The One Marketing Piece that is Keeping You from Reaching the Next Level

Posted on:

September 15, 2016

Let’s begin by looking at the marketing type that maximizes the hopeful result of branding.

Extremely smart marketing types call this “Information segmentation and mass individualization based on experiential results.” They use words like this to justify their fees, so let’s call it what it really is:

Customer Retention Marketing.

You probably wanted something more glamorous. Like getting more leads for less dollars, or how to turn one sale into many. Or maybe how to generate online reviews that sound like your mother wrote them. Well…

If you practice the rare art of “active” Customer Retention, all of those can happen. This is already known by a small, well-rewarded group of contractors who’ve held a tight lid on this weapon as long as they could. You’re about to see why.

Why you mathematically cannot reach the next level without Customer Retention

The following 3 minutes of numbers can pay you back for a lifetime. You probably feel like each year, you try more things, work harder, market for (and get) leads, but have yet to see the payoff. You may see Customer Retention as “nice” but not required. Here’s the problem:

Average Customer Acquisition Cost: $250. (This is conservative. It can be much higher, but don’t have space to explain. Call us.)
Average Transaction size: $490. (Across service, replacements, agreements.)
Average net profit: 12%. (This is also biased ‘high’ due to the more enlightened audience of this article. Actually, the ‘real’ average across contracting is closer to 7%.)
Average profit per call: $58.80. ($490×12%.)
Average number of repeat visits required to break even on acquisition costs: 4.25. ($250/$58.80.)

See? Until you’ve made 5 average visits to one customer, you’re losing money. And if your average customer only calls you back 4 times or less…

Your aggressive “Lead Generation only” marketing is merely accelerating your bankruptcy.

This is coming to you from a hardcore Direct Response marketer who is paid to generate leads. Yet, the truth is that until you fix the hole in the bucket, it will never fill.

It gets worse.

Without an active, regular Customer Retention Program, consistent studies prove you’re losing 11% of your customer base per year.

So for 3,000 customers, that’s 300 or so saying goodbye who would’ve spent $490 each, or another $150,000 walking out. Oh, then you get to re-spend $250 to replace them, or another $82,500.

Yes, that’s a quarter million dollars gone *poof* out of your company. If a vandal slashed one tire on a service van, you’d be livid, yet this is a quarter mil. that’s getting no attention.

Truthfully, it costs you more not to have a Customer Retention program than to have one.

Spending money on Customer Acquisition without an investment in Customer Retention is like running a marathon while smoking cigarettes. Counter-productive, futile, costly.

Fixing the Hole

“It costs you 8 times more to get a customer than to keep one.” You’ve only read that about 9,000 times, generated from every study in every industry, with little variance over many years.

Yet for contractors, due to your average transaction size and generally weak acquisition marketing, this number is far higher. It can cost you 30 times more to get a new customer than to keep one. (Our Customer Retention program is less than $4 per customer.)

And today, the distraction rate and horrible short-term memory hurts you even more. What were we even talking about? Oh, yeah…

Way too many contractors deceive themselves with, “Well, I’m not losing customers, so why spend anything more?”

First question: How would you know? No one ever calls to say, “Hey, I’m heading to the competition and just wanted you to know.” Nope. They’re just gone. They can’t remember your name, or went to Google to find you and saw all of your competitors, or they didn’t like the CSRs attitude, or they’ve seen another company’s ads enough times to try them out. (16% who leave took a competitor’s offer.)

Yet, 55% of your lost customers leave because of your “indifference.” They just didn’t think you cared if they stayed or not. They chose not.

Customers are most likely to leave unless you:

Reinforce the relationship – It’s easy to leave a contractor; it’s hard to leave a relationship.
Regularly communicate non-transactionally – Any schmuck can send a “Tune-Up Special!” (help me) twice a year and call that Retention, yet it absolutely is not. Plus, no relationships flourish from non-contact. The more regular the better.
Prove that you value them – You say you care, but how do you show that? Words are not action.

Ready to fix this profit-killing problem? Want to join the ranks of the elite contractors who have a system of Customer Retention and long lines of devoted, referring customers? Here you go:

A Killer Customer Retention Program Includes:

“Thank you” follow-up calls, email, card. Any of these post-visit are great, and can include a survey, if you’re really smart, with a link to your Reviews page. Double smart.
Referral Generator email or card after you’ve proven they’re happy. This is how you get exponential dollar returns from your customer base.
Weekly social posts about happy customers, interesting calls, before and after pics, “tagging” where appropriate. You’re building a community here.
Monthly non-transactional emails with customer service info, tips, linking to your main site for reports, videos. Automatically drives up SEO, too.
Quarterly real-mailed newsletters. These outperform all others combined, are the most impressive, have the longest shelf life. They should be professionally produced, include customer- only ads and have articles that psychologically position your company above competitors. (Can send you a sample.)
Bi-Annual Appreciation Cards, Holiday Cards, other. People are sick of insincere emailed “Happy Birthday” wishes. Yet, real mail goes to the home, gets touched, has associated value.

If you can only do 3 of the above, choose 1,4, 5. The whole thing will cost you less than 12% of your entire marketing budget to pull off.

Be the company people remember and refer. When you intentionally build Retention and referrals, your payoff compounds in huge numbers.

Stay with it and you can build a Customer Retention empire, driving your company’s customer base, referrals and profits beyond your dreams. Take action to turn your dreams into reality.

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Adams Hudson

President at Hudson, Ink.

Adams Hudson is president of Hudson, Ink, a contractor marketing firm serving the contractor trades, and ACCA’s national marketing partner. Readers can receive a free subscription to Adams’ Sales&Marketing Insider eNewsletter by emailing a polite request to freeACCAstuff@hudsonink.com.