Navigating a Graceful Customer Exit

Updated: Feb 3, 2021

“Our customers are disappearing and we’re not sure when they’ll be back. If ever.”

I expected to have these conversations with friends supporting the service industry--travel, hospitality, consulting, personal and professional services. But I’m also hearing it from less obvious sources--internet advertising, automobile component manufacturers, healthcare, and niche pharma players.

I’m not smart enough to figure out the nuances of each industry dynamic. But I do know a thing or two about customer retention strategy. The COVID-19 business environment puts nearly every corner of the market into a customer crisis, making “What’s the best way to lose customers?” a sadly pervasive, and relevant question.

I don’t have a precise answer, but there are three guidelines that help in almost any situation or industry to execute a graceful exit.

  • Exit as you Entered - You know how you invest all that marketing, success, and goodwill energy when you onboard a customer? Tap into that during an exit as well. Most B2B relationships start with high hopes and a healthy dose of care and optimism. View exits as part of the customer lifecycle, not the end of the lifecycle. These may be the darkest hours, but for many customers, there is a light at the end of the tunnel. Assume that. Prepare for that. Burn no bridges.

EXAMPLE: I spent several years working with SMBs in the wedding and events industry. They go out of business all...the...time. But a quick query of our data showed that 30% of businesses that terminated contracts because they were no longer in business, not only found a way back but were paying customers again within 18 months. And that’s only the SMBs that returned as paying customers.

  • Set the Stage for a Return - You may be losing the customer for now, but don’t let go of your investment in their success. Your knowledge and empathy now will be remembered later. Provide some words or data that, that person, needs to hear.

EXAMPLE: A logistics software SaaS provider I work with is losing customers both at renewal and off-cycle. When brainstorming ideas on the best way to wrap up the current relationship we started with a lot of gratitude-forward ideas--and it’s always good to appreciate your customers. But what emerged in our planning sessions was that these to-be former customers need to hear what made them great so they can tap into that as they rebuild. They set about reminding every exiting customer about their best qualities as a business. And they can do that because they saw it, and enabled it, first-hand. The customer didn’t need to hear how appreciated their business was. What they did need to hear was “You built the world’s first, and best, perishable food asset tracking system. And your national network of employees share a culture and purpose. That’s so rare. We’re proud to have helped along the way and look forward to working with you again in the future.”

  • Drop the Fight. Do What’s Right - Many companies have onerous cancellation, delinquent payment, and non-renewal policies. And for good reason. But many of those programs and decisions were made on assumptions of 5, 10, or maybe 20% annual churn. What if ⅓ or more of your entire customer base is at risk? What if your customer base is somewhat finite--as for many B2B companies? It may be time to reframe from “barriers to exit” to “ramps for re-entry”. Invest as much time creating easy re-entry now as you previously spent devising complex exit.

...Reframe from “barriers to exit” to “ramps for re-entry"...

EXAMPLE: I don’t work with them, but I know a pair of transaction management and payment processing providers who are exporting entire transaction and customer data sets when their customers exit. The data is important for their (former) customers’ post-COVID emergence. One is even providing drops of the internal analytics the company used to assess customer health, in hopes their customers can use this to better understand their operations. This used to be THE switching cost--a complete data reset. And they’re putting it into their customers’ hands at exit along with value-add analytics.

It’s hard to take the long view when the immediate future is so uncertain. Graceful exits are a way to embed customer retention into your culture for the entire customer journey. Now more than ever, we must view that journey as cyclical, not linear, and recognize exits as a stop along the way, and not the terminal we’ve assumed them to be.

In what creative ways are you setting up your exiting customers for a future return? I’d love to hear your story.

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