Service: Make Service a Profit CenterMonday, January 13th, 2020
What’s done is done.
When the work is finished and the job is done, we pack up our tools, shake the homeowner’s hand (after collecting any outstanding balance for services rendered), and ride off into the sunset never to return. At least that’s what happens for many home improvement contractors (the story’s different for HVAC contractors and other service oriented businesses, but bear with me).
In our story that I’m sketching out, we’ve done everything right up till now: we’ve marketed ourselves well, set the appointment when the opportunity presented itself, sold the job that met the homeowner’s needs, installed the work with integrity and quality craftsmanship, and were paid as our just reward for a job well done – but what happens next? For many contractors this is the end of our relationship with this particular homeowner. That’s par for the course, just the way things are.
Time passes, the homeowner forgets who came and did the work for them or maybe the house is sold to someone new, someone who doesn’t know anything about the work that you did there (the average homeowner moves every seven years). But what if there’s an opportunity here that we’re breezing past because we just can’t imagine it?
Let’s give a name to that opportunity: Lifetime Customer Ownership.
What’s the cost of acquiring a new customer? Well, marketing dollars and reputation went into getting that customer. Since reputation is a tricky thing to measure let’s stick to marketing dollars. What is your allowable cost per lead? For the sake of this exercise, let’s say it’s $120. But that’s your cost per lead and not every lead turns into a sale. Let’s say one out of three does buy from you, so that's $120 x 3 or $360 in marketing cost. (Add in the cost of your marketing manager while you’re at it.) Point being: new customers are expensive to come by.
Now imagine a different end to the story. Instead of riding off into the sunset, what if we could find a way to never part ways with the customer? This is what we at Contractor Nation call the “Perennial” idea. Contact them once a year (or more) to schedule maintenance, service, inspections or about another service. Get in front of them, show you care about the continuing results they are getting from the work you did originally, maintain your relationship, and sell them something else when you can. That’s Lifetime Customer Ownership.
Remember, new customers are expensive to come by. What if you made even a fraction of those new customers into lifetime customers?
“But” – perhaps you interject – “can you develop an annual maintenance program around a trade that does not involve ‘live’ products or situations like HVAC, generators, landscaping, etc?” I say that you can – and it becomes even more impressive when you do.
What might Lifetime Customer Ownership look like for your business? Consider the Perennial idea and how it could impact the way you do things. You might realize – as I did – that Service can be a Profit Center. And a big one at that.
See you soon.