Winning Back 5 Huge Clients at One Time

And Generating Six Quarters of Record Revenues and Earnings

An Interview with Lonnie Sciambi, Managing Director and CEO, Value Force, LLC

In this article you’ll learn how turnaround expert Lonnie Sciambi won back 5 huge telecom clients using his “Pilot Test” method. You’ll also see how he leveraged that success to drive new sales and generate six quarters of record company revenues and earnings.

Dan Pfister: Lonnie, before we get to your strategies for reactivating past clients, could you share a little about yourself and your company?

Lonnie Sciambi: I'm “The Entrepreneur’s Yoda.” As an advisor, mentor, author and speaker, my passion is inspiring and guiding entrepreneurs and small business owners to grow, build value and achieve their dreams by realizing that value, all the while…keeping them from “the dark side.” You can find me at thevalueforce.com.

Dan: Can you share the story of one of your client reactivation campaigns?

Lonnie:  Sure. I've done a series of turnarounds over the years, and the chairman of a languishing small public company who I’d known for years asked me to come in and take over as CEO.

They just didn't get the importance of customer service and continual product improvement. And they’d lost five huge accounts.

It was a company that literally owned a niche market in telecom, but they just didn't get the importance of customer service and continual product improvement. 

And they’d lost five huge accounts. These were major telecom companies and they were lost in less than 18 months. 

The problem was the product was old compared to the newer competitors and the customers just weren’t getting the attention and response they used to get. In short, these very big and important customers were being taken for granted.

We had a new product in development for more than 18 months but nobody was managing the engineers and the first thing we did was get them focused and told them to get the product ready for introduction within 30 days.

I also brought in a new sales manager and scheduled meetings with the highest-ranking decision makers I could find at each of the ex-customers and asked if they’d grant us a meeting to review history.

During these meetings and several that followed we explained how things had changed and we asked if they would give us a second chance on a pilot basis. 

I promised them that the new product would increase efficiencies and save time and money and that they could use half a dozen of our products for 60 days, absolutely free.

I promised them that the new product would increase efficiencies and save time and money and that they could use half a dozen of our products for 60 days, absolutely free. We would also install them and train their people at no cost.

Now, the average catalog price of this product was 65 grand and I said if it didn't meet or beat the results we promised they could just return the box to us, no harm, no foul.

However, if it did get the results, they would purchase those six and place an additional order for at least six more to be delivered over the next six months. Further, we promised them their own account manager (it was actually the same person for all five) who would meet with them on a weekly basis to gauge progress and to make sure they were getting the necessary attention.

These clients were all over the globe and we really had to work. We actually got on planes to meet with them – they were that important to us.

Dan: So you physically went to Paris or London once a week?

Lonnie: We started that way but we were killing the account manager so we changed over to conference calls.

We were determined to get these ex-customers back and we got three of the first five back within 90 days.

But we were determined to get these ex-customers back and we got three of the first five back within 90 days. 

What that means is we got them to agree to a pilot. This is my idea of a pilot - a pilot is really one word of a two-word phrase and the phrase is “pilot test” and a test is pass / fail. 

You don’t get to use our product and give it back if it works. If it does what we said it's going to do, then you're going to buy six products now and six later. If it doesn't, then we're going to take the box back - that was the whole idea.

This was a good deal for them because they got to use our best new product for 60 days. Everybody loves a good deal and that's what this was. For some of them it actually turned out to be 90 or 120 days, if they needed a little more time to review it, but that was okay because these guys were big and they carried that kind of clout.

We actually got all five customers back, the other two came back within the first eight or nine months.

We actually got all five customers back, the other two came back within the first eight or nine months.

Net to us was more than a half a million dollars in new sales and an additional backlog of three quarters of a million within the first year. 

Dan:  So client reactivation was clearly valuable enough to have a prominent place in your playbook.

Lonnie: For me, it's basically a half step down from selling into the existing customer base and that’s the most cost-effective way to sell and grow. 

They know your company and your product, you know them, you might have to reprove yourself but at one point they were confident in your ability to deliver both products and services. And oftentimes it's poor service after the sale that kills a good relationship.

Dan: Was it tough to sell the pilot test?

Lonnie:  Yeah it was. I talked to them about the point in time when they thought this company could really help their network and how they used us, in one instance, for 10 years. And what happened over that 10-year period? The company didn't keep the product up to date and slowly but surely customer service levels dropped.

So we had to come in like we were the new kid on the block and we promised them big results. And training was the key because with the training they would know how to get the most out of the product. 

