When a customer cancels

To paraphrase a famous saying, “You can’t please all the people all the time”. You will always have some customers that cancel, whether that it during, immediately after or a long time after purchase.

One tactic that many companies use is to immediately offer the customer an incentive not to cancel – typically a reduction in price or additional services (Sky are a prime example of this!).

Whilst that will work for some customers, you then run the risk of the customer cancelling at regular intervals, expecting a discount each time. This rapidly reduces your margins, especially as word of mouth spreads and soon you have an epidemic of customers expecting discount in return for not cancelling. There are even websites set up specially to show people how to use this tactic to get maximum discounts from certain firms.

However, the true value of a customer cancelling is that it is an opportunity to get honest, direct feedback that you can use to improve your product and/or service, which over time will win you more customers (at the right margins) and potentially tempt back customers who have left. Handled the right way, it can also turn former customers into advocates of your business, generating referrals.

Ideally you should follow up a customer cancellation with a phone call. If that is not possible, the next best option is a letter (old school I know, but it works) with a reply paid envelope so they can send their feedback to you. Finally, an email can also work but not as effectively as a call or letter. One thing to avoid is a visit unless you have an excellent, longstanding relationship with the customer (so much so that you think of them as a friend before you think of them as a customer). This is because, just by being face to face, they will feel under pressure, unlikely to give you honest feedback and less likely to become a customer again in the future.

Whether you call, write or email, there are some key elements you should include:

  1. Express disappointment that they have cancelled. Use a phrase such as “I’m sorry you have cancelled – I hate to lose customers”.
  2. Assume that it is something you have done wrong – “we have obviously let you down or failed you in some way”.
  3. Show that you value their opinion by asking for feedback – “I am always trying to improve our business and would like to learn from any mistakes we made. Could you take a minute to give me your feedback to help us improve? (note, it is important to set their expectations by stating how long it will take to give you their feedback).
  4. Include a link (in an email) or a reply-paid envelope in a letter for their feedback.
  5. Explain that all customer feedback is read and used by the business.
  6. Finish by expressing sorrow once more that they have cancelled and offer them a route back to becoming a customer again – “Once again, I am sorry that you have cancelled and look forward to your feedback. If you feel we could be of service in the future, please do not hesitate to get in touch”.

When you put together the questions for feedback, restrict them to a maximum of four. Two that you must include are “What did we do wrong that caused you to cancel” and “What else could we have done?”.

If you have an accountant, they should be your first stop for business advice. If you don’t have an accountant or they can’t help, BuBul has a wide range of experts available. For more business advice why not follow BuBul on LinkedIn?