• How to Mine Your Customer Files for Gold

    Feb. 1, 2006
    Want more business? Youll find it in your customer files. But dont just look at the names and numbers; take your customer list from the last 36 months

    Want more business? You’ll find it in your customer files. But don’t just look at the names and numbers; take your customer list from the last 36 months and grade everyone from A through D in three areas:

    Recency: How recently have you seen them? If customers had you come out within the past eight months, give them an A. If you paid them a visit somewhere between nine and 18 months ago, give them a B. If it’s been 18 to 24 months, give them a C; and if it has been more than 24 months, give them a D.

    • Frequency: How frequently have you been by? If any customer had you out five or more times in the past 36 months, give them an A. If it was three or four times, give them a B. If you’ve only been by once or twice, give them a C; and if there’s been no activity in the past 36 months, give them a D.

    • Amount: How much have they spent? Customers who’ve spent more than $1,000 in the past 36 months get an A. Those spending between $500 and $1,000 get a B; for $250 to $500, give them a C; and if less than $250, give them a D.

    Now, average the grades on these three levels to see where they land. Depending on the results, you will be able to either wean customers out of your files, or advance them to higher services. For example, customers who graded A or B should receive newsletters, maintenance agreement offers, equipment upgrade offers, IAQ offers, and virtually all “hot” deals. On the other hand, customers who graded C or D should get three attempts to upgrade themselves before getting pushed into your “inactive” file for future use.

    This way, you prompt more sales from your highest activity group, and let the dead heads fall elsewhere.

    Making Regular Contact Makes Money

    To make money from your customer list, you must make regular contact. Staying in touch ensures a higher “top of mind” rating with customers, whereas not staying in touch ensures that they will check the Yellow Pages for another company when they have a real need.

    You should at least send your customer lists a newsletter, news card, and a customer survey or thank you card. You could also send a maintenance agreement letter, pre-season or post-season special, customer discount only postcard, free or discount service offer, or “happy calls” following a service.

    After sending a direct mail letter, you’ll get another boost if you send a follow-up mailing that “links” it to the previous letter. Generally, a second offer can get you about 75% response of the first offer. For example, if Letter #1 gets you a 1% response (not bad for direct mail), Letter #2 can get you 0.75%. That’s a very respectable total compared to stopping with just the first effort.

    If you conduct customer surveys annually, you’ll increase the flow of knowledge and get free marketing research. Simply ask, “Are your energy bills getting higher? Have you noticed an increase in repairs? A decrease in comfort? Have you heard of a product or service you’d like us to add? How could we improve our service to you?”

    At the end of the survey, offer to send them a discount coupon good on their next service if they return it. And if they put down two or more referrals on the bottom, increase the offer. You won’t believe how much value this will give you and your customers.

    Also, send meaningful news when you’ve got it. Perhaps you hear news of recalls, updated warranties, system modifications, or maybe you just purchased a new “super tool,” — who should you tell? Your best customers! Include them in this information loop and they’ll include you in their buying loop.

    Of course, as I preach time and again, sending only sales messages makes your relationship a shallow obligation. Regular newsletters two to four times a year are always a good idea.

    Remember, educated customers buy and refer more. Your job is to make sure they stay educated about you. And your customer list is your number one tool for getting that job done.

    Adams Hudson is president of Hudson, Ink, a creative marketing firm for contractors. Readers can get a free marketing newsletter by faxing their letterhead with the request to 334/262-1115. To receive a sample copy of our customer retention newsletter, call 800/489-9099 or check out www.hudsonink.com for other free marketing articles and reports, including a free 16-page report called “Get More Leads in Less Time.”