The Profitable Marketing of Customer Relationships

Aug. 1, 2006
What would you do without your customers? Are you really trying to find out? All you have to do is forget about them and let them forget about you. And

What would you do without your customers? Are you really trying to find out? All you have to do is forget about them — and let them forget about you. And if that’s what’s going on, it’ll be clear soon enough what you’ll do without your customers.

Contractors as a group have a bad habit. They service a customer one time and think because they did such a great job, that customer is theirs for life. But that’s not what happens.

Nope. Customers wade in and out of customer files. According to recent surveys, the reason 55% of them leave is due to “indifference.” They think you don’t care whether they stay or not. How could you possibly allow that perception to go unchallenged?

The simple fact is this: contact is the way to keep customers. That involves a number of tried-and-true techniques, such as follow-up phone calls after repair or service calls, thank you letters, holiday cards, “customer only” direct mail offers and a customer retention newsletter.

If done correctly, that last item — the newsletter — is the centerpiece of a well-run customer retention program. A newsletter filled with interesting home care tidbits is not perceived as “advertising” and thus forges a far better image and strengthens the relationship. Better relationship equals better retention.

On the other hand, a newsletter that focuses on you and what you want customers to buy for your benefit will be quickly discounted as the self-centered sales piece that it is. Battered relationship equals battered retention.

For those who do it right, customer retention newsletters are among the most cost-efficient marketing methods around. Think of it. It costs you $275-$325 in marketing costs for each customer, and that’s money you’ve already spent. A good customer retention newsletter costs less than $3 a year per customer, including postage for four issues. Not a bad return on investment, especially since it involves returning customers.

A customer retention campaign investment will range from a minimum of 6% to 8% of 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.

Build a fence around your customers with a solid customer retention campaign. Invest in a good, regular customer newsletter that keeps your name and your services in customers’ minds all year long. In time, your customers become “unswitchable.” You’ll get more referrals, greater loyalty, and more sales thank before.

Adams Hudson is president of Hudson, Ink. He creates custom ads, newsletters, and gives marketing seminars. Readers can get a free sample of his turn-key Customer Retention fall newsletter sample by faxing your letterhead to 334/262-1115 with the request or calling 800/489-9099. Check out for other free marketing articles and reports.