Contractors have this costly habit of servicing a customer once and then thinking “they’ll stay” as customers. Well, they do stay in the customer files, rarely to ever hear from the contractor again. If they do, it’s generally to be sold something. That’s not a relationship; that’s an obligation.

So customers wade in and out of the customer files, and you never hear when they leave or why. Yet here’s why 9,000 paying customers started using someone else…

  • 4% said your pricing was unfair (hey, there are cheap people everywhere!)

  • 9% died or moved away (can’t really help that one).

  • 12% had an unresolved complaint.

  • 16% took a competitor’s offer (I hate that one.)

  • 55% left due to your “indifference” (this means they didn’t think you cared!)

    Actually, those last two figures are for the same reason, so 71% left because you weren’t there, but your competition was. Ouch.

    To make matters worse, customers are the highest value group for any business. And they value relationships with their vendors. In fact…

  • 37% said the relationship was the most important reason they bought.

  • 22% said it was because they owned another product of yours.

  • 14% were referred by a friend or family member.

    Add those up and 73% of your business has some relationship tie-in. But I find that contractors spend up to 80% of their marketing money going after people with whom you have little or no relationship. It’s no wonder why your marketing is not performing for you.

    Once you lose a customer on a replacement sale, he’s out of the market for at least eight years. What is that worth? And don’t scream “no loyalty” among customers. The question is: Are you being loyal to them? Remember, if you haven’t created loyalty, then there’s no reason for future business, or their referrals. In short, you’re cutting off a sales stream you never knew you had… but it was right within your grasp.

    A well-run customer retention program has – as its centerpiece – a customer newsletter. They’re simple to use, quick, and customers keep them around. Best of all, it’s not perceived as “advertising” and thus forges a far better image and strengthens the relationship. Better relationship equals better retention. Period.

    And you’ve already paid to get these customers. Recent studies show that it costs you $275-$325 to get a customer. A good customer retention newsletter only costs about $2.80 a year including postage for four issues. Not a bad return on investment!

    A customer retention campaign investment will range from a minimum of 6-8% of your total marketing budget. You should send newsletters between two to four times per year to every customer who has written you a check in the last 48 months. That’s a paltry expense when you consider all you’ve just read. But for you fence-sitters, look at these figures…

  • Loyal customers spend 33% more than non-loyal.

  • Referrals among loyal customers are 107% greater than non-loyal.

Rate of referral is highest when closest to the point of contact.