Contractors have a costly habit of servicing a customer once and thinking, “They’ll stay as customers.” Well, they do stay. Customers stay in the customer files, rarely hearing from the contractor again. You never know when they leave, or why.

Here’s why 9,000 paying customers started using someone else:

  • 4 percent said pricing was unfair.

  • 9 percent died or moved away.

  • 12 percent had an unresolved complaint.

  • 16 percent took a competitor’s offer.

  • 55 percent left due to “indifference.”

    Those last two figures amount to the same reason: 71 percent of your customers will leave because you aren’t there, but your competition is.

    Once you lose a customer on a replacement sale, he’s out of the market for at least eight years.

    Loss Prevention

    A well-run customer retention program features a newsletter as its centerpiece. They’re simple to use, quick, and customers keep them around. Done well, it’s not perceived as “advertising” and thus strengthens the relationship. Better relationship equals better retention.

    You’ve already paid to get these customers. Recent studies show that it costs $275 to $325 to get a customer.

    Customer retention campaign investments start at a minimum of 6 percent of total marketing budget. You should send newsletters two to four times per year to every customer who has written you a check in the last 48 months. Consider:

  • Loyal customers spend 33 percent more than nonloyal customers.

  • Referrals among loyal customers are 107 percent greater than nonloyal.

    Late-Summer Strategy

    For cooler regions, prepare an “end-of-season” direct-response replacement offer as appropriate. Continue pumping selected service groups to build a customer database for retention mailing next month.

    The point during August is to gather more names for your hottest list. All calls — prospects, demand service, and quotes — should be on your mailing list. Track zip code response penetration.

    Newspapers — Top-of-mind awareness ads continue running with occasional image and all-purpose ads. Direct response for end of the season can be powerful, depending on its applicability.

    Direct mail newsletters — As seasonal replacement calls start to drop, urge your highest probability groups to take advantage of trade-in offers, or use a sister promotion to your newspaper ad.

    Postcards — Service postcards should hit larger markets to nudge fence-sitters. It takes a good, guaranteed offer to get early season tuneups.

    Radio — Stay steady in radio; continue to harp name recognition for selected service or replacement leads. Prepare to spend more here in late fall and winter.

    On-hold messages — Continue with maintenance agreement info, free newsletter offers, and other service benefits.

    Yellow Pages — At least 77 percent of contractors spend over half their entire budgets here. Fax me your ad for a free critique.

    Next Month

    Your customer list must be brimming with active customers to receive your newsletter. Prepare for preseason tuneup or preventive maintenance offers by the end of September. Make more end-of-season offers where appropriate. IAQ providers should prepare for the allergy season.

    Hudson is president of Hudson, Ink, “Creative Marketing That Works.” For more information, call 800-489-9099 or visit

    Publication date: 08/04/2003