What to Do When You Lose a Major Client

Losing a major client can put a big dent in the cash flow of your small business. It can take a long time to recover that lost revenue stream. You may find a new client, but new clients typically purchase less than clients with whom you have an established relationship.

So if you lose a major client, start thinking about what you can do to win their business back.

Your best option is to contact them before they actually defect. A client will usually show some warning signs before they stop doing business with you. For example, you may find that they are contacting you less frequently or their purchases are declining in an uncharacteristic way. They may fail to renew contracts. Or you may simply detect a change in their attitude.

Try to establish what the problem is. Make a phone call or raise your concerns in a meeting. If you do identify a problem, then you need to make a generous and decisive offer to resolve it. The cost of fixing a problem is likely to be much less than the lost lifetime value of a major customer.

If a client has actually left you, then things are immediately more complicated. You should try to set up an ‘exit’ interview and establish why you have lost their business. But be aware that clients may be reluctant to openly discuss issues immediately after they have defected.

If you call, they may be thinking, ‘I thought I just got rid of you guys.’ Or they may prefer to be ‘polite’ about why they left. They may not see any benefit in raking over the details of a relationship they see as ended.

Nevertheless, try to establish the reason for the defection, as this will help you formulate a strategy. Has the customer been drawn away by a competitor? If this is the case, you need to establish the competitor’s advantage. For example, are they competing on price or quality?

If the client went to a competitor because they were cheaper, you need to decide whether you can match or better their price. It may or may not be appropriate for you to do so. You might be selling a prestige product and do not want to go too far down market.

The competitor may be offering product or service features that you do not. Can you upgrade to match them? If you do not win back a particular client, then upgrading may at least prevent further defections.

A client may have left because their own economic circumstances and needs have changed. If this is the case you may want to do no more than tell them that your door is always open. Or perhaps they are moving and need a supplier that is geographically closer. In that case, you may want to explore e-business options.

If the customer has left because of service problems or poor complaint resolution, then you need to apologize and make amends. Thank the client for the information and let them know you will take steps to deal with the issue.

Don’t be too pushy. Be gracious, regardless of whether or not the customer seems open to the idea of renewing business ties.

Don’t look desperate by offering too much. Your best option may be to find some way to keep the relationship alive. For example, see if you can angle for some portion of your previous business. Or get permission to contact the client again in a few months. If you can’t arrange another meeting, then settle on a strategy to stay in touch, whether by phone or through periodic marketing emails, brochures or letters.

If you can’t win the customer back immediately, then make sure you make a note of their reasons for defection. Bear these reasons in mind when you re-establish contact.

If you are lucky, things may change in a few months or a year. People may have moved on to different positions within the company and this may be more favorable to you. The client may have lost corporate memory of any problems, or your competitors may be in trouble, in which case you may be well placed to restart the relationship.

Copyright 2002, RAN ONE Inc. All rights reserved. Reprinted with permission from www.ranone.com.