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A Strong Retention Program Will Out-Perform Any Other Marketing Investment


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Marketing is all about getting sales, right? That’s certainly the result you want for all your efforts, but the line is not drawn quite as straight as that. The truth is marketing gets leads. Leads turn into customers, and customers bring sales. And if you’re doing it right, your customers will bring you more sales, year after year.

The value move is to increase the retention rate (the persistence), following the first sale. As very expensive, exhaustive studies in insurance, banking, and catalog retail have shown, when people own two (or more) products from a company, their loyalty and value increase.

A strong Retention Program will out-pull, out-profit, and generally out-perform other forms of marketing – dollar for dollar – than any other marketing investment you can make.

By the time a customer enters your database, you’ve already spent an average of $275-$325 in marketing costs to get him there. So you can see right away that each customer’s name represents a pretty serious investment on your part, but more importantly each name represents an opportunity for a steady income stream.

Think of it this way: If a 10-year customer buys one system, has a continuous maintenance agreement, and only refers two customers like him a year, that level of customer is worth over $90,000 in sales. It’s hard to imagine, but the math is not debatable.

The fact is, loyal customers spend 33% more than non-loyal customers. Referrals among loyal customers are 107% greater than non-loyal customers. If the business that wins a customer stays in touch, treats him fairly, remains valuable, and continues to build the relationship, the customer can’t help but use and refer the business!

This is why I scream – I mean, strongly suggest – to my clients to establish new standards in Customer Retention. Got that? Customer Retention!

Set Customer Standards: Put figures on your customer service just like your other business systems. How long to handle a $100 complaint? A $1,000 complaint? Who handles each? Do you have customer priority levels? Who gets a “Happy Call,” a gift certificate, and a newsletter? Have a system of service that won’t fail you.

Satisfaction comparison: Shop your competition! Face it, other companies may handle an issue better than you do, and customers may love it! You’ll never know unless you find out. Have an employee’s spouse stay home one day and take estimates.

Regular contact: This is essential. Sending only sales messages makes your relationships a shallow obligation. Staying in touch assures a higher “top-of-mind” rating with customers. Regular contact through newsletters (2-4 times a year) works best.

Customer Commitment: This includes satisfaction training, better guarantees, and a written statement of what customer satisfaction means distributed to your employees at minimum, and at most, published on all your customer correspondences.

Customer satisfaction measurement: Either as a random call, or a “bounce back” card on your customer satisfaction survey. Simply ask: How did we rate in these areas? How can we improve? What other services could we offer? Were we clean, neat, orderly, polite, etc.?

How does this happen? It begins with a relationship between you and your customer. The relationship is strengthened by your good service, and the company’s quality products.

With these elements in place, a solid marketing program makes the relationships between you and your customers even stronger. Also, as part of your marketing, a well-designed “Customer Retention Program” will make a significant difference. It can pay huge dividends in loyalty, upsells, resells, backend sales, and referrals.

A Customer Retention Campaign investment will range from a minimum of 8% to a maximum of 24% of the total marketing budget. The higher figures would include Maintenance Agreement promotions designed to secure a loyal customer base for years to come.

The more modest figures include the fundamentals of retention including thank you notes, holiday cards, “customer only” direct mail offers, and customer newsletters. The last item is the most important method of friendly, helpful, “non-sales” communication.

Effective newsletters are not solely about “heating and air,” and certainly aren’t only about the company. Instead, they provide genuinely useful information to help your customers run their households safely and cost-efficiently. This is something they want to read more about, unlike the content of a hard-hitting sales piece that is begging them to open their checkbooks.

Just because your primary focus isn’t for the direct sale doesn’t mean sales won’t follow. The benefit for you is that this helpful newsletter brings your company’s name and logo right into your customers’ homes. It reminds them that you’re their heating and air conditioning company, and it keeps them informed about new products and services that will be of benefit to them.

The fact is, your company’s current customers are the absolute #1 source of your future sales. When you lose customers through neglect, you lose all of their future business, and all of their referrals to your competition! When you keep customers by maintaining regular contact, you keep that pool of sales for yourself. A strong Customer Retention Program is the tried-and-true method for making that happen.

If you choose not to protect your customer base, please know that many will celebrate your inaction, and will collect accordingly. Yet, you and your customers will celebrate if you remind them of your great value during tighter times. AND THAT IS NO MYTH!

Adams Hudson

Posted In: Building Performance, Sales & Marketing

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