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Tuesday, July 29, 2014

Missy Henriksen

director of the Professional Pest Mangement Alliance.

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[PPMA Pulse] Retaining Current Customers — The Key to Success

PPMA Pulse

June 24, 2014

Business owners and their marketers often spend a significant amount of time, resources and energy on ways to attract new customers to their business. However, the old business adage that says it’s cheaper, easier and more effective to retain current customers than it is to acquire new ones still holds true. Successful companies know their ability to keep the customers they’ve already acquired is a testament to their success.

Studies from the U.S. Small Business Administration and U.S. Chamber of Commerce have found that acquiring new customers can cost as much as five to seven times more than simply retaining existing ones. Considering customer profitability tends to increase over the life of a retained customer, there is extra incentive for businesses to allocate more resources to sharpening their customer retention strategies.
 

Why Customers Leave?

Many businesses think they lose customers to a competitor due to price or service offerings — and that may be true. However, an often-cited study from research firm CRMGuru about why customers defect from a company found more than 70 percent of respondents cited bad customer service as the main reason for leaving. Poor quality followed, cited by 30 percent of respondents, while 25 and 15 percent said price and changing needs, respectively. Similarly, a study from Zendesk found customer service was one of the two biggest drivers of customer loyalty, in addition to quality. Is it obvious? Customer service is the best way to retain customers. But, it is also the easiest way to lose them.

Companies can reap the rewards simply by investing in the customers they already have. According to the book “Customer Winback,” sales campaigns launched at existing customers often result in success rates as high as 70 percent. In fact, the “2013 Pest Control Attitudes and Usage” survey, conducted by the Professional Pest Management Alliance (PPMA), found 65 percent of current and past pest control users said they never switch companies, showing strong customer loyalty and retention.

By providing exceptional service and nurturing existing customers, not only will companies improve their chances of increasing customer loyalty, but they also can help increase the likelihood of customers referring them to their relatives, friends and neighbors. Word-of-mouth is one tactic that is especially beneficial to the professional pest management industry and doesn’t require additional advertising in order to bring in new customers. Using testimonials in marketing materials and online properties can help prospective customers, especially those who don’t utilize the services of a pest management company, see the value of regular professional pest control.

After all, a company’s profitability in the long-term is largely dependent upon their ability to keep current customers.
 

How to Get Customers to Stay?

Customer service is the single most effective retention strategy, but it’s a strategy that requires companies to be creative and proactive. According to Geoffrey James, a Forbes columnist and business guru, if companies want to keep the customers they’ve got, they should reverse priorities and pay more attention to customer service and quality — and, consequently, less attention to functionality and price.
 

Use Surveys.

Conduct customer satisfaction surveys in order to glean insights into why they chose the firm, which services they use, which they don’t and why, what services they’d like to see offered and any other questions to enable companies to see how their service is performing in relation to customer expectations. Extend a personalized thank you to customers who participate in surveys and engage with those whose answers may be of concern.
 

Targeted Communication.

Keeping meticulous details on every customer interaction enables companies to create targeted communication plans and increase customer retention by making them feel special. In today’s world where consumers are bombarded with emails, various forms of advertisements, direct mail and a slew of other impersonal methods of communication, anything remotely personal will stand out. For example, PCOs can create a regular schedule of communication as part of their ongoing customer nurturing. This type of outreach can be based on service dates, service calls, or seasonal expectations and conducted via phone or email. This personalized communication increases the opportunity for customers to offer feedback outside of a service call.
 

Build Trust.

One of the easiest ways to build trust with customers is to go above and beyond what is required (and expected). Whether it’s finding time for last-minute appointments, pointing out home repair needs, providing education and materials regarding specific pests, and assisting them beyond the service call, these actions can go a long way in building trust and relationships.
 

Anticipate.

Detailed records and surveys can assist companies in anticipating their customers’ needs and elevating personal service to a new level. This proactive approach to customer service can help firms eliminate problems before they occur, thus providing an additional reason for customer loyalty. Examples of anticipatory service include invoice due alerts, pest pressures in advance of each season based on weather conditions in the region and bed bug prevention materials in advance of the summer travel season. These types of actions often exceed customer expectations, building an even stronger case for company loyalty.
 

Surprise and Delight.

Many consumers have come to expect rewards and favors from companies, but those rewards are much sweeter when they are received as a surprise. For example, Zappos, a company that has made customer service an art, automatically upgrades all purchases to priority shipping without calling attention to it on the checkout page. Why? By giving customers a next-day delivery when they didn’t anticipate receiving it, Zappos guarantees they will shop there again and again.

To replicate Zappos’ approach, firms could surprise customers by offering an unsuspected discount on a service or a free service in addition to a scheduled service. This tactic is especially important to use with first-time customers to show them they’ve made the right choice.
 

The Bottom Line.

Just as with any human relationship, taking existing customers for granted can have a negative effect. While customer attrition may not be felt immediately, the impact sometimes can be irreversible. However, high customer retention rates can have long-term positive effects in terms of company reputation, profitability and longevity. As companies work to boost loyalty and grow brand ambassadors, the No. 1 tried and true strategy behind successful retention campaigns remains exceptional customer service. By creating happy existing customers, companies are well positioned to acquire new customers, too.

 


The author is executive director of the Professional Pest Management Alliance and vice president of public affairs for NPMA. For more about PPMA, visit www.npmapestworld.org/ppma.