Increase Profits With Improved Customer Retention
Last summer, my family went on our annual vacation to Michigan. The cool weather, beautiful scenery and outdoor activities make it a paradise for my family of seven. And as always, a fishing trip is scheduled into the plans — this year salmon was the target. I have been an avid fisherman my entire life, but given my unfamiliarity with salmon and Lake Michigan, I chartered a guide to help me find and catch some of the strongest pound for pound fighters in the water.
Our captain, Mark, was a former search and rescue Coast Guard officer and regularly competed in salmon fishing tournaments. He knows the water and he knows his fish. After leaving the dock at 5 a.m., the drag on the reels was soon buzzing with fish. Two large salmon were in the boat within 45 minutes. Within an hour, the bite halted. The temptation to move to another spot was strong, but that’s when Mark told us the No. 1 rule of fishing: “Don’t ever leave fish to find fish.” And herein lies so much truth for us as business owners.
We naturally want to grow our janitorial businesses. And when we think of growth, we always think of sales — new sales. True enough, we need new sales to grow our business. But we can make a fatal mistake by neglecting our own fields in search of greener pastures.
Statistics prove it is much cheaper to keep customers than to acquire new ones. Harvard Business Reviews says that getting new customers can be between five and 25 times more expensive than keeping existing ones. Additionally, increasing customer retention by just 5 percent can boost profits by as much as 25 percent, according to invespcro.com.
So let’s get practical. How can you fish in the waters you already have to increase growth and profits?
Price Increases: If you are providing top notch service and your relationship is strong with the client, you should be able to get small price increases over time. These increases go straight to your bottom line.
Increasing Scope of Services: Is there the possibility of adding to the daily routine of work you currently perform? For example, adding a day porter or cleaning new areas currently not cleaned.
Project Work: What extra-bill services could you add to increase revenue and profit? For starters, how about floor stripping, window cleaning, painting or carpet extraction?
Referrals: Sometimes your best sources of new business are referrals from your existing clients. Reference letters or direct referrals to new clients can be very powerful. Do not neglect this source.
So remember, don’t leave fish to find fish. Your best sources of profit are right in your own backyard. In fact, they are your very own customers. Nurture, feed and prune them for maximum profit harvest. Don’t cross Lake Michigan to find fish when there are plenty in your own pond.
Jordan Tong is a BSC consultant and founder of Elite Business Coaching, in addition to being a third-generation owner of Frantz Building Services based in Owensboro, Kentucky. For more information on his coaching services, visit www.elitebusinesscoaching.net.
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