YOU'D BE SURPRISED. Not by the fact that customers leave, because there is always someone who just doesn't quite get how magnificent you are. But by the fact that — and brace yourself, this is harsh — it's mostly your fault. All you have to do is forget about them.
Before you throw your magazine down and decide to send CONTRACTOR an entire bag of hate mail for letting a knucklehead like me have a column, hear me out.
It can destroy your business
Sometimes we've got to see the blindingly obvious before we get to a real solution. So we'll start with that.
Customers do 100% of the buying. They also do 100% of the repeat buying. And they do about 100% of the referring. Think this is simple and obvious? You'd never guess it by what you're about to learn, but I'm not through rubbing it in yet.
Previous customers spend their money 33% faster than first-timers. They're 40% more likely to buy the up-sell offer. They're three times more likely to refer others. And they cost one-sixth the amount to retain as they did to attract initially.
Think that through for a moment. You spend roughly $275 to $325 to get a customer. You get nothing to watch them leave. And when they leave, here's why:
- 74% blame poor customer service as a major factor in their decision, which also included the following.
- 55% say "company indifference" or "no contact." More than half leave you because you showed no interest in them staying!
- 32% are disappointed with the quality of work.
- 25% feel pricing was unfair. Many contractors think this is the No. 1 reason, but actually they weren't given enough "value" reasons to stay.
- 9% blame functionality. Their equipment didn't work.
- 8% say their needs changed. They felt they didn't need your business anymore.
The lack of a Customer Retention program is the largest mistake you can make for your business. And yet most plumbers fall into that category.
First step to retain customers
Get ready for another anticlimactic moment. And for me, it's not even about marketing for a change. But it's about what I call "personal branding." The first step is simply service.
You'll never keep a customer if your service is slipshod or poorly thought out. Customer Retention begins with the first interaction a person has with your firm. The key to making those buyers repeat customers is proving that you deserve and value their patronage.
Here are four ways to differentiate yourself through service:
- Call customers with status reports (even if everything is moving along OK). A 30-second phone call to say your tech is late is invaluable.
- Extend the relationship beyond the buying and selling. Done largely with follow-up contact such as thank-you calls, cards and newsletters. Remember these aren't "selling" they're building something more valuable: Loyalty.
- Help your customers know what your company offers and does. Ever had customers say, "I didn't know you did that!" right after they paid your competition to do it? Highly unpleasant learning experience. Newsletters accomplish this, but so do "on hold" messages and broad market blasts.
- When you blow it (and you will — you're human!), make amends quickly.
Your business won't grow without customers. Your customer base won't grow without service. Solid customer service is the first step toward customer retention.
The rest of the story
After you've made the first step with your stellar service, the rest is simply building on that initial investment — an investment that will return to you in referrals, repeat purchases and upsells. The best part is that you can do it. It's not for "other" contractors to do and you copy. It's for you to do to be first and different, plus it's easy.
- Contact them four times a year. At least send them a newsletter, news card, customer survey or thank-you card. You also may send a maintenance agreement letter, preseason or post-season special, customer-only discount postcard, free or discount service offer or "happy calls" following a service. (We recommend electronic "voice blasts" that send one recorded message by you to as many as you want. Connects to voice mail or answering machines. Very neat.) Help your customers feel more "inside," connected or have some input for complaints, suggestions, questions, etc. It strengthens the relationship. Without a relationship, they leave you.
- Send meaningful news. You get news of recalls, updated warranties, system modifications or you may have just purchased a new "super tool," but whom do you tell? Include your customers in this information loop and they'll include you in their buying loop. (How's that for fairness?) Why leave the initiative of calling you to pure chance? Make some of your own luck for a change.
Want to be a hero? Tell them of a price increase that's coming, but you can still do it at the "old" price if they hurry ... customers only. Staying in touch through a newsletter helps.
Rule No. 1 is don't be boring. Homeowners regularly toss the "industry-specific" newsletters. While newsletters are designed to keep your name in a customer's mind, they are not hard-hitting sales pieces either. Instead, a newsletter balances both, but is mostly to build a relationship, which builds loyalty, referrals and sales far better than screaming advertising messages do.
- Conduct customer surveys annually. All you're doing is increasing the flow of knowledge and getting free marketing research. Simply ask: "Are your utility bills getting higher? Have you noticed an increase in repairs? Have you heard of a product or service you'd like us to add? How could we improve our service to you?" At the end, you offer a discount on the next service for sending it in (or a small gift certificate). Increase the reward if they'll put two or more referrals on the bottom. You won't believe how much value this will give you and your customers.
Remember, educated customers buy and refer more. Your job is to make sure they stay educated about you.
The big lesson in all this: Your customer list is the most important single thing in your business. Period. Extracting value from it is the most important business mission. If you lose 10% of your customers a year — the industry average — what did that cost you?
It costs you far more not to have a Customer Retention program than to have one, I promise. Build the list, build the relationship and keep the customers — starting today.
Adams Hudson is president of Hudson, Ink, "Contractor Marketing that Works." He creates custom ads and newsletters and gives marketing seminars. Readers can get a free sample of his turnkey Customer Retention fall newsletter sample by faxing your letterhead to 334/262-1115 with the request or calling 800/489-9099. To receive the free four-page report, "The Simplest Contractor Marketing Secret," send your request to [email protected] or check out www.hudsonink.com for more information and free reports