Image partiellement visible d'un propriƩtaire d'entreprise en train de discuter avec un client

The impact of bankruptcy on the client: how to maintain the relationship

As a business owner, you’ve worked hard to build your brand. However, sometimes unforeseen circumstances cause financial difficulties that can lead to bankruptcy. Part of dealing with this situation is realizing the profound impact it can have on your valued customers.

After bankruptcy, many entrepreneurs want to rebuild their lives and decide to start a new business. In this case, regaining the trust of customers is essential to ensure the survival of the new business.

Bankruptcy or insolvency

Bankruptcy and insolvency are related but not the same.

  • PUSH bankruptcy is a legal procedure aimed at settling the debts of a company that is no longer able to meet its financial obligations.

  • L’insolvency occurs when a business cannot pay its debts when they fall due. Insolvency can lead to bankruptcy, but not necessarily.

Whether it’s a sole proprietorship, partnership, or corporation, every time a business has to file for bankruptcy, it affects various stakeholders, including the customer base that plays an important role in your business success.

Maintaining customer relationships

During bankruptcy, when customers often experience frustration and uncertainty, complaints from them increase. Effective management is essential to minimize damage to your reputation.

Here are some tips to help you maintain customer relationships:

  • Fast communication: Don’t delay responding to customer complaints. Responding immediately, even just to provide updates, can go a long way in alleviating customer concerns.

  • Transparency: Be transparent about the bankruptcy and its impact on contracts. Provide accurate information about refunds, guarantees and possible alternatives.

  • Empathy and understanding: Reassure customers that their complaints will be taken seriously. Anyone dealing with customers must do so sensitively and professionally.

  • Solutions and other options: If possible, suggest solutions and other options. You can provide refunds, offer arrangements with other suppliers or fulfill orders through partnerships.

Strategies to regain customer trust

If you want to start a business after bankruptcy, it is essential that you instill confidence in customers, new and old. It may take some time, but here are some tips to help you:

  • communication: Be honest about the steps you took during the bankruptcy process and the steps you are taking to avoid it. Talk about the lessons you’ve learned. Reassure customers of your company’s commitment to their satisfaction and well-being.

  • Uniformity of services: Focus on providing consistent and reliable customer service. To restore trust, you must demonstrate your ability to honor promises, deadlines, and commitments.

  • Incentives : Offer incentives, discounts or loyalty programs to keep customers coming back and reward their patronage. These steps can help demonstrate that the company is committed to repairing relationships.

  • Improved customer service: If possible, strengthen your customer service and actively ask for feedback. Being responsive to your customers’ needs will foster their trust and loyalty.

  • Brand reputation restored: Highlight positive changes, new strategies or innovative offerings that illustrate the recovery and growth of your business.

Business failures have serious consequences for customers, disrupting orders, contracts and relationships. With prompt communication, transparency and proactive efforts to regain trust, business owners can minimize the impact on customers and get back on track.

This article is intended to provide general information only and is not intended to provide legal, financial or other professional advice. Please consult with a professional advisor regarding your specific situation. The information presented is believed to be factual and current, but we do not guarantee its accuracy and cannot be considered an exhaustive analysis of the topics discussed. Opinions expressed reflect the judgment of the authors as of the date of publication and are subject to change. Royal Bank of Canada and its entities do not promote, either explicitly or implicitly, the advice, opinions, information, products or services of third parties.

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