Too much time, energy and money is spent searching for potential clients. In the new world of media, getting found via search engines or social media has become an additional expense. Wooing and winning new clients is more difficult as they have information and resources available with a click on their mobile device and set up systems to guard from pesky sales people.
Costs to generate new prospect can include:
- Client and partner referral
- Inbound marketing activities
- Marketing/PR spend
Other costs attributed to customer acquisition include:
- Sales team
- Miscellaneous costs
These are considered the “Cost to Acquire Customers” (CAC)
Basically, the CAC can be calculated by simply dividing all the costs spent on acquiring more customers (marketing expenses) by the number of customers acquired in the period the money was spent. For example, if a company spent $100 on marketing in a year and acquired 100 customers in the same year, their CAC is $1.00
While growing contact lists (aka prospects or leads), these questions need to be answered:
- What is the definition of a lead?
- What costs should be included in a cost-per-lead calculation?
- Where does lead scoring fit into the process?
- What metrics should marketers track?
- Why is it important to reach leads early in their buying process?
- How can you reduce lead cost without reducing lead quality?
- And more
A recent report by SoftwareAdvice showed the following marketing channels more expensive for cost-per-lead: According to the survey results, more than 6 in 10 marketers perceive the following as having a somewhat or very high cost:
Trade shows and events (82.8%)
Print, radio and TV advertising (79.9%)
Third-party lead originators/publishers (67.2%)
Third-party webinars (65.5%)
Telemarketing/Cold Calling (62.6%)
The high cost of new prospects emphasizes the value of current and past clients.
A study done by Marketing Metrics says you have:
- A 60 to 70 percent chance of successfully selling again to a current customer
- A 20 to 40 percent chance of winning back an ex-customer
- A 5 to 20 percent chance of turning a prospect into a customer
Based on these statistics, it makes sense to invest time and energy on winning back an ex-customer or client. Since losing client base is inevitable, what should you do when clients leave?
When you lose a client, it’s almost always because of service. Price is rarely the problem. Before you try to win back that lost client, you need to examine the problem and figure out why you lost the client in the first place.
Decide if you want them back. Not every client is an ideal client. If the client you lost was difficult to work with, they might not be a good client to have. The best thing you can do at that point is to make sure that they are leaving happy and will continue to share your company as a referral.
Research the client's needs. Look at the company's website, recall the information you learned when you worked with the client in the past or talk to people who know the client. The goal is to be able to share with the client something your company can provide their company needs.
What does your client think the problem was? Learn about the reasons they made their choice. Make an appointment to meet with them, tell them how much you value them as a client, ask them what went wrong, tell them what you are going to do to address their issues, ask them for a second chance, and don’t forget to apologize. Many times there are misunderstandings that can be remedied easily.
This first step can only be accomplished at the executive level – from your company and theirs. If you’re not having a conversation with someone who has the authority to say “Yes, we’ll give you another shot,” you are not talking to the right person. If they are a good (or great) client, you should already have the type of relationship to have a frank discussion. If you don’t have that type of relationship, you need to rethink your business strategy and culture.
Get out in front of any issues you uncover during your conversations. Fix your internal processes to reduce any over-promising and under-delivering of your teams and products. Drill deeper into the buying process and find ways to make it easier for your clients to buy from you.
By the third attempt to get things right (or if you discover that your products or services won’t live up to your clients’ expectations) - Don’t go any further. Thank them for their business and agree to part ways. It may be time to accept that the relationship is over. Doing business without a win-win is worse than no business at all.
Keep past clients in the loop. Let them know about changes you are making in your organization that will address their issues. Be as transparent as possible to rebuild their faith and trust in your company. Continue to stay in contact with them on a regular basis. Keep after them gently by reminding them of your services, your appreciation of them, and your knowledge of their needs. Continue to offer tips, ideas and introductions.
Their business will evolve and so will yours. Stay open to the opportunities. If you do not win them back as a client, you're still ahead of the game because the now former customer will have a "good feeling" about you and your company for making the extra effort. Once you have them back, you will no doubt treasure them more than ever.