customers, calculate with reactivation costs of around 20 percent of previous sales per customer. You should record the exact amount, especially with important customers, and use it as a basis for further activities.

Inquire about reasons for migration and change

When reactivating former customers, you should always ask why a customer turned away. This improves your customer loyalty: You can find out whether the company made mistakes, whether competitors have developed a better offer, or whether interests have changed.

Ask former buyers the following:

• Why did you end the customer relationship or let it rest? Was it because of customer satisfaction?
• If the customer mentions offers from the competitor: What is your experience with company X? What did you like better than ours, what did you like less?
• If the customer mentions other interests: what are they? Can we convince you with a modified offer? Or: We also have these items in our portfolio, but we don’t actively offer them due to the low demand. But look here …
• What made you move back to us? Also, ask whether the customers perceive the “returnee campaign” positively.
• What can we do better to strengthen customer loyalty and customer satisfaction?

Step 3: Check the success of your measures

The easiest way to find out whether your campaigns are working is to find out for all contacts whether these people have bought (again) from you and how high the turnover or profitability was. Create an income statement based on the following questions:

• How many customers actually reacted to your promotions?
• How many of the customers contacted bought?
• How high were the sales/contribution margins per purchase on average?
• How high are the sales/contribution margins compared to new and regular customers?
• Is the comparison representative or are there influences that falsify the result, for example, because several new major customers have been won or you have not dealt intensively with acquisitions for a long time?

Example of a simple success analysis:

Period: August 2019-August 2020.

All figures in EUR, some values ​​rounded

The overview shows that winning back customers is worthwhile in this case. The turnover or DB remaining after reactivation costs is in the range of regular customers and significantly exceeds the contribution from new customers.

Step 4: Learn from conversations with customers

Try to derive improvements from the comments of won-back customers. Practice shows that companies often need to improve their service or pay more attention to new products or services.

From the statements, you should create an overview of the customer requirements and prioritization. Get rid of bugs cited by multiple won-back customers. Or implement measures that quickly lead to success.

Important for further customer loyalty: ask reactivated customers after a while whether they are satisfied with the improvements.

Take precautions in the following time to prevent churn. Ask about customer satisfaction or change requests, for example for the product range and service.

A practical example of customer recovery

Peter Huber sells high-quality tools at moderate prices. For some time now, he has had the impression that he has not seen some customers for a while. He notes that 6 percent of his customers haven’t bought in more than 8 months. He doesn’t know the causes. He decides to speak personally to 12 customers with whom he has generated a contribution margin of more than EUR 1,500 per year. He would like to contact other customers by letter.

Huber is considering giving every reactivated customer a 10 percent discount on their first purchase and giving them a tool from the new range as a gift. During his visits, he asks about the reasons for the long absence. He learns that important competitors rent out machines for a fee or offer product advice on the Internet. Some customers have chosen a different provider due to a change of location, others have been treated in an unfriendly manner by an employee from whom Huber has since separated.

Huber decides to set up a tool and machine rental company and wants to improve its website and service.

His conclusion: He was able to reactivate 3 of them personally addressed customers. Of the customers who have now been contacted several times by letter, 19 have contacted him, and 4 have bought from him again. The sales and even the contribution margins after deducting the discounts and costs for the gifts were as high as before. The customer loyalty measure has paid off. Huber wants to repeat it once a year.