Client Loss: Three Types of Women Entrepreneurs, Three Types of Responses

How will YOU respond when a customer threatens to leave?

Maybe it will be due to a gap in communication.  Maybe it will happen due to increased pricing competition, a poor fit, a service problem, or a new product your competitor creates.  Regardless of the cause, every entrepreneur faces the risk of losing customers at some point.  But what we know from our research is that it's very likely different types of women business owners will respond to this challenge in different ways.   This article looks at how three of the types will respond to customer loss.

As we've seen Jane Dough is an entrepreneur who enjoys running her business and makes good money. She is comfortable and determined in buying and selling, which may be why she's five times more likely than the average female business owner to hit the million dollar mark. Jane Dough is clear in her priorities and may be intentionally and actively growing an asset-based or legacy business. It is estimated that 18% of women fall in the category of Jane Dough.

Overall, Jane Dough has a fairly pragmatic, business-minded approach to everything that happens in her business, so when she encounter a problem with a customer loss, she most likely won't get flustered or panicked.  Instead, she may take the attitude, "It's just a business decision on their part.  Customers come and go based on what they need.  We have to stay focused on growth and not let this get to us."  In some ways, this pragmatism is very good, because it keeps Jane Dough from becoming distracted by one-off events so she can continue moving toward her big goal - growing a thriving and profitable business. 

However, Jane Dough should monitor (or have someone on her team monitor) her company's on-going customer retention rate.   Also, she should have someone take the time to conduct an exit interview, if her departing customer is willing.  Why?  Because Jane Dough often will delegate work to other people, she may not immediately be aware of a systemic problem in the business.  Let's say, for example, that she starts tracking customer retention and learns that roughly 15% of customers don't return and half of those are because product delivery takes too long.  Jane Dough could work with her team to find ways to address delivery challenges to improve the process and retain more customers.  But she'll only know what to focus company efforts on if she's tracking the reasons customers leave and the magnitude or rate at which they are leaving.

One other word about Jane Dough - if it turns out that customer defections are happening as a result of something her company has fallen short on, she may be the type of leader to become angry with the person responsible for managing the function where the breakdown occurred.  I have seen several Jane Doughs react with a rapid, "Fire them!" mentality, thinking that the problem is the person, not the system.  Although there are cases where the problem IS the person, it is also true that systems can be at fault.  Before taking extreme personnel action, Jane Dough should carefully dissect the system itself, along with other processes that feed the system, first.  This is the better way to understand how and where breakdowns are occurring and prevent the problem from arising again if a new person is hired to do the job.

Accidental Jane is a successful, confident business owner who never actually set out to start a business.  Instead, she may have decided to start a business due to frustration with her job or a layoff and decided to use her business and personal contacts to strike out on her own. Or, she may have started making something that served her own unmet needs and found other customers with the same need, giving birth to a business.  Although Accidental Jane may sometimes struggle with prioritizing what she needs to do next in  her business, she enjoys what she does and is making good money.  About 18% of all women business owners fit the Accidental Jane profile.

Because Accidental Jane tends to have started a business based on her personal networks and through referrals, the loss of even a single client may be difficult for her.  First, she may worry that she's let someone down (either the client or the referrer) - and this may cause her to doubt herself or her abilities.  Secondly, because Accidental Jane's business is often dependent on deep relationships and word-of-mouth referrals, she may worry about the negative impact on the future of her business of losing a customer - because each customer may represent a significant chunk of her income.

Accidental Jane would do well to speak with this lost customer herself to understand their reason for departure.  Because her relationships are often with personal contacts or strong referrals, she has a fair chance of reclaiming the customer with an open dialog.  This may mean changing the way work gets done so that the customer's needs are better met.  But, following this discussion, Accidental Jane should process what she heard with her business mind, not her heart.  Sometimes, customers are just a bad fit.  Other times, she may make the decision that it's not worth it to change her process to fit a particular clients' needs.  In the end, even a lost customer can turn into a potential referrer for Accidental Jane if these discussions are held in an open, honest manner where both sides walk away with renewed respect for each other, even if they have "agreed to disagree."

Secondly, a lost customer should always serve to remind Accidental Jane to not put all her eggs in one basket but instead to keep her eye always scanning the horizon for potential new customers.  Therefore, it may behoove her to develop specific marketing systems (such as email newsletters, systematized referral programs, affiliate networks, etc.) to help her continue building a steady list of prospective customers, even if she has no plan to work with them in the immediate future.

Tenacity Jane is an entrepreneur with an undeniable passion for her business, but who tends to be struggling with cash flow concerns. As a result, she's working long hours, and making less money than she'd prefer. Nevertheless, Tenacity Jane is bound and determined to make her business a success. At 31% of women in business, Tenacity Janes are the largest single Jane type.

Because Tenacity Jane already tends to be struggling with cash flow, the loss of a client may be a substantial source of stress to her. She may wind up feeling that she needs to work even harder to gain and keep her clients.  She may find the experience discouraging and not be certain what to do about it.

As with Jane Dough and Accidental Jane, Tenacity Jane would do well to speak with the lost customer candidly about what went wrong.  Rather than doing so in an effort to "rescue" the customer, however, she should interview with her ears listening for the truths she can learn about her business.  She should look for the clues that may help her understand why her business is not currently delivering the income she desires.  Are there competitive pricing issues?  If so, Tenacity Jane needs to understand how her competitors are able to deliver at a lower cost.  Are there product, service, quality or delivery problems?  If so, Tenacity Jane should listen carefully for opportunities to make improvements within the business itself.  Is there a breakdown in communication such that customers expect something different than what is actually delivered?  If so, Tenacity Jane should revisit her marketing and communication materials to see if they need to be clarified.  In short, a lost customer can be a wonderful learning opportunity that provides the exact information to help Tenacity Jane's entire business improve. 

Next week, we'll continue this article by looking at how Go Jane Go and Merry Jane would handle this issue.