Could Your Competitors’ Customer Retention Be a Problem for You?

We all need to keep our eye on the ball – our own ball – and not worry so much about what our competitors are doing. However, we can’t be blind to the ways competitor marketing impacts our own success, including the efforts they make to keep their customers.

So, how does your customer retention program stack up to your competitors? You may not know this answer, but it still brings up issues to address.

A customer retention strategy is, in a sense, an “inside” marketing program. You are reaching out to your current customers in order to keep them and their future business and referrals. What your competitors are doing to hang on to their buyers is not entirely your concern. However, if their customer retention programs are strong, you’re not getting their customers. And if yours is weak, your customers may soon wander their way and stay there for a while.

In an industry where products and services are largely similar – and pricing often isn’t too far apart – your customer’s experience with you stands out. So, who are you to your customers? If they don’t know, that’s a problem in the works.

Earn Trust.

One reason customers leave is they simply don’t see any difference between you and your competitors. Instead of seeing you as a friend and advisor, they see you as a convenient contractor to call in a jam. When they’re in the next jam, they’ll call someone else who is equally convenient.

Another reason customers leave is they don’t like how they were treated or didn’t like the product/service they received. Ultimately, they weren’t satisfied and didn’t see the value in their business with you. Or they don’t like how you do business – perhaps you’re not easy to reach, or they think you’re rude or some such.

A good initial experience along with quality service and installation starts the relationship on the right foot. Then regular communication and follow up continues to establish your role as trusted advisor and industry expert. So, they call on you again because they’ve grown to trust your opinion on big decisions – such as whether they should repair or replace their system. And they feel they can trust their home’s safety and their family’s well-being to your contracting expertise.

Remember, customers make emotional decisions, not rational ones. Your industry accolades won’t mean nearly as much as the personal, professional contact before, during and after the sale.

Extend the Customer Experience.

Your relationship doesn’t end when the service call has been completed; it’s actually just beginning. So, after you deliver excellent service, quality products, superior repairs and installation… follow up to ensure satisfaction. Welcome customer feedback. Respond to any concerns. Solve problems and keep your word. Make amends if there are issues. Then, stay in touch.

Your communication strategy should include sending helpful information for the home in regular newsletters or online links. Send tune-up reminders to help homeowners stay on schedule. Include special customer discounts in postcard mailings. And don’t forget your customer list when it’s time for annual holiday cards.

What are your competitors doing? If their activities include any of the above, they’re tightening their grip on the customers you’d like to lure away. So, make sure you’re doing the same for your own.

Make It Easy to Reach You.

Communication strategies should go both ways. How easy is it for your customers to get in touch with you? This gets back to the desire for convenience. Don’t be too hard to reach when it’s a lot easier to just try someone else. And be sure you provide a variety of ways for customers to get in touch with you.

For example, many customers want to be able to schedule an appointment online, but some just want to make a phone call. Also, have an email address that actually responds to messages. And if customers give you their mobile number, ask if they’d like to receive a text reminder that the service technician is on the way.

Remember the Value of Retention.

Do you like good ideas in theory – or as action steps? It’s far easier to recognize that something makes sense and sounds like a good thing to do than it is to actually take the steps to make it happen. So, don’t forget the dollars and cents that are at the heart of your customer retention goal.

Your customer retention rate is the framework for increasing customer lifetime value. As you’ve probably heard, it costs five times more in marketing costs to earn a new customer than it does to keep one, and loyal customers spend more, buy more often and refer their friends. Essentially, a retained customer is a pipeline of future business. But if you lose that customer, you clog the pipeline.

Count the Cost of Loss.

And what does the cost of customer loss look like? A typical business loses about 20 to 25% of its customers every year. As those losses compound, within four or five years, you will have lost basically the level of your current customers. So, if you want to stay at the same level in light of departures, you have to keep plugging the holes as customers leave. And that’s going to take a lot of work – and a good bit of money.

In order to stem the losses from this rate of customer departure, you’d have to grow your customer base by 30% each year just to stay right where you are. At the same time, you’d be spending a lot more in marketing costs to bring in those new customers.

Customer retention marketing, however, is far more lucrative in its results and much more cost-efficient in its enactment. To keep your customers out of your competitors’ clutches, be smart about retention. It’s better to protect your most valuable business asset – your customer base – from your competitors’ wistful eyes with a low-cost, consistently applied customer retention program.