I was disappointed when Zulily closed abruptly last year, but at least I only had discounted TOMS at stake, not my teeth.
Back in December, SmileDirectClub customers were shocked to learn that the company had gone out of business overnight. No one notified customers, many of whom were halfway through their dental alignment. There were no refunds and no continuation plan other than “Contact an orthodontist. Good luck!”
That’s a perfect example of how not to manage a business closure. Closing a business can be a personal and very difficult decision. It also isn’t unique — 20% of businesses close within the first year, and 50% within the first five years.
Amidst all the logistics and financial to-dos, how you treat customers during a closure will cement your reputation and legacy for years to come. Follow this guide to learn the best way to wind down your business while doing right by your customers.
Table of Contents
- Closing your business? Good customer service still matters.
- Customer Service Dos and Don’ts: Tips for Going Out of Business the Right Way
- Saying Goodbye to Your Customers
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Crisis Communication and Management Kit
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Closing your business? Good customer service still matters.
So, you’re closing your business. Why, then, should you care about customer service or customer success? Here are a few reasons you should shutter your business with customer care and professionalism.
1. Your business still exists in some form.
Sometimes, you may close just one location in a chain or one business concept under a parent company. In this case, you need to continue to serve customers well so you can retain them at one of your other locations or businesses.
In other cases, your retail business might be simply moving online. There’s a common trend I’ve noticed in the past few years. Remember Brookstone? They closed their 100 mall stores in 2018, but you can still buy your massage chairs and shiny-but-unnecessary gadgets online. How about Pier 1, Papyrus, Dressbarn, Payless, or Gymboree? It’s the same story.
Even if your business closes, your brand, intellectual property, and customer list may have value you can monetize — as long as you don’t kill your brand value in the closure process. Take Overstock.com, for example, which purchased the Bed, Bath, and Beyond brand after it closed. If you’re selling your practice or moving entirely online, you want to hold on to your reputation.
2. Maintain loyalty for your next venture.
Many famous entrepreneurs — including Bill Gates, Sir Richard Branson, Colonel Harland Sanders, and Milton Hershey — all had failed businesses before finding success. If you want to start another business down the road, don’t burn all your bridges now.
3. It’s the right thing to do.
Most business owners have a reason for being in business outside of simply the money. Chances are you’re proud of what you’ve built, and you’ve enjoyed serving your customers (at least, some of the time). If you own a local business, think of the impact that closing poorly would have on your community and neighbors.
Customer Service Dos and Don’ts: Tips for Going Out of Business the Right Way
To navigate this tricky transition, follow these dos and don’ts of going out of business well.
Do: Communicate with customers.
Whenever possible, send customers an email or letter notifying them of your decision. Share as much of the reasoning and story that you feel comfortable telling, but make sure that the message is succinct and clear. For instance, don’t send a vague email subject line like “Thank you for supporting us.” Send more than one message with urgent keywords like “Final reminder” or “Last day in business.”
Don’t: Tell customers too early.
If customers still owe you money, you want to make sure you can collect as many of your outstanding invoices as possible before announcing you’re shutting down. And, of course, don’t let your employees find out at the same time as everyone else. Tell your team first.
In the example above, local grocery delivery company Green Bean Delivery shared their announcement with customers a week before closing. This gave customers just enough time to receive their final deliveries, contact customer service if needed, and shop the closeout sale. Notice how they reinforced their mission and thanked customers for their longtime loyalty.
Do: Anticipate customers’ FAQs.
Before sending an announcement, try to anticipate as many customer questions as possible. This way, you can avoid answering a flood of queries, answering the same questions over and over again. Share as many practical details as you can, including:
- Your final date in business.
- Any changes to your hours or operations in the meantime.
- Whether pending orders will be fulfilled or refunded.
- Whether you’ll honor returns, gift cards, and vouchers.
- How customers can export their files or records, if applicable.
- If you have another location, how to transfer over.
- Inventory sales for discounted shopping.
- Any continuity details, such as a new owner or referrals to competitors.
- How to contact customer service or check order status.
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- Free Crisis Management Plan Template
- 12 Crisis Communication Templates
- Post-Crisis Performance Grading Template
- Additional Crisis Best Management Practices
Don’t: Overpromise or overexplain.
While you want to give sufficient detail and value, don’t overpromise. If you don’t have the cash flow to honor returns or gift cards, don’t say that you will. You don’t need to overexplain. Simply state your policy.
It’s also ok to admit any details you don’t yet know. Take, for instance, this business closure email from online whiteboarding platform InVision. The CEO’s letter hits all the right notes, including a clear timeline and how to export your documents.
The email explains that one of its tools, Freehand, has been acquired and will be continued in some form by the new owner. However, they’re careful not to give too much detail since the data migration plans are still in development.
Do: Offer promotions to convert and retain customers.
If you have remaining locations or are moving your business online, incentivize customers to keep shopping with you.
Gabrielle Marie Yap, Culinary Entrepreneur and Senior Editor at CarnivoreStyle, shared how she handled closing a restaurant location a few years ago.
“We reached out via email, social media, and even put up notices at the closing site, thanking them for their patronage and explaining the reasons behind the closure,” she recalls.
Yap said her company wanted to incentivize customers to visit their other locations.
“We offered special deals and discounts exclusive to those affected by the closure. Whether it was a free appetizer or a percentage off their bill, these little perks made customers feel appreciated and encouraged them to give our other spots a try,” Yap says.
Ultimately, the feedback and insights they learned through the experience helped them strengthen their existing locations.
Don’t: Let morale slide.
It’s understandably difficult to keep your staff positive when they’re losing their jobs. But, business closures are often made worse by employees badmouthing the owner or posting insider stories on social media.
You can avoid many issues by paying your employees all wages that are due and severance if possible. Then, lead by example to serve customers with professionalism until you switch the lights off.
“I’ve found that keeping staff motivated with a customer service focus helps retain employees needed to wind down smoothly,” shares Will Yang, head of growth and marketing at Instrumentl. “It’s about finishing strong.”
Yang notes that when he closed his retail store, his team celebrated customer and community until the last day. “Though bittersweet, we all left proud. The care we showed customers remained our legacy,” Yang says.
Do: Hold your head up high.
Closing a business holds a lot of emotion — you might be disappointed, crushed, or even relieved. No matter your emotional state, walk away knowing that you did what few people are willing to do: take a risk to build something. No business closure is truly a failure when you delivered value to customers and learned something from it.
Saying Goodbye to Your Customers
Closing your business is one final chance to thank customers for going along for the ride of a lifetime with you.
I know that I carry a fondness in my heart for many restaurants, stores, and bookstores that are no longer in business. Depending on your industry, customers may have marked important milestones with your business, like a first date with their spouse or buying a wedding dress.
Throwing a final inventory sale or open house can give customers a chance to say goodbye, take photos, and share their good memories.
When you communicate clearly and transparently, anticipate customer FAQs, and treat customers and employees with respect in these final days, you’ll earn respect and loyalty for whatever chapter comes next.
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