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Why Customers Leave

Every agency loses customers from time to time, for many reasons. Sometimes they're gone forever, for many reasons. However, in most cases, you can get them back IF you know for sure why they left, if you know for sure that you want them back, and if you have a standardized process for recapturing defecting customers

Right now you are losing customers. How you react to these defections could be the difference between life and death for your business. The reason is simple: It costs about five times more to obtain a new customer than it does to retain an existing one. Yet, out of the multitude of companies spending thousands to create new customers, few care to know when their customers stop coming back. Instead of continuously pouring new customers into your agency, try spending some time plugging a few of the leaks with a standardized process for recapturing defecting customers.

These five action points should make a difference:

Identify defections when they happen. You must know when a customer has ended a relationship with your agency. For agency businesses, it's a non-renewal. Transactional relationships require a little more work to follow. Knowing a customer's average transaction size and frequency will let you identify behavior that deviates from the norm.

Evaluate the value of a defection. Once a customer has left, you have to decide whether that customer is really worth keeping. Every agent will agree that some clients provide more value than others and that retention of those high-value consumers is crucial. At some point, every business needs to look at its clients not just from a standpoint of their potential value, but in terms of their impact on the cost of operations and marketing.

Identify the cause. Regardless of your intent to keep or lose a customer, you must know why the customer is leaving. Conducting random exit interviews will give you advance warning of problems that, if left unresolved, could drive your customers to the competition in droves.

Use a standard recapture process. Standard processes ensure that critical activities take place in a consistent manner. Create one method of contacting defected customers and make it a part of your daily marketing activities. An agency should always be focused on direct marketing. New customers are placed in the agency's "person who buys'' bucket. Then, based on the size of the account and the number of policies written for them, the agency sends out a series of targeted letters and phone calls designed to create the opportunity for account development.

Measure the outcome of your efforts. Nothing improves unless it is measured. A good set of customer-recapture metrics should track the number of customers that defect in a given time period and the percentage that ultimately stayed. You'll also want to quantify the revenue received from these retained customers–it will be an eye-popping figure!