Retaining Customers is The Easiest Thing You Can Do to Stay Profitable
Through word-of-mouth advertising, loyal customers can help you gain new customers
Sure, everyone wants new and more, but you can find better right where you are. More to the point: Every contractor loves to acquire new customers, but you’ll find more spending at higher levels plus referrals at a fraction of the marketing costs with the customers you already have. Sound like a plan?
Yes, so as you keep pumping your acquisition marketing out to prospects, save a little of your budget and attention for the easy and profitable pickings of outreach to your innermost circle.
The customer retention path to steady work flow and sustained viability has no peer, and here are five reasons why:
Marketing costs are lower — Squeezing marketing dollars out of HVAC contractors can sometimes be like squeezing a smartphone out of a teenager’s hand. It’s not always easy when the thinking is, “Won’t people call me because I’m good at what I do?” No, they need to know why they should turn to you to take care of their home comfort.
The next question is, “Well, if I did a good job, won’t they come back?” No, again. They need to feel that they have a relationship with you. However, solving that problem is a much easier program to implement in time and money than the first one.
Studies show that marketers spend eight times more in acquiring new customers than in retaining current ones, and that process relies largely on periodic communications after the sale. This is truly a donuts-to-dollars comparison because a little bit of dough in your retention coffers yields a big return. For example…
Repeat Customers Spend More than New Customers — Repeat customers spend 67 percent more, according to marketer surveys. Returning customers are not only more receptive to the upsell, but, because they’ve already developed trust in your company, they’re more willing than a prospect to take your recommendation for the higher-end equipment. And, when they trust you and your recommendation, they act more quickly than price shoppers and wait-a-whiles.
Customer retention will strengthen your bottom line — The numbers show this over and over. A 2-percent increase in customer retention has the same effect on profits as cutting costs by 10 percent.
Spend and save? Yes, actually, because the small amount of increased spending in your marketing budget brings in higher sales, which is better for your company than cutting back and staying small.
Further, studies also show that a 5-point increase in customer retention can increase profits by 45 percent. Any interest in a 45 percent profit increase, or are you cool with how things are going now?
You can’t put a price on loyalty — Or, perhaps, maybe you can, because you can sure profit from loyal customers. Not only does your customer retention program generate additional income for you from your current customers, these customers also do some of your acquisition marketing for you.
Back to the research: Studies show that 55 percent of consumers express loyalty by recommending the companies that consistently touch them through marketing. And being savvy in your customer contact helps too. Approximately 51 percent of U.S. consumers are loyal to brands that interact with them through preferred channels of communication.
Now, to hit the point home…
When you dance with the ones who brought you, they’ll stay on your dance card — Customers in a retention program are five times more likely to repurchase, five times more likely to forgive you when you’ve made a mistake, four times more likely to refer family or friends, and seven times more likely to try a new offer.
Your customers are why you are in business, and loyal customers are even more the reason you’re able to keep at it year after year. Just 20 percent of a customer base equals 80 percent of a company’s revenue (but zero percent if they leave you).
So, what does that mean for you?
The average service contractor loses 11 percent of its customers every year, and you can figure out for yourself that those losses mean you’ll have to replace them with higher marketing costs. Plus, you can only imagine the missing income from customers who left without spending at higher levels or more often and who took their referrals with them.
Or, instead, you can implement (or strengthen) your customer retention program, and enjoy the benefits that loyal customers provide.
There are several steps you can take that are simple, yet powerful. Namely:
Build trust — That starts with the first phone call — and the professional handling of a customer’s request for an appointment — and on to the scheduled visit, the analysis of the problem, the solution recommended, and the solution delivered. So, you’ve begun to build trust by performing at a high level and providing excellent customer service. Now, you’ve laid the groundwork to keep going. Customers return to you and buy from you because they trust you. Otherwise, no trust, no sale, no return, no repeat sale, no referral.
Communicate on a regular basis — Communication is the foundation of a customer retention program, and you have a dozen different ways you can make this happen. Their entry into your customer retention program begins with a follow-up call and a thank you letter. It also includes regular newsletters, holiday cards, and other special touches during the year to show you care, and you’re there. Each communication builds on the trust you’ve begun to establish.
Note, the centerpiece of a customer retention program remains a quarterly newsletter printed, mailed, and filled with helpful advice for the home and perhaps a discount or two for the customers on this special list. In the meantime, social media profiles are your opportunity to stay in front of your customers more often — offering tips; recommendations; insight; gratitude; and light-hearted, friendly posts.
Also, on your website, keep the content pipelines flowing and full of helpful information that continues to establish that you’re an advisor and expert, not just a sales team. Use social media posts to share this content.
Be responsive — Consumers take their complaints to social media. Keep these profiles monitored and take these opportunities to respond and be concerned and helpful. You not only have a chance to make a problem right, you’re also demonstrating that you are strong in customer support.
Also, welcome feedback and thank customers for their comments. As part of this effort, encourage and monitor reviews. People trust word-of-mouth from friends and family more than they trust anything you say in your paid marketing, and reviews are word-of-mouth that they can turn to when they don’t have personal recommendations. If you get good comments, ask if you can use them as a testimonial. If you see something negative, apologize for the inconvenience and work to solve the problem.
Publication date: 1/8/2017