March 28, 2024

Small Business Advice

Looking at why you lost a customer can be healthy

"Look through your customer's eyes. Are you the solution provider or part of the problem?" ~Marlene Blaszczyk

Jerry Osteryoung | 3/2/2015

Looking at the customers you have lost is one of the best ways to measure how effective or ineffective your customer service is. Too often, I see businesses looking at their existing customer base to try to determine this, which is kind of like asking a student how he liked the test in which he got an A on. Ask a different student who failed the test, however, and you will get an entirely different answer.

The trouble with looking at your existing customers to gather insight about your operation is that they feel the company is doing well. That is why they are still with you. Obviously, they like what they are getting and are going to be more inclined to let little irritants pass them by.

You might be asking the right questions, but you need to be sure you are surveying the right population. If you are asking your satisfied customers, you are not going to uncover where your problem areas are.

A good friend who owns her business recently asked her staff to look at the customers they had lost over the last two years. As she compared these customers, she found that the 20 businesses they had lost were all small in terms of sales during that time period.

When she started to call these customers -- which was very painful for her -- she got similar responses from each of them. Although the customers liked her a lot, they did not like that they had to explain the details of their operation every time a new service representative came out on a service call. After a while, they just got tired of explaining this over and over again and left the company.

Since this was a systemic problem in this business, the owner had to first decide if she wanted to go after these smaller accounts. If she did, she then had to figure out what they could do differently to address these complaints.

Analysis showed that these smaller accounts could amount to a sizable number of sales, so the owner decided they were important to keep and nourish. They had spent a lot of time getting these customers, and she knew this effort would pay off as these customers grew.

Knowing who her former customers were allowed this entrepreneur to find out what needs were not being met and make the necessary changes to her operation. She established a better process for recording notes about her clients’ businesses from each service representative and a way to make sure that each service representative read the notes before going out on a call. She was not able to get back any of the customers she had lost, but she was able to ensure she would not lose accounts because of this complaint again.

Now go out and see if you can find trends among your lost customers and do not be afraid to call them. This is the only way you can get honest information about why they left. With this insight, you can put a plan in place to address these issues so you do not keep losing customers for the same reasons.

You can do this!


Dr. Osteryoung has directly has assisted over 3,000 firms. He is the Jim Moran Professor of Entrepreneurship (Emeritus) and Professor of Finance (Emeritus) at Florida State University. He was the founding Executive Director of The Jim Moran Institute and served in that position from 1995 through 2008. His newest book co-authored with Tim O'Brien, "If You Have Employees, You Really Need This Book," is a bestseller on Amazon.com. He can be reached by e-mail at jerry.osteryoung@gmail.com.

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