For a company to get and keep more customers in a service-based business, it must deliver an experience customers desire, will pay a premium for, want to use repeatedly, and which they refer to others. Doing so makes a company look and feel trustworthy, dependable, reliable, and devoted and for all of this, customers will feel an allegiance and faithfulness to patronage. This is loyalty.
Customer satisfaction is worthless. Customer loyalty is priceless!
If you want your service agreement program to take flight and soar to new heights, stop thinking of it as something that locks your customers to your company for tune-ups in the shoulder seasons. A good service agreement program is the single most important part of your overall marketing platform to create customer happiness, loyalty and referrals. In other words, the service agreement is a relationship marketing model.
Typically, the most successful and profitable companies have the greatest number of service agreements. Service agreement sales stem from delivering an exceptional service experience and outstanding customer care that yields the highest customer happiness scores, reviews, referrals, and repeat business. Repeat customers lead to engaged loyal customers that cement their relationship in a company’s loyalty programs.
Companies with popular loyalty programs get 50% of their leads from technicians who generate opportunities from existing customers. These contractors get 25% from referrals by existing customers or by proximity to existing customers. The remaining 25% comes from advertising and marketing efforts.
Countless studies reveal that loyal customers and their referrals yield a greater impact on a business’s top line revenue and net profit than do new customers.
Think about this: Your existing customer base will buy 67% more than a new customer opportunity from your marketing. Estimates show that landing a new customer costs 5 to 20 times more than selling into an existing relationship.
Loyal Customers Are Golden!
Loyal customers buy 54% more quickly than non-loyal customers. A customer who buys twice is two times more likely to keep buying than one who buys once. Loyal customers cost much less to reach and sell — It costs approximately $40 to reach, visit, and close a customer versus $325 and up for non-customers.
Loyal customers convert at a much higher rate — 80%+ for loyal customers versus 35% or less for non-customers. The lifetime value of a loyal customer is 20 times their annual volume. A 5% increase in customer loyalty can mean up to an 85% increase in profits, according to Harvard Business Review.
Referrals Lead to Riches
Referrals are the best form of advertising and one of the greatest sources of high margin business. Loyal customers are the best way to generate referrals. They refer 107% more than non-loyal ones. Word-of-mouth advertising is 50 times more effective than any other form of advertising. Consumers are six times more likely to rely on a recommendation than on advertising and yield closing ratios of 78% versus 32% for cold acquisition.
Plus, referrals are 1/8th the cost of broad market advertising acquisition. Some more facts:
Loyalty and referrals don’t come from simply satisfying customers and offering what someone can get through another outlet for less. You must offer something people cannot get anywhere else. Make customers so happy that they feel compelled to tell others so that the relationships you develop are PRICELESS.
Turn suspects into prospects; prospects into customers; customers into continuing clients/partners; partners into promoters/raving fans; raving fans into emissaries/evangelists/brand ambassadors; which is the highest level of loyalty, as their loyalty shifts from your products, services, and brand to themselves and what they believe in the soul.
Once a prospect becomes your loyal customer, you can escalate the relationship to a place where they choose to raise their level of loyalty and/or can buy other products and services you offer in other channels (e.g. plumbing, electrical, generators, smart home). Loyalty yields repeat business and referrals.
BOTTOM LINE: Deliver a differentiated customer experience that makes a life impact, is memorable, ensures loyalty, generates repeat business, and is worth telling others about. Don’t fit in. Stand out. Be REMARKABLE! The result will be a steady stream of happy repeat customers, stellar reviews, quality referrals, and put your company on the path to build a loyal customer base. It’s time to optimize for loyalty.