The reasons your firm loses customers – both internal and external – are complex, but identifying them can be accomplished with five simple questions.

The catch is that you’ll need to call your lost customers (or a sampling of them) and your questions need to be open-ended.

Before we cover those questions, let me first address the No. 1 objection companies have about calling on lost customers.

They don’t think their lost customers will take the calls and/or answer questions. Invariably, their fears prove to be unfounded if they follow two rules:

If you have a small company and you lose a half a dozen customers, call them all.

If you are larger, you will want to use a sample.

You can calculate the sample size needed from any number of online tools, like this one from SurveyMonkey.

Question 1: Why did you choose our company to begin with?

Leading with this question reveals considerable insight on your company’s value proposition and what customers expect when they agree to work with your firm or use its services.

As any management consultant can tell you, there often is no correlation between company mission statements or brand promises and what’s driving customer acquisition. This question also puts a spotlight on what your sales team is saying in the field.

If they’re overcommitting, you’ll find out between the answers to this question and the next one.

Question 2: What caused you to leave our company?

This gets at the heart of your call.

Why are you losing customers?

If you’re wondering why you shouldn’t “lead” with this question, it’s because you need this question to be framed within the context of what your customer was expecting when he or she began working with you.

You’re not just going to find customer service, or technical or billing problems here. You’re going to understand how your delivery in those areas stacks up against what was promised.

A partner in our firm that worked heavily in customer retention for years found that the worst case of customer attrition he encountered stemmed from salespeople promising savings of up to 40 percent when the average savings were 7 percent — far below the estimate.

Technically, the company’s sales reps were not lying because they said savings were “up to” 40 percent.

Additionally, there was a scenario in which that was accurate, but the difference between that potential and the actual savings was so great that customers felt they’d been lied to and were easy pickings for the next company that called on them.
Question 3: Which of our competitors did you go to?

Understanding why you lose customers gets at your own firm’s shortcomings, but that’s only half of the customer-loss equation.

You also need to know which firms they’re choosing instead of yours so you can shore up your defenses.

Which leads directly to the next question.

Question 4: Why did you choose our competitor?

This is where you get the information you probably don’t want to know, but need to know.

Are you losing customers to new technologies?

Have you sold heavily on price and accumulated a price-sensitive customer base that will take the next low-priced offer that comes along?

Does a competitor have a killer promotion or incentive that’s especially attractive?

This is the question that completes your puzzle – especially if you’re losing customers who were not dissatisfied with your company but you lost them anyway. 

Question 5: Is there anything we can do to earn back your business? 

You need to ask this question so you know how to approach all of your lost customers with win-back offers.

But you must ask this question last because some of your respondents will think you’re pivoting to a sales call at this point and cut the call short.

And if you lead with this question, every respondent will think it’s really a sales call. Always ask this one last.

Pulling it All Together

The challenge with open-ended questions is coding and analyzing the answers to get quantifiable information.

For example, you would count all keywords related to being “too expensive” and then calculate the percentage of your lost customers who cited cost as a factor when leaving.

Thanks to word cloud analytics, it’s easier today than it’s ever been to analyze these types of results.

You’ll still need to take a little time going through your customers’ responses to manually add keywords here and there to make up for unclear answers before crunching the data.

It’s well worth the effort.

 Asking your customers these open-ended questions will give you the data you need to minimize customer attrition – what your customers expected, how you performed, which of your competitors is taking your customers and why. 

Khali Henderson is senior partner with BuzzTheory Strategies, a marketing consulting firm specializing in the channel.