5 ways to prevent the canceling customer

ILLUSTRATION: PHOTOTECHNO/ISTOCK / GETTY IMAGES PLUS/GETTY IMAGES

Pest management professionals (PMPs) understand the value of expanding their customer databases. With social media, digital marketing and other modern sales tools available, companies are spending record amounts of resources to grow their businesses. Sales reps also are pushing hard to capture the three-quarters or more of the residential population that do not use pest management services (Sources: The National Pest Management Association, Specialty Consultants). Sales boards in most offices visually depict progress and challenges: “Is Sally selling on par with Debbie?” “Jim’s sales have really increased this month.”

Acquiring new customers is exhilarating. Charts, boards and analytics all look impressive. However, many owners and managers are bewildered when adding so many new customers did not really improve profit.

The real challenge is to nurture existing customers. For example, if a $1 million company wants to grow by 5 percent this year, simple math shows that company would only have to sell an additional $50,000 to meet the goal, right? A closer look, though, might reveal a vulnerable spot: A company with a 93 percent retention rate might think that is excellent (i.e., 7 percent of gross in cancellations). But that now means that to grow 5 percent, $50,000 would have to be sold. The 7 percent lost would have to be made up as well, so a net 5 percent growth would mean 5 percent growth plus replacing the 7 percent lost, or a 12 percent sales increase ($120,000).

Put simply, using this model for a year of 12 percent sales, any sales that closed from Jan. 1 until Aug. 1 would be just to make up for cancellations.
 

SHIFT IN FOCUS NEEDED

A reputable business analysis shows that only about half of service companies have a customer retention program, or even a process in place to try to save cancellations. Many companies focus spending on new sales efforts, without making nearly enough effort to retain customers. Too often, when customers call to cancel, the process is to do so with no questions asked or attempts to save the account.

The average cost of acquiring a new customer is more than five times the cost of retaining an existing customer (Source: Forbes.com). To win and keep customers, it is important to have a retention program in place from the start.

Simple steps can be taken to reduce cancellations, including:

1. Get to know the customer. Ask how things are going. Have customer service staff ask about the kids, the dog, the cat by name. Technicians can add personal notes on service tickets to update the file. A personal touch goes a long way.
2. Periodically email news about pests, and why your company is important in protecting their health and their living and working environments. If the customer email is not on file, obtain their email address. In this era of information overload, though, don’t overcommunicate and let them unsubscribe. Note that many older customers likely would appreciate a hard copy left during the service call.
3. Celebrate customer longevity by offering a deep discount for a first add-on service. For example, if customers have a termite contract with your company, offer a reduced price or first free monthly/bi-monthly/quarterly general pest service if they agree to a longer-term service agreement. Customers with more than one service are much less likely to cancel. The probability of selling to an existing customer is about 65 percent; the probability of selling a new customer is just over 5 percent (Source: Forbes.com).
4. Make follow-up phone calls. Calls from owners or managers to save an account have no value if the customer believes he or she hasn’t been appreciated up to that point. Don’t wait until it is too late to make customers raving fans of your company. Make the call no later than the day after service.
5. Get employee buy-in. Your office staff and field technicians are the company, in the eyes of the customer. Make sure they know how to properly represent the company. Remember to reward any retention success on their part.

BAUMANN, a PMP Hall of Famer (Class of 2013), is VP of technical services and regulatory affairs for Nisus Corp., Rockford, Tenn. He can be reached at gregb@nisuscorp.com.