On today’s marketing menu: a big helping of customer retention.

I’m not an economist. I just watch them on TV. And if I tried to give anyone advice on solving the economic earthquake, people would die, get sued or both. All I know is marketing. And successful businesses are responding to changing conditions by changing their marketing messages to something that would have served them well from day one: “We care.”

Oh really? Thanks for the reminder. Well, at least this is sinking in after the last 150 consecutive articles I’ve read and re-angled in support of that same message. Customers - as in your past and current ones - are the most efficient business target now. Just as they have been, but were likely overlooked.

Take restaurants, for example. Look how many are offering “bailout specials” and the like, especially for the lunch crowd. They are trying to get people spending again, and are crafting their message to say, “We know times are tough. We know you want to hold onto your money. We’re going to help make it easier for you to do business with us. Why? Because we care.”

Focus On The Customer

Sure, the offers are for anybody, but the ones they’re most trying to reach are their customers. The ones they used to see regularly who are holding back, hesitating. (Sound familiar?) They miss the ones who piled in the doorway when things were good, waiting for a seat.

Yes, plenty of restaurants in this economy miss their customers. However, the truth is people are still eating and they’re still buying food. That need did not go away. But the relationship with the “solution provider” has been challenged. As a result, customer retention programs have been belatedly added to the marketing menu.

Same with hotels, entertainment, retail, service sectors, luxury providers, recreation resellers, theme parks, you name it. Customer lists are being combed harder than ever.

You plumbing contractors have a great advantage in any economy: you’re required. People have grown quite fond of running water. And in financially troubled times, you can actually save your customer money by repairing leaks and replacing inefficient water heaters (especially given the tax credit benefit that’s now available).

Likewise, in any economy, customers still go by the truism: “I don’t care how much you know until I know how much you care.”

Customers still make up your most valuable list - they have the most influence on sales, repeat business and referrals. They buy more, buy faster and pay more for services more readily. Yet too many plumbers issue an invoice and turn a blind eye, going after that elusive “new” customer. You may want to rethink that.

The Only Three Ways To Grow Your Plumbing Business

Good times or bad, you’ve got three ways to go about it: acquire more customers; increase average transaction size; and increase frequency of transaction. That’s it.

The first one - acquiring more customers - seems like a no brainer, and it is. Most plumbing contractors feel this is the way and spend exhaustive dollars on this, which is by far the most expensive marketing you’ll ever purchase. The dollar returns are far higher if you use direct response marketing, but other types of ads and mix of media build the base along with direct response.

However, if you stop there and run in full-bore acquisition mode most of the time, your ROI will drop while frustration rises. You’ll be one of our callers who says something like, “No matter what I do, I can’t get to the next level.”

Welcome to the next level …

The second item - increasing average transaction size - is another “multiplier” we use to help boost profits quickly. You’ll do this primarily through higher visibility and a strong, positive presence in the market. That’s where your image and top-of-mind awareness (TOMA) ads come in.

Another sales truism: The higher the image, the higher the price, independent of competency. Does a Rolex really tell time better? Does a BMW get you from A to B better? Doesn’t matter. Marketing that raises your image or TOMA will result in higher transaction sizes.

Same with using a “sales bump” at the end of a transaction (the “you-want-fries-with that?” close, or the reason candies and cheap magazines are at the check-out counter). It’s as simple as adding an upgrade, a maintenance agreement or even a coupon for a discount off the higher-grade service right at closing. Think if you did this on every service call, every time. Yet as you get customers, you’d better do the one thing that’ll add to your business even more over time …

To increase the frequency of transactions is the third way to grow your business. Now, who is your market here? Who is going to buy more often? Your loyal customers are. Even more than that, they are less likely to shop around, more likely to accept an upsell to a maintenance agreement or top-of-the-line equipment, and more likely to refer their friends and family. (I’ve now said this twice in this article, just to make sure you read it, retain it and act upon it!)

The largest, single failing of the otherwise-talented-yet-eternally-struggling contractor is making no effort to retain customers. This is a shortcut to bankruptcy and a great way to make sure every month is a “clean slate” start-over of new challenges.

Increasing transaction frequency is the same as any system in your business. It is accomplished by having a program that encourages it. Do this through regular contact, customer-only communications and other methods to “advance” customers. Otherwise, migration of your highest-value asset (paying customers) occurs, stifling their reuse, referrals and any recurring revenue streams.

The contractor marketing model that focuses solely on acquisition - get as many customers as possible, serve them and then go get some more - is a flawed model because it focuses on the most expensive part of marketing while leaving unattended the most cost-effective form that produces the best results.

Your marketing’s goal is to get and keep. However, inattention to those you get is the same as fishing for food but relying upon a catch-and-release program and wondering why you starve.

What Does Retention Look Like?

Customer retention is a marketing strategy. That means a customer retention program is not a feeling, a wish or a slogan. It’s not a vague idea about what you’d like to see happen. Customer retention is built on an action-based plan designed to give your customers a good reason to stay - before your competitors give them a good reason to leave.

There are two aspects to the plan: customer service and customer contact.

If you want to retain your customers, you must expect them to have a good feeling about your company, your products, your staff, your service. That means you’ve got to serve your customers and take care of them in a way that they recognize and appreciate.

Tidy up any sloppiness in any areas ranging from how the phones are answered and the calls are routed, to the punctuality of the in-home tech, to the competence of his work and his ability to communicate, to the follow-up after the call.

To keep your customers, you need to help them keep you in their minds. Actively communicating with customers through newsletters two to four times a year, periodic customer-only mailings, thank-you notes after service, an e-mail sequence of follow-up, holiday cards and more will remind them of your relationship and everything you do.

In insecure economic times, a good customer retention program is the most secure marketing investment you can make. By the same token, disregarding customers in uncertain times is a certain way to allow them to disregard you or be seduced away by the competition. This makes customer retention far more costly not to have.

Once you begin to feast on the bounty of customer retention, you’ll want a much bigger serving - and even dessert.

Links

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