Economic Tip No. 2: Market to the Existing Customer Base
[Editor’s note: This is the second article in a five-article economic series offering tools and suggestions to help contractors during changing economic times.]
Picture the old expression, “There’s gold in them thar hills.” Now imagine what the hills represent for your business. Can you picture where there may be some missing gold or a gold mine in your business? You may have an untapped resource right under your nose - and it is just too obvious to notice.
That untapped resource is your existing customer base. While businesses pour hundreds of dollars into attracting one new customer, they often overlook the loyal ones already in their database that cost little or no money to market to. These customers offer unlimited repeat business, word-of-mouth referrals, and even give testimonials as long as they continue to get good service and don’t feel neglected.
“I have just realized that the most important thing we should do each morning is work on our customer retention,” said Jim Browne of Detroit Temperature Engineers Inc., Livonia, Mich. “We all know it’s ‘cheaper to keep her’ than to go out and drum up new business. Client retention has been the last thing on our minds - until it looks as if we are going to lose an account - then we get smart, but generally too late.”
One contractor has tried a lot of ways to increase business but still comes back to the reliable customer base. “We have tried many items in the past decades, however, we fail to realize that our customer base is by far the highest percentage of success,” said Thomas Stritecky of Waterbury Heating & Cooling Inc., Sioux Falls, S.D.
For one contractor, it is all about maintenance agreements. “Our primary goal is to remain connected to all customers via maintenance agreements,” said Mark Angellotti of Expert Heating & Cooling, Woodhaven, Mich. “We do have a number of customers who do not get involved with our maintenance agreement yet call us religiously, spring and fall, when they get our mailer. To connect with our customers who have not entered into maintenance or called for service is the most difficult. We do our best to do this in person.”
METHODS OF MARKETING/RETENTIONSeveral contractors interviewed by The NEWS listed various ways they market to their existing customers in an effort to retain their own “gold mines.”
Rick Hetterscheidt of Hetter Heating & Cooling, Columbus, Ohio, said his main thrust in marketing to his existing customer database is through the mail and added, “We send a spring and a fall newsletter that contains articles about recent employee certifications, company customer service awards, new company hires, benefits of renewing a maintenance agreement, new industry product upgrades, etc. We include recent customer testimonials and a couple of coupons for various products to be installed.
“But we also run advertising through the suburban weekly newspapers. These newspapers are cheaper and more accurately target our core customers. We run specials focused primarily at service - knowing full well that’s what drives our installs.”
“We send a birthday card to each furnace and air conditioner we sell,” said Bill Bradley of Airtronic Heating and Cooling, Redford, Mich. “In the packet is an offer for a maintenance agreement and a letter explaining why they are important. If they don’t respond to this, they get twice yearly postcards offering discounts on tune-ups.
“We market to these people for 10 years or until we get a response, then they are added to our tune-up customer list or maintenance customer list. No response for 10 years gets dropped from marketing lists.”
Sal Sidoti Jr. of Sal’s Heating and Cooling Inc., North Royalton, Ohio, said it is important to respond to his customers immediately - showing good service and loyalty. “We have personal people answer the phones 24/7, including holidays, and we are there within the hour,” he said. “We respond to concerns right away.
“My advice is to be available to potential customers and always call back. Make sure that every customer who calls in is accounted for.”
Sidoti noted that his company markets itself in the small community papers but doesn’t overkill with phone book ads. His company is also a member of the Better Business Bureau and Angie’s List.
Stritecky, whose company does $4 million in service and replacement in his community, listed his most successful retention programs.
“We have an all inclusive service program called the XP [extended protection]. For a monthly fee we will include fall and spring check-ups and take care of the expense of all parts and labor throughout the year at no charge [with a few exceptions]. Typically, we receive about $30 per month year around. This is easy to market, balances our cash flow, and reduces our after hours service.
“We also send direct mailers to our base with off-season discounts; usually 15 percent on select items. And we offer free service contracts on installs for the first year. Then we in-house call and market the next year about one month before the anniversary. Our success rate is very high.”
Angellotti said, “Our basic modes of maintaining existing customers include: Two annual postcard mailings for spring and fall specials; yearly reminders for maintenance contracts sent out annually on the first of each month; as time allows, we query our customer database for those who we have not seen in x number of years. Phone calls are made in an attempt to provide maintenance or just re-establish contact; and quarterly e-mails sent to a limited number of customers with reminders, specials, etc.”
THE LIGHT COMES ONBrowne said that his company has tried various marketing methods in the past but until he was contacted for this story, had not put a lot of effort into marketing to his existing customer base. “We do occasionally send out a ‘Give Us Some Pointers’ questionnaire, which asks our clients to fill in the blanks regarding quality of service, timeliness, helpfulness of staff, overall level of satisfaction, and other comments,” he said. “We get few of them returned. Maybe because we are sending out few of them or its too busy of a form.
“Effective immediately there is one going out with every billing. We need to let our existing clients know we care, we want to be better, and we need their help to get there. A light just went on.”
Publication Date: 03/23/2009