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Losing customers will reduce your profits, increase your marketing expenses, and lower your cash flow.  Therefore it is important that you learn why customers are leaving your business, and implement changes to retain them.  Primary market research will provide you with the information you need.

  • The first step is to define “lost” customers.  These are not only customers that leave your business entirely for the competition, but also those that shift part of their purchases to an alternate source.
  • Next you must identify which customers have been lost.  This list should be broken down by customer size (how much they purchased from your company) prior to moving business to the competition.
  • Categorize the reasons why the customers left your business; these will include: service, price, quality, and distribution alternatives.
  • Finally, have a third party interview departing customers to determine exactly why they left.  These interviews can be conducted over the phone, or in person, but should be as specific as possible.  For example customers don’t leave because your price was too high, they leave because the competition “offered a 25% discount on the first full year of business, followed by a 15% discount on each successive year.”

The purpose of your research is to determine the root-cause of why your customers are leaving, and then to take the necessary steps to prevent future losses.