Keep Current Customers Coming Back
Originally published: 11.09.11 by Jamie Gerdsen
Show appreciation to build consistent cash flow with return business.
In the competitive industry of service and replacement HVAC, keeping customers has always been easier than getting new ones. Even considering the growing popularity of new services such as Energy Performance Contracting, if HVAC companies skimp on cultivating new business with existing customers, they’ll loose out significant revenue potential and become overburdened before all of that “new customer” business translates into more resources.
The statistics on retaining a current customer versus obtaining a new one have not changed over the years: It is still six to seven times more difficult to obtain a new customer than retain one. And research conducted by Bain & Company found that increasing a customer retention rate by 5% could boost profits by 25% to 95%.
So, although expanding into new markets to gain new markets share is a good thing, it shouldn’t become your singular marketing focus. You need current customers to keep buying and buy more in order to consistently generate cash. Satisfied customers who tell their four or five friends — who in turn call your company — is how to do it.
Although we strive for 100% customer satisfaction at Apollo, we sometimes come up short. So we are always thinking of ways to show our customers how much we appreciate their business. Here are 10 of those ideas and how to execute them to successfully achieve a higher satisfaction rate and in return increase business from existing customers:
1. Loyalty reward programs: Create a program that rewards customers who renew service agreements before their expiration. Figure out your profit potential, and then offer a 5%-to-10% discount on the next year’s agreement. If this is not a good option for you, consider instituting a price protection guaranty that enables customers to lock in the price of the agreement for life, as long as they renew. If that still is not viable, what about offering a credit toward new-equipment purchases or new services?
2. The filter drop: A fun program we have developed allows our technicians to stop by unannounced and drop off a free filter to our top customers. It is an easy way to add value to the customer relationship, while checking in to inquire about additional needs.
3. You say it’s your birthday: If you aren’t currently gathering customer birthdates, it is time to start! Our company sends birthday cards that include discounts or gift certificates for equipment or additional services.
4. Random acts of kindness: Since chasing new customers is much harder than retaining current ones, we instituted a “call or visit anytime program” whereby our technicians touch base and visit any customers we already serve. We leave visits up to the technician, but many times when they are servicing a nearby customer, a quick hello is easy and achievable.
5. Give back to the community: This initiative could be achieved many different ways, but one easy way is to pick a charity that reflects your mission and donate a portion of the profits to it. Don’t forget promoting this on your website, in your marketing materials, and anywhere you can (yard signs work well, too).
6. VIP program: Implementing a discount program (as much as 25%) for your long-time, loyal customers is imperative. This can include discounts on certain products for a limited time or their annual service agreement renewals.
7. Reward feedback: With web companies such as Angie’s List, Yelp, or Epinions, feedback and reviews are more important today than ever before. Offer customer perks for taking time to provide feedback. Something like a $10 gift card to a coffee shop or $20 gas card work well.
8. Surprise thank you: More than 12 years ago, our company began thanking our installation (higher dollar) customers with surprise gifts. Gifts have ranged from a dozen red roses to a tray of specialty cookies or candy. This has become a staple of how we measure our service offerings, and the feedback from customers is very positive.
9. Say what you do: One way to show customers you appreciate their time is to treat them with respect when communicating. Use basic language, not jargon or made-up words that sound good around a conference table but have no meaning outside of your company. By clearly communicating your service offerings to customers, additional sales and opportunities arise. Once you have shared your capabilities, then comes the next idea . . .
10. Do what you say: What all customers want is someone who says what they’ll do, then does just that, and does it to a level that provides satisfaction. As long as you “do what you say” you are capable of, the customer will be satisfied.
These efforts can be time consuming, but clearly planning out how to execute for success is vital. Many times, executing is the most challenging part of implementing a new strategy. We’ve found the following strategies to be successful:
Delegate a single idea to a single person: Not only does this make the task attainable, but also it displays trust in the workforce by offering employees new opportunities to prove their capabilities. Demonstrating leadership support and providing a team structure will foster accountability.
Provide incentives upon completion: Incentives can be monetary or material. Just be sure you do not offer it too soon or wait too long. A reward offered too quickly might be seen as a promotion and will discourage — rather than encourage — trustworthy behavior because it might be viewed as a gimmick. On the flip side, a reward offered long after completion could seem like an afterthought rather than a genuine gesture.
Rewards present opportunity two-fold: 1) with your employees and 2) with your customers.
Just remember, sometimes cash is not the best reward for many reasons. Cash, in most cases, is more costly, spent quickly, and normally not a visual reward. Cash does not encourage customers to purchase more of your services, yet offering discounts or providing the customer with promotional items will generate more buzz.
Whatever you choose as a reward system to your employees or customers, make sure the reward is easy to deliver, offers value for the employee/customer/company, and is delivered in the appropriate time frame.
Jamie Gerdsen is President/CEO of Apollo Heating Cooling and Plumbing, Cincinnati. For additional information on ideas presented in this article, contact him at email@example.com or (513) 271-3600.
Unhappy Customers Cost More Than You Might Think
An example of how to measure your current customer impact can tell you a lot about the possibilities of revenue growth:
1. Calculate your current renewal rate for service agreements. This number represents your company’s customer satisfaction rate and can be used to measure areas for improvement, as well as, estimate growth opportunities.
2. If your satisfaction rate is 80%, that means 20% — or two out of every 10 customers — are unhappy or dissatisfied with your service. Some would consider this a strong number for satisfaction; however, what’s important is every bad experience leads a customer to tell 10 friends. Therefore, two unhappy customers could equal 20 people who never consider your company.
How Do You Thanks Customers?
Trane dealer Steve Lauten, President of Total Air & Heat Co., Plano, Texas
One thing we use is a gift card to Chili’s family of restaurant (Chili’s, Macaroni Grill, and Maggiano’s). What makes it different is the gift card has our company logo on it. We order these online through Chili’s, and they have been very popular with customers.
Greg McAfee, President of McAfee Air Repair, Dayton, Ohio
1. I personally send out a custom-made thank you card that has a picture of me on the front and our logo on the back. It reads “Your Loyalty as a customer is greatly appreciated! Thanks a Million!!! Please tell your friends and family about us!” It includes my business card, and an imitation million-dollar bill.
2. We send out gas cards if they refer someone or if they leave a positive review.
3. Most importantly, we say “Thank You” for both positive and negative feedback.
4. What not to do: Once we sent Ester Price chocolates that had sitting unopened in our office for a few months…when asked later how he liked it, he said they were good, but all melted!
W. Theo Etzel, President/Owner, Conditioned Air, Naples, Fla.
We send a personal letter signed by me. We do not do gifts or cookies or things. We do send a nice card to people who buy a system from us but it does not have a gift card or anything in it — just a nice touch from the personnel in the replacement department. People really appreciate the personal letter and my direct contact information.
Articles by Jamie Gerdsen
Keep Current Customers Coming Back
In the competitive industry of service and replacement HVAC, keeping customers has always been easier than getting new ones. Even considering the growing popularity of new services such as Energy Performance Contracting, if HVAC companies skimp on cultivating new business with existing customers, they’ll loose significant revenue potential and become overburdened before all of that “new customer” business translates into more resources.