It is not absolutely necessary to survey your customers before you con- duct a campaign to reactivate dormant accounts. As Schein found through experience in magazine publishing, simply by sending a mailer to your inactive accounts—those who bought within the last 24 months but are not buying now—you can get 2 to 10 percent or more to buy again, instantly reactivating them to active customer status.
But you can significantly increase the percentage of inactive ac- counts that you reactivate if you take the time to find out why they be- came inactive in the first place. For instance, one of my clients, a
newsletter publisher, found that renewal rates were extremely low—and cancellation rates extremely high—for one of the stock market newslet- ters they published. When they conducted a survey, they found that sub- scribers were annoyed because the stocks recommended in the newsletter, which was a monthly, traded too fast. By the time the newsletter was printed, mailed, and received by the subscribers, the stocks picked by the editor had already gone up in price to the point where they were beyond the trading range the editor recommended. Therefore, the subscribers were getting recommendations too late, and they could not buy the stocks the editor endorsed.
The solution was to adjust the investment strategy to a portfolio of slightly more conservative stocks. These stock prices moved more slowly, and the holding periods were longer. The problem was solved and sub- scribers could now buy the stocks recommended. When they mailed re- newal notices to subscribers, they acknowledged the problem and explained what they had done to solve it. The renewal rate was higher than with any other effort done previously.
How else could they have solved this problem? They could have in- creased the frequency of publication from monthly to twice a month or even weekly. Or they could have offered to update stock recommenda- tions between issues on a web site accessible only to subscribers. They could have set up a telephone hotline that subscribers could call for up- dates on portfolio positions between issues. Or they could have asked subscribers to provide their e-mail addresses, and then e-mail them whenever there was a buy or sell action to take between issues.
Find out why customers no longer buy. Has a competitor opened a store with cheaper prices and a bigger selection down the street? If so, you may have to make a fundamental change in your business to win your customers back.
Sometimes an accounting or corporate procedure causes you to lose business. If you can help your buyer overcome the problem, you can of- ten win back the business. For instance, years ago one of my large cor- porate clients suddenly stopped giving me business. It turned out they had adopted a corporate-level policy of consolidating vendors, which fa- vored a few large vendors—and left me and dozens of other smaller vendors out.
When my assistant asked the accounting department for details, she learned that I had been incorrectly classified as an advertising agency in their accounts payable system (I am a freelance copywriter, not an ad agency). So when they consolidated from two dozen to two
ad agencies, my name was cut and a purchase order could not be writ- ten to me.
We explained to them I was never an ad agency to begin with. I was able to get their accounting department to list me as a consultant in their vendor files instead, and the assignments began to flow once again. Had I done nothing, my buyer would never have been able to hire me again.
When a customer stops buying, find out why. Often it is a circum- stance rather than a deliberate desire that causes them to stop ordering from you.
The reason they do not remedy the circumstance on their own is that, frankly, it is not that important to them. They like you, perhaps, but they are busy and, like most busy people, take the easiest route of least resis- tance. In such a case, you’ve got to step in and help initiate whatever change must take place in order for them to be able to buy from you again. The business you were getting from them will remain lost until you do.
For instance, a salesman for a software distributor told me that his major account had stopped ordering software from him. When he asked, the customer said, “I like you better and your prices are better, but your company requires a purchase order for every order. I am overworked and do not have time to write all these purchase orders. Your competitor does not require purchase orders, so I buy from them.”
The salesman went to his management, told them of the problem, and asked them to waive the purchase order requirement for his cus- tomer. To his surprise, they refused! But instead of giving up, he found another solution.
He told his customer to give him a stack of blank purchase orders. Then, whenever the customer wanted to buy a program, he simply called the salesman and told him what he needed. The salesman filled out a purchase order and faxed it to the customer for his signature. All the cus- tomer had to do was sign the P.O. and fax it back. The salesman took over doing all the paperwork his customer didn’t have time to do, and it worked—he got the business back and reactivated the inactive account.