It really helped with sales. Our sales people could point to our five huge reactivated clients and say … They're using it. They're using it. They're using it.

I don’t think we made money on that $1.2 million, I’d say we probably broke even on it. 

But it really helped with sales. 

Our sales people could point to our five huge reactivated clients and say … They're using it. They're using it. They're using it. Call them up. See if the product isn’t doing exactly what I just told you.

Dan: So say I’m a big telco, one of your former customers and I'm willing to give you a shot but how do I know you won’t just give me poor service after I buy the product?

Lonnie:  Well that’s what we had to prove and that’s why we had the account manager smother them during the 60-90 day period. He was calling them damn near every day. He was talking to multi levels, he was talking to the executives and he was talking to the guys on the line.

We had to overdo it, to prove it. We had to act like a startup. We had to act like our company depended on this, because frankly it did.

Dan:  And I would imagine that when you're spending months on site, with five different groups, you're going to learn a ton so you can make the product even better or even exactly what the client wants, right?

Lonnie: Do you think???  Do you think???

Dan: (laughter)

Lonnie: I wrote a blog several years ago that asked “Is your customer part of your product development process?” Very few customers are and they ought to be because you learn so much. 

Dan:  So you made this Herculean effort to win these big telcos back, what was the end result?

We did six consecutive quarters of record revenues and record earnings. And we got ourselves back on NASDAQ.

Lonnie: The turnaround was very successful. We did six consecutive quarters of record revenues and record earnings. And we got ourselves back on NASDAQ.

Dan: If someone asked you what the first thing they need to do, to win back past customers, what would you tell them?

Lonnie: You’ve got to find out what you did wrong. First you do it internally on paper and then you want first-hand information which is what I did when I went around to the telcos for our first meeting.

In the meeting we’d introduce ourselves … I'm the new CEO, he's my new sales manager and we're here to say we're sorry we lost you as a customer. We want to understand more about you and what we did wrong to lose you, because how could we lose somebody as valuable as you?

Dan: And what’s the number one factor for successfully reactivating a client?

Lonnie: It's absolute honesty. It's admitting why you lost them (once you learn). It’s vowing that those reasons don't exist anymore and that you’ve learned valuable lessons about nurturing customer relationships. 

Now, it’s easy to say stuff like “If you'll just give us a second chance, we'll prove it”, but you’ve got to have a game plan for reigniting that situation.

Dan: Why do you think so many companies don't try to win back their past customers?

Lonnie:  I think sometimes it's just laziness and sometimes it's just pride, they jilted us. Sometimes it's just stupidity, not realizing the potential gold in those old relationships.

That's really it. It's not recognizing that they were once a good customer. And why aren't they a good customer today? “Well we had a competitive situation and they bought on price.” 

No. Nobody just buys on price, that may have been one of the reasons, but it wasn't THE reason. There are other reasons and you need to find out what they are.

Dan: What are the biggest mistakes you see companies making with customer reactivation?

I recommend conducting a loss review every time a customer is lost, whether in a competitive situation or when a longtime customer is lost.

Lonnie: I recommend conducting a loss review every time a customer is lost, whether in a competitive situation or when a longtime customer is lost. 

This is something I learned in the very beginning of my career. I started with IBM and that was like getting a PhD in sales and marketing.

IBM did loss reviews. When you lost in a competitive situation, it was a big deal and they wanted to know why they lost. They didn’t want to put you on the hot seat, they wanted to understand what could have been done better and create a strategy to deal with the issue when it comes up again.

That’s for losing a prospect, but almost nobody conducts a review of why they lost a customer. Almost nobody does that and that's really important. 

They don’t do it because it's embarrassing. 

“The customer has been with us for 10 years and he walked away. Why? Well, because they offered him a cheaper price.” 

No. You don't kick away a 10-year relationship solely on price.

You’ve really got to analyze a loss.

You’ve really got to analyze a loss. Think about sports, football especially. What do they really, really look at when you lost a game? Why did we lose? What did we do wrong? What do we have to fix?

Loss reviews are one of the most critical things we have to do when we lose a customer.

Dan: And I assume that’s not something you just do internally – you also get direct customer feedback, right?

Lonnie: Absolutely. What I always do is call the customer and say, “Can we take 15 minutes and can you tell me why we lost, because that'll really help us to not lose a really good potential prospect like you guys in the future.”

Now going back to an existing customer is a piece of cake compared to that, and invariably they’ll talk to you and tell you exactly what you did to lose their business.

This is something you’ve got to learn from. But there are a lot of companies that just don't pay attention to that, they just accept turnover.