Customer retention fantasyland
Let’s talk about the fantasy world you may have been living in. You know, the one where you provide someone a service once and then think that makes them a customer. Or the one where your service and expertise is so amazing that customers remember your name and number with total recall, never to visit Google again, and refer you endlessly to friends, family and neighbors.
That sort of thinking will put you straight out of business and into the unemployment line. In the real world, it’s your responsibility to remind customers you exist and that you provided an exemplary service. And if they forget you, guess whose fault it is? Bingo. Yours! Not theirs.
So first, let’s clarify why your customers would lose interest in your company anyway. According to a survey of 9,000 paying customers, customers leave for any of the following reasons:
- 4% said your pricing was unfair.
- 9% died or moved away.
- 12% had an unresolved complaint.
- 16% took a competitor’s offer.
- 55% left due to your “indifference.” This just means they didn’t think you cared!
The second reason is the only one you can’t do anything about. And the last two figures actually relate to the same reason: 71% of customers left because you weren’t there … but your competition was.
Customers value relationships with their vendors. In fact …
- 37% said the relationship was the most important reason they bought.
- 22% said it was because they owned another product of yours.
- 14% were referred by a friend or family member.
Add those up and 73% of your business has some relationship tie-in.
So now you know two key points: Customers leave because you aren’t there for them, and they’re looking for a relationship.
But here’s where these issues get further complicated. Contractors typically spend up to 80% of their marketing money going after people with whom they have little or no relationship. Yet, if they would redirect a portion into effective retention marketing, they could transform their contracting business.
The simple fact is this: Contact is the way to keep customers. And contact isn’t some kind of big marketing mystery. It’s easy things, such as follow-up phone calls after repair or service calls, thank-you letters, holiday cards and customer newsletters. Even just a simple social media contest allows customers to stay involved and will help to build that relationship.
There’s no doubt that the customer newsletter is the crown jewel of retention marketing. They’re simple to use, quick and customers keep them around.
Your newsletters should have information that is not solely about the plumbing business. This is because you must — I repeat must — retain customers’ interest, and 2,500 words on sump pumps will not do it. In order to be effective and interesting, maintain a 60/40 split of general interest to specific field interest in your editorial split.
The best newsletter campaigns give customers rich, interesting information that helps them run their households safely and cost-effectively. Plus, they bring your company name and logo right into your customers’ homes. Newsletters keep them informed about new products and services while providing customer benefits. Best of all, it’s not perceived as advertising, and thus forges a far better image and strengthens the relationship. A better relationship equals better retention.
One other important note: You’ve already paid to get these customers. Studies show it costs you $275 to $325 to get a customer. Yet, a good customer retention newsletter only costs about $3 per customer a year, including postage, for four issues. It doesn’t take a financial genius to see that retention marketing is far less costly than acquisition marketing — and just as important.
The fact is, your company’s current customers are the absolute No. 1 source of your future sales. When you lose customers through neglect, you lose all their future business and all their referrals to your competition. When you keep customers by maintaining regular contact, you keep that pool of sales for yourself. So, get your head out of the clouds and go keep some customers — before your competition beats you to it.