As landscape contractors prepare for next year, one thing they are always concerned about is attrition. How many clients are they going to lose and how many clients do they need to gain in order to make up for that loss?
A customer is four times more likely to defect to a competitor if the problem is service-related versus price-related, according to research from Bain & Company. But clients are lost for more than just poor service- death of a homeowner or change of home ownership, for instance. For the average company, up to 40 percent of customers will depart this year and not return, reports America’s Best. That’s quite a chunk of business for a small company to have to replace.
In the process of supplanting customers who have been lost, there is a tendency to obsess over obtaining new customers. It becomes the golden ticket for revenue for the coming year. As such, all of a landscape company’s marketing efforts target new homeowner zip codes. What’s even more disturbing is many small business owners don’t even know how many customers they’ve lost from year to year, much less try to get them back, America’s Best points out.
What tends to happen next is existing customers are forgotten as sources of additional revenue. And those customers who have not returned are considered “lost.”
Don’t let lost customers go so easily
Here’s why landscape business owners should pay serious attention to attrition each year.
First of all, a Marketing Metrics study says companies have better chances of winning back lost customers than they do of replacing customers with new ones. You have a 20 to 40 percent chance of winning back ex-customers and only a 5 to 20 percent chance of turning prospects into new customers. Statistically, your odds are in favor of understanding why clients leave and taking steps to win them back.
Jill Griffin, author of “Customer Winback: How to Recapture Lost Customers and Keep Them Loyal,” suggests a few ways to win customers back:
- Ask the client, “What can we do to win back your business?” Listen to what they say, make the changes and then ask them for their business.
- Be patient and stay in touch with lost customers. Wounds heal slowly.
- Make it easy for customers to come back.
- When the customer does return, earn his or her business every day.
Existing customers = additional revenue
Want an even easier solution for replacing lost customer revenue? Sell more services to existing customers who already know and trust your business.
Marketing Metrics research says the probability of selling more services to an existing customer is 60 to 70 percent. I’m not a gambling woman, but these odds are looking pretty good compared to trying to replace that lost revenue by finding new clients.
Educate existing customers on your additional services. Communication can do this, but hosting a customer appreciation event can simultaneously thank existing customers and educate them. An Influitive study measured how businesses of all sizes market to existing customers, and 60 percent host customer events.
While you’ve got happy customers engaged, start a company referral program to help continually feed your business new work so those moments of attrition don’t negatively effect business as much. Only 46 percent of Influitive survey respondents do this, yet it’s one of the most effective ways to generate more business.
“Set up a system to ensure you regularly request referrals from each satisfied customer after you’ve made sure they are happy,” explains Rieva Lesonsky at Small Biz Daily. “Make it as simple as possible, whether that’s filling out a quick form at the point-of-sale or responding to an email from your business. Follow up on those referrals quickly before they go stale.”
Lost and found
Yes, some lost customers won’t return. But in trying to retrieve customers who have strayed you’re also showing a commitment to doing everything you can for them. And, who knows, one day that client who was once lost could turn out to be one of your best customers.
Some Insight from LawnSite.com
It’s the first time you’re meeting with a client. Ever look for some red flags that say this client might not be a good long-term fit for you or your company?
LawnSite members recently made a list of these “red flags” in a recent post titled, “First Meeting — What Are Your ‘Red Flags?’” Here are a couple of their responses.
“When they say, ‘This is just a small job, but the big one is in the future.’ It may be true or it may not be, but it is almost always an attempt to manipulate your initial price.”
— Ben Bowen
“When they say, ‘We want you to mow once and then we will see how it goes after that.’ I don’t do onetime jobs, but have gotten sucked into it from phrases like that.”
— Utah Lawn Care