Customer Retention: Grow your business through repeat and referral customers

by Jonathan McGaha | 30 September 2015 12:00 am

Shiv Singh, senior vice president of global head of digital and marketing transformation at Visa, once said, “The purpose of a business is to create a customer who creates customers.”

If you ask today’s successful general contractors what helped them survive and thrive during this most recent economic downturn, most will tell you that repeat business and referrals are the keys to survival. So, how do general contractors get repeat business and referrals in today’s economy? For some companies, such as Jewett Construction Co. Inc.[1] in Raymond, N.H., repeat and referral work makes up most of their business. Craig Jewett, president of Jewett Construction, says that the company gets its work from its work, with 78 percent coming from repeat or referral business. Similarly, Tom Gunsinger, president of Bel-Con Design-Builders Ltd.[2] in Belleville, Ontario, Canada, says that 80 to 90 percent of its business is either a past customer or referral from a past customer.

Not all successful builders and general contractors rely on such a high percentage of repeat and referral business. Take for example Branco Enterprises Inc.[3] in Neosho, Mo., which currently has approximately 20 percent repeat and referral business, a number GR Stovall, business development, says the company is diligently trying to increase. “The concept of repeat and referral business should be important to any company who cares about its reputation and long-standing in the market they serve,” Stovall says. “With repeat and referral business the client is satisfied and willing to speak of their satisfaction. Both actions are a reflection of quality workmanship, reliability and price from their builder of choice.”

 

Keeping Promises

Know what your customers want most and what your company does best. Focus on where those two meet. ~ Kevin Stirtz, author 

To increase your chances of getting repeat or referral business, the most important thing a company can do is to do what it says it’s going to do. This includes not overpromising on what it can deliver, and if a mistake does occur, fix it quickly and at the company’s own expense. Additionally, Gunsinger adds that being responsive and communicative throughout the process is also important.

Jeff Schaller, vice president, pre-construction operations at Rudolph Libbe Inc.,[4] Walbridge, Ohio, says approximately 80 percent of the company’s business is repeat. On every project, he says the company strives to meet or exceed its customers’ expectations for quality, value, schedule and responsiveness. “We work to anticipate their needs,” he adds. “It’s essential to add value and offer creative solutions. Safety is our core value, and we provide clean, safe job sites to protect our customers’ employees and the public, as well as our associates.”

A.C. (Clif) Coleman III, president and CEO at Coleman-Adams Construction Inc.[5] in Forest, Va., says that over the years, his company has had approximately 60 to 70 percent repeat and referral business. “Just do a really good job-treat your customers fairly, look after their money like it was your own, keep the quality and performance top notch-and word will get around,” he recommends.

When it comes to making good on what you promise, Jewett says it comes down to having accurate and honest estimating. “That’s really where it starts,” he explains. “We put a lot of emphasis on preconstruction. I tell clients that building [a project] is really the easiest part; it’s making sure that we’ve got everything programmed before we start. So we spend a lot of time on preconstruction and estimating services before we even stick a shovel in the ground.”

 

Customer Service

Customers don’t expect you to be perfect. They do expect you to fix things when they go wrong. ~ Donald Porter, vice president of British Airways

Gunsinger recommends listening to your client and understand their business so you can help them the best. “Like they know their business, we just have to learn enough about their business to understand what they’re trying to accomplish,” he says.

Schaller agrees, saying, “Communication is integral-knowing our customers’ goals, priorities and plans for the future is extremely important. We want to be the only contractor they need.”

According to Stovall, a company culture should be focused on client satisfaction. “The client must feel they are dealing with professionals in every way before they are willing to repeat the process themselves and/or give a referral to others,” he notes.

Since building is not always a comfortable thing for a client, Jewett says they try to minimize a client’s pain through the process to make it a good experience. “Customers just want to be paid attention to and they want to get what they paid for,” he says. “And, they want to deal with honest people.”

 

Maintaining Relationships

Spend a lot of time talking to customers face to face. You’d be amazed how many companies don’t listen to their customers. ~ Ross Perot, businessman and former presidential candidate

Remaining in constant contact with your customers is one way to stay top of mind. Whether it’s a phone call or email, a monthly newsletter, or just doing follow-up warranty walk-throughs, staying in contact with previous customers ensures they have a good experience. This increases the chances of your company being called when a new project comes up.

According to Stovall, maintaining a strong client connection is essential. “We don’t communicate well enough as an industry,” he says. “We should seek to build a strong multilevel relationship with our clients from the very beginning and allow that to help build client confidence.” Coleman says that in addition to sending out a year-end thank you letter to clients, they send out Kansas City, Mo.-based Butler Manufacturing[6]‘s Building Profit magazine when there are articles related to a client’s business.

Long-term relationships have always been extremely important to Rudolph-Libbe, according to Schaller. “Our goal is to be a business partner to our customers for the life cycle of their businesses,” he explains. “Many of our customers have worked with us for years or even decades. Repeat business and referrals are the
best compliments we can receive from a customer.”

Additionally, Schaller says the needs of its customers have helped guide the company as they’ve added services over the years, such as site selection, energy management, maintenance and the Special Accounts Department, which specializes in projects under $1 million.

One way Bel-Con maintains relationships with existing customers is to put on lunch-and-learn seminars. While this started as a way to invite potential clients to learn more about the company, Gunsinger says the seminars help educate current and past clients on topics of interest to them, such as labor issues or import/export issues. By putting on and sponsoring these seminars, Gunsinger notes that the main benefit is that they are helping to educate their clients on topics of interest to them, rather than just strictly building a building for them.

In addition to the lunch-and-learn seminars, Gunsinger says the company sends regular newsletters and has an active Twitter account and LinkedIn company page. “We will feature a lot of our clients and tell a little bit about their stories,” he says. “We’ve done the same with our photo galleries on our website, and may include a link to their website in the write-up of each project.”

Once a project is complete, Branco does post-project interviews to get good and bad feedback, and open the door for a “lessons learned” conversation, Stovall says. “The client relationship needs to be maintained not only through the project, but well after,” he explains. “We send out a regular emailed newsletter to clients and a number of other contacts. This allows them to simply reply to the e-mail with a comment of any kind, or forward it if they would like to share.”

Stovall goes on to say that if they use references in a proposal, they take the opportunity to call on the references and ask if they can do so. In further explaining the specific pursuit, it opens the opportunity to see how their business is going. “Getting past clients engaged in our current pursuits raises their potential to repeat and refer,” he says.

 

Cost of New Business

Profit in business comes from repeat customers; customers that boast about your product and service, and that bring friends with them. ~ W. Edwards Deming, author

The benefit of retaining customers and getting referrals is a financial one too. According to a study by Boston-based Bain
& Co. Inc., it costs six to seven times more to acquire a new customer than retain an existing one. According to Ken Krogue, president and co-founder of Inside-Sales.com, referrals are 36 times more valuable than a cold call, 10 times more valuable than a tradeshow lead and four times more valuable than a web lead.

In addition to helping Coleman-Adams maintain a consistent backlog of work, Coleman says repeat and referral business is reassurance they are doing a good job for their customers. “It’s the most inexpensive sale out there,” Jewett says. “It doesn’t cost anything. That’s why it’s so important.”

As author Chip Bell says, “Loyal customers, they don’t just come back, they don’t simply recommend you, they insist that their friends do business with you.”

Source URL: https://www.metalconstructionnews.com/articles/customer-retention/

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