Loyalty Is Key to Customer Retention

October 29, 2007
/ Print / Reprints /
ShareMore
/ Text Size+
Contractor Jeff Syster (left) shares a laugh with Terry Nicholson, president of Success Group International, before Nicholson’s presentation on customer loyalty at the AirTime 500 meeting in Orlando.

ORLANDO, Fla. - HVAC contractors who focus on attracting new customers to their business often spend a lot of time and money with unsatisfactory results - sometimes money losing results. According to Terry Nicholson, president of Success Group International, keeping existing customers happy and nurtured is time better spent. Nicholson was addressing members of AirTime 500 at their fall meeting in Orlando.

He asked contractor members if they knew the percentage of time they spent nurturing existing customers versus wining new customers. He reminded them that the goal of any successful contractor is to know how to spend the right amount of time, proportionately, on each segment of the business. Nicholson said ultimately, a contractor needs to put a high focus on nurturing existing customers and winning new ones. “If you do that, there is a pot of gold awaiting you,” he said. “You are going to reap a lot of profits.”

He said that almost one-half of a business’s potential customer base never hears any advertising or marketing messages because of a few different factors, including:

• People are unserviceable because they will always be loyal to their own contractor.

• People are locked out forever because you made them mad and they won’t come back.

• People don’t hear your messages because they don’t use the medium on which the messages are advertised.

“You have to realize that there are a certain number of people you will never reach,” Nicholson said.

He noted that a lot of money is spent on getting new customers, which can lead to increased advertising costs as a percentage of sales. Nicholson introduced the second maximum theory to show the importance of getting a customer and keeping a customer.

“The second most important thing is to get a customer to use you a first time,” he said. “The most important thing is to get customers to use you a second time. Smart companies focus on lifetime client value.”

He asked AirTime 500 members if they would guess how many years it would take for a customer to become a non-customer because they hadn’t reused them for service. Nicholson estimated that 85 percent of the room guessed three years or less, which led to his explanation of loyalty facts.

“Sixty-eight percent of consumers change their place of business for little or no reason,” he said. “And a 5 percent reduction in lost customers can increase profits by up to 75 percent. A first-time customer has a 30 percent chance of becoming a long-term profitable customer.”

Nicholson listed several advantages of having loyal clients:

• You are saving on marketing dollars.

• Long-term customers tend to be less price sensitive.

• There is a greater probability of free word-of-mouth advertising.

• Loyal clients don’t shop you.

• More trust means they are willing to buy additional products from you.

• There is a higher probability of replacement sales in the future.

• You have a base to call on when you are slow.

• Happier customers and increased loyalty makes your employees’ jobs easier and more satisfying.

Nicholson summed up by saying what loyalty is and how it affects HVAC contractors. “Customer loyalty is customers choosing you repeatedly over others when they have other options,” he said. “People make decisions with their heart or their head. What you are really trying to do is to capture heartshare.

“Keep this in mind: You aren’t after 100 percent customer satisfaction, you are after 100 percent customer loyalty.”

Publication Date: 10/29/2007

Did you enjoy this article? Click here to subscribe to The NEWS Magazine

Recent Articles by John Hall

You must login or register in order to post a comment.

Multimedia

Videos

Image Galleries

2014 Energy Efficiency Forum

Highlights from the 25th annual Energy Efficiency Forum in Washington, D.C.

Podcasts

NEWSMakers: Jason Vogelbaugh

Jason Vogelbaugh of Alpha Controls drops in to the NEWSMakers podcast to discuss his role with the company, the InsideIQ Building Automation Alliance, and current energy-efficiency projects being worked on. Posted on Sept. 26.

More Podcasts

ACHRNEWS

NEWS 09-29-14 cover

2014 September 29

Check out the weekly edition of The NEWS today!

Table Of Contents Subscribe

Venting R-22

The NEWS reported that a man received prison time for venting R-22. Should EPA step up enforcement?
View Results Poll Archive

HVACR INDUSTRY STORE

plumbing-hvac.gif
2014 National Plumbing & HVAC Estimator

Every plumbing and HVAC estimator can use the cost estimates in this practical manual!

More Products

Clear Seas Research

 

Clear Seas ResearchWith access to over one million professionals and more than 60 industry-specific publications, Clear Seas Research offers relevant insights from those who know your industry best. Let us customize a market research solution that exceeds your marketing goals.

DON'T MISS A THING

Magazine image
 
Register today for complete access to ACHRNews.com. Get full access to the latest features, Extra Edition, and more.

STAY CONNECTED

facebook icontwitter iconyoutube iconLinkedIn i con