There’s no two ways about it…
It hurts. Losing your biggest customer (or client) is one of the worst things that can happen to a business owner. Maybe even the worst.
But like it or not (and we hate it as much as you do!), it’s inevitable.
Maybe your company has grown to the point where your oldest client can’t afford you anymore. Or perhaps you messed up a big order, and your customer declined to give you a second chance. Or maybe they just don’t want what you’re selling any longer.
Whatever the reason, it’s never a question of if you lose your best customer, but when.
And when that happens, you want to be prepared. And we’re going to help you prepare!
In today’s post, we’ll give you a simple 3-step plan to follow, so you can:
- Do right by your customer…
- Generate new, high-quality leads…
- And rapidly regain lost revenue…
…in that order – without spending a ton of time and money on “emergency marketing”.
Sound good? Then let’s go!
We’ll start with the step that won’t make you money in the immediate future… but will prevent a lot of headaches and nasty surprises in the long run.
We are talking about breaking up with your customer – amicably.
Step 1. Protect your business by helping your customer move on
When you’re about to lose your biggest source of revenue, it’s very easy to go into survival mode. To focus 100% on landing on your feet. And to forget the customer who is leaving. After all, they made up their mind, and you don’t owe them anything… right? Right?
This kind of thinking is a mistake, and it can be immensely damaging to your company and your reputation in the long run. Whatever business you’re in, you have a duty to your customer. Yes, even after they decide that you won’t be working together any longer.
(That’s what the “Strategy of Preeminence” is all about – you can learn more about it here, if you’re interested.)
Of course, this duty doesn’t mean that you have to keep working with the customer, or not collect what they owe you, or anything like that. No, it simply means that you need to look out for their best interests, and make the transition as painless as possible.
If you can, set your customer up with someone else who will meet their needs instead of you.
Yes, technically that would mean losing business to a competitor. But look at it this way: no matter what you do, you’re not getting that particular customer back. Otherwise you wouldn’t be in this situation in the first place.
By referring them to someone else, you will split up amicably, and preserve your status as their trusted and valuable advisor until the end. Down the road, it will pay off in countless subtle ways: from word-of-mouth recommendations from your ex-customer, to new business opportunities, to maybe even regaining their business in the future – who knows?
Besides, the alternative would be to have a disgruntled, upset customer out there, telling everyone who would listen how horrible it was to work with you, how you only cared about getting paid, and how you left them high and dry.
Not a pretty thought, is it?
And that, right there, is why Step 1 is so important. Once you’ve taken care of it, you can officially move on to helping your business through this difficult situation.
Step 2. Attract high-quality leads with a referral campaign
Here’s the next step in your game plan:
You want to tap into the cheapest, most effective customer acquisition channel – word-of-mouth marketing and referrals. In our experience, this is the best way to plug the gaping hole in your revenues and your heart (sniffle) after losing your biggest customer.
Just to be clear: when we say “referral campaign” what we really mean is “just talk to as many people as you can as quickly as possible.” This is not the time to get sophisticated.
So let’s keep it simple, cheap, and dirty. You will need to:
- Contact your customers using the highest-touch channel available (with their permission, of course). In descending order of effectiveness, you can do it in person, over the phone, or by email. Unsurprisingly, the in-person approach is 34 times as effective as email.
- Formulate a simple ask: to tell one friend about your company. Of course, that friend should be someone who would actually benefit from your product or service. If you sell high-end exercise equipment to gym owners, you won’t benefit from someone’s Aunt Edith finding out about your company. Sorry, Aunt Edith!
- Make it as easy for your customers as possible to spread the word about you. Write a short email script they can copy and paste, fill in the blanks with their friend’s name, and hit Send. This point is extremely important. You might not have a rewards program in place to incentivize referrals… but you need to make the process an absolute no-brainer.
When is the best time to reach out to existing customers about referrals? That’s a great question. And the answer is – as long as you do it, it won’t matter too much. But we know you like to optimize things, so here are a few great opportunities for outreach that you can use:
- Holidays. Sure, giving gifts to other people is fun… but you know what’s more fun? Recommending something awesome to a friend without spending money on it yourself!
