Customer Retention - Your Marketing X-Factor

Since I offended nearly half the advertising world last month when we looked at "Branding Myths" in marketing (see CB, Feb 2006, page 72), I thought I should keep the trend of general disgust alive this month by giving you some "real marketing from the inside."

This type of marketing will maximize the desired result of your branding. Extremely smart marketing types call this, "Information segmentation and mass individualization based on experiential results." They use words like this to validate their fees just as I do but for this article I'll call it what it really is:

Customer Retention Marketing.
What, you wanted something more glamorous? You wanted me to talk about getting more leads for less dollars, or how to guarantee differentiation in your market? You'd rather learn how to turn one sale into many? You feel our time would be better spent discussing the nuances of phone-melting headlines?

Well, guess what if you practice the rare art of "active" customer retention, all of those things can happen. It is truly, the "X-factor" in a contractor's marketing arsenal.

Of course, 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.

In fact, when I used to speak to seminar crowds or interview contractors, only about 6% did any customer retention. Now, I estimate it to be around 11% - and growing. Customer retention must be yielding some positive results or this number wouldn't have nearly doubled in just three years.

But, before I disclose the answer that will let everyone capitalize on this no-longer secret form of marketing, I feel I owe some tips to those 11% who've already been practicing retention marketing so that they will be able to stay ahead of the pack. After all, fair is fair.

For Experienced Retention Marketers...
Since the number of contractors who practice customer retention is growing, it's even more important to step up your efforts. However, since you're pro-active, here are some suggestions to take it a step further and help you get that advantage back:

• Increase your aggression for maintenance agreements in your newsletters and in stand-alone mailings. Do not limit newsletter mailings to MA customers only, since you want to increase the natural ascension from "normal" customers to MA customers. Make sense?
• Push for greater differentiation through IAQ initiatives which, due to a high-tech nature and health slant, can elevate your marketing position considerably.
• Stealth pursuit of web-based lead generation allows "customized, flexible lead flow" largely under the befuddled noses of your competitors. Those who get in early tend to maintain an advantage. This is inexpensive, fast, and worth a try.
• Continue to wean yourself from Yellow Page addiction to fund and extend your newsletter, thank-you campaigns, and follow-up referral sources. Allow your remaining YP ad to be a pure lead generator small, fast, and uncluttered.

For New Retention Marketers...
For those of you who have just recently begun a customer retention campaign, whether you've started using newsletters, or are relatively new to maintenance agreements, I have some advice. Don't quit!

Too many contractors get the instant differentiation benefit and positive comments from customers and they immediately follow it up with a tendency to jump to the next thing. These sporadic efforts lose the momentum and bring confusion to your staff. Remember, retention is a program, not an event.

Also, realize that the effect of retention marketing is like compounded interest the true magic requires patient, continued pursuit. It builds on itself, multiplying the effects, allowing low-cost marketing advantages for the earned loyalty, shorter sales cycle, easier upsells, more referrals, and a greater response rate.

For the "I'm Still Thinking About it" Group...
If you've not yet jumped into Customer Retention, maybe all you need is a spark to get you going. Perhaps you can get that from reading this article or talking with other successful contractors who consistently use retention marketing. However, for true change, something else must happen.

As most success coaches will tell you, it's not about checking off items on a list. It's about changing your mindset. And since it's my job to be your personal tour guide for guilt trips, check this mind-shift:

• The "normal" contractor gets a customer in order to make a sale.
• The "marketing" contractor gets a sale in order to make a customer.

Admittedly, that sounds odd, and the scarcity of those who actually understand this mind-shift is almost the point. But this should make it clear...

The contractor who is wisely counterintuitive in marketing wins the marketing. Period. Those who think, act, and do like everyone else get results just like everyone else. I've also noticed that his or her complaints are just like everyone else's too.

So, by really understanding and applying the marketing contractor mindset, you're automatically in the small segment that has differentiated from the pack.

Most contractors seek to get the sale a noble goal that I fully understand. So their marketing follows that pursuit to the fullest. Those who do it well get there with hard-hitting direct response. Those who do it poorly struggle with mediocre and frustrating results from a variety of sources.

Your Future with Retention Marketing
Imagine your business just a couple short years from now. Instead of a "sort of" satisfied group of customers (so labeled merely because they bought something), you see a huge crowd of raving fans. It's twice the size it is today; each a direct supporter or salesperson for you. Nearly half of them have a maintenance agreement, and they're encouraging the other half to join them! They all feel that they know you to a degree, and vice-versa, because you've built a relationship not based purely on the sale.

Loyalty is nearly unshakeable. Why? Because it's easy to quit using just a contractor, but it's very hard to quit a relationship. The next time another contractor offers them a "sale," it's going to have a negligible effect because it's not so much about the individual transaction anymore.

Think of the bigger transaction...your business has not only swelled in sales and predictable profits, but it has become far more valuable and saleable. If you ever wanted an exit strategy, having thousands of loyal customers preferably with maintenance agreements is a critically valuable element. It can be appraised, evaluated, and bought gladly so.

The main reason customers leave is because they think their contractor doesn't care if they stay. Could anything be further from the truth? Show them by building a relationship with them.

As a customer builds this loyalty with you, it makes acquisition attempts that much more difficult. Now you know why customer retention efforts have doubled in this industry. If you haven't already, you had better get on the train now.

All you have to do is think past the sale, and toward the relationship that will multiply sales. The huge decrease in costs, the boost in image, the surge in referrals, and the nearly unshakable loyalty will guide you on your way.

If you're a first-class contractor, don't treat your customers like second-class citizens. Do you really believe in customers for life, or do you believe in customers until the check clears? How you answer that question will have the biggest impact on how many checks actually do clear.

Most of all, remember: focusing on the sale instead of the customer, though alluring on the surface, is limited by meager expectations. It is finite. Yet "relationship thinking" avails you to the infinite. Have fun in your marketing.

Adams Hudson is president of Hudson, Ink, a creative marketing firm for contractors. Call 800/489-9099 to request a sample of his spring newsletter and free report, "The #1 Costliest Mistake in Contractor Marketing". For a free marketing newsletter, contractors can fax their letterhead with the request to 334/262-1115 or email [email protected]. Check out www.hudsonink.com for other free marketing articles and reports.