- After a successful order. Once your customer paid something for your product or service, recommending it to somebody else is a much smaller request by comparison.
- Your business birthday. Your business turning a year older is a wonderful excuse to contact your current customers and ask them to refer people to you. If your brand is personality-driven, you can use your own birthday in a similar way.
- Customer’s “anniversary”. After someone has stuck with your business for a year, or several years, they become a lot more likely to say yes to all sorts of requests. Write in, congratulate them, and ask for referrals!
An important note about referral incentives:
You will notice that we haven’t mentioned any incentives or rewards that you could promise your customers for bringing in new people into your business. That’s by design. The thing is, referral incentives don’t work equally well with every type of customer.
For example, some customers will be happy to spread the word about your brand in exchange for freebies, store credit, and discounts from you. Others will happily promote you for free… but will balk at the idea of getting rewarded. The latter situation is very common with companies who have high-net-worth customers – check out story #1 from this article, for example. It talk about exactly this kind of situation.
Bottom line is, you will want to tailor your approach based on the kind of market you’re in.
Step 3. Replace lost revenue by upselling your existing customers
Now, while you’re waiting for those referrals to come through and start working with you, something else is probably happening. Namely, your finance people are running around in a panic, saying something along the lines of:
“We projected a ton of revenue from that customer! This will put us so deep in the red next month! [insert additional lamentations, screams, and gnashing of teeth here]. What are we going to do?”
They are not wrong. In the short term, you will need to replace the revenue that you lost when your biggest customer walked away. And one of the few guaranteed ways to do it is to make a new offer to the people who already want what you’re selling.
Your existing customers can do a lot more than point new business in your direction. They can spend more on your products or services – that is, if you offer them something valuable.
Every business is different, so we won’t pretend like we have a one-size-fits-all solution for this step. What works for a software company might not work for a retailer, and what generates a ton of extra revenue for a consultancy will be a huge flop if tried by a design company.
So instead, we will give you a selection of ideas you can test to figure out if any of them are going to make sense for your business model.
Here they are:
- Encourage a bigger financial commitment. If your customers are making recurring payments to your company, asking them to switch to an annual plan (at a discount) is an excellent way to generate extra revenue in a hurry. If they pay you in installments, asking to pay off their purchase sooner (again, at a discount) is another thing you could do.
- Offer an upgrade. If you are selling service packages at different prices points, or multiple tiers of a certain product (e.g. an online course), you can always suggest an upgrade to your most loyal customers. You will notice that this approach is similar to idea #1, except it’s value-based with a lower emphasis on saving money.
- Create a premium-level offer. In almost every industry, there is a segment of customers who are ready to pay the highest price for the highest value and level of service you can provide. If you haven’t tapped into this particular segment of your target market, now is the time.
- Run a sale. We don’t like to overuse sales and discounts for acquiring customers. But luckily, this is a completely different scenario! We’re trying to replace lost revenues and stabilize cash flow, so everything is fair game – including offering some discounts to those customers who are still on the fence about buying from you.
- Upsell, downsell, and cross-sell when appropriate. Whenever a sale happens, brainstorm a way to turn it into two sales or more. For example, if a customer buys your software, could you offer a companion monthly service to help them learn how to use it? Opportunities like these are everywhere in business, and leveraging them can multiply your revenue… without adding a single new customer!
Customers are like buses…
…in that there’s always another one around the corner. Losing your biggest source of revenue stings – but there’s nothing you can do about it.
When something like that inevitably happens to you, you will want to focus on the things you can control: helping your customer to land on their feet, generating new revenue in the short-term, and lining up new leads as quickly (and cheaply) as possible.
Of course, there are many more steps you could take, beyond the ones described in this post. Cutting costs, developing new customer acquisition channels, taking out a loan… you name it.
But for the purposes of this article, we just wanted to give you the three most important strategies you could use. You can implement these on a shoestring budget, and they will still drive business results – fast.
So if you ever end up in a situation where your biggest customer is walking away from you, you should keep this 3-step plan in mind. Enjoy!