Crack for Clunkers

Maybe I missed something. Just read that the Government Used Car Lot traded in 700,000 soot factories on wheels they call ‘clunkers’. Good that we got some unsafe and/or vile vehicles off the road to save Americans from our dependence on foreign oil. Read on.

Given that the average clunker got 12 miles per gallon and the pristine ‘new’ car (with a pristine payment book for our formerly non-spending shoppers) gets 25. Driving 12,000 miles a year, the deathmobile uses 1,000 gallons; the bluebird of vehicular happiness uses 480. Love it.

That’s 520 gallons saved per vehicle. We are geniuses! For the 700,000 vehicles, we just saved 364MILLLION gallons of fuel. We are even more smarter than geniuseseseses! Since we get 23 gallons of automotive fuel from one 55 gallon barrel of oil, that’s about 16MILLION barrels of oil we don’t have to buy!

Take that, Oily Mongers! Since we’re currently gulping down 6million barrels of your crudeness a day, we just saved nearly 3 days worth! HA! Go find another customer!

For my next to last calculation (because my abacus is smoking) at $75 per barrel, that’s a savings of $1.2billion dollars. The savings are racking up like crazy now! The only slight negative here is that it cost us $3billion to save the $1.2b.

If anyone in the health care debate brings up “Cash for Cankers,” I’m moving to New Zealand.

By the way, this is not political commentary, policy debate, or assailing the effort to save fuel or car dealers. This is about shallowness and mismanaged relationships.

Though the Clunker program brought great throngs of people trading in $500 cars for $4500 and the ensuing “great news” of heavy spending surge, I have a fairly dire prediction for the next couple months: ain’t nobody trading in any more clunkers unless you pay ‘em handsomely. Sorry. Get ready for really ‘bad’ car sales numbers. We’ve built an expectation we can’t continue, and it was NOT based on loyalty.

The best relationships may start with an inducement, an urgency, a ‘reward’ (faster service, discount coupon, tax credit offer) but will not last unless one of two things happen. Whether a car dealer or a contractor, the same rules apply:

1. Offer another incentive, equal or better than the last. This shallow “gimme” based relationship is why I caution that over-using Direct Response is like crack, i.e. ‘more is better’. This is a downward spiraling, profit robbing model.
2. Build a solid (preferably programmed) plan of contact that deepens trust, instills confidence, reinforces value, and requires cooperation from both sides.

The first one is easy to offer, harder to maintain. The second is harder to start, easier to maintain. And the second one kicks bootie every time.

You wanted something more glamorous? You wanted me to talk about getting more leads for less dollars, or how to guarantee differentiation in your market? You’d rather learn how to turn one sale into many? You feel our time would be better spent discussing the nuances of phone-melting headlines?

Well, if you practice the rare art of “active” customer retention, all of those things can happen. It is truly, the “X-factor” in a contractor’s marketing arsenal.

Of course, this is already known by a small, well-rewarded group of contractors who’ve held a tight lid on this weapon.

In fact, a few years ago, I began polling contractors on “Who uses customer retention?” and only about 6% did. Now that figure is nearer 11% - and growing.

Given that contractors don’t spend where there’s no result, I’ll let you conclude why this number has nearly doubled in three years. This is also the marketing method that has gotten most of the credit for “saving” contractors in this recession. The profitability among “those who do and those who don’t” seems to be widening as well. Makes sense.

Regardless of which group you’re in, you may find the following useful.

If you already have a Customer Retention program:

• Increase your aggression for maintenance agreements in stand alone mail/email and in your newsletters. Do not limit newsletter mailings to MA customers only, since you want to increase the natural ascension from “normal” customers to MA customers.
• Push for greater differentiation through IAQ initiatives, which, due to a high-tech nature and health slant, can elevate your marketing position considerably. (Request a free IAQ Marketing Report from us if you want to read more.)
• Stealth pursuit of web-based lead generation allows “customized, flexible lead flow” largely under the befuddled noses of your competitors. Those who get in early tend to maintain an advantage. This is inexpensive and fast.
• Continue to wean yourself from Yellow Page addiction to fund and extend your newsletter, thank-you campaigns, and follow-up referral sources. Allow your remaining YP ad to be a pure lead generator – small, fast, and uncluttered.

For New Retention Marketers

For those who have just recently begun a customer retention campaign, allow it to build momentum. Too many contractors get the instant differentiation benefit and positive comments from customers, yet have a tendency to jump to the next thing. These sporadic efforts lose the momentum and bring confusion to your staff. Remember, retention is a program, not an event.

Also, realize that the effect of retention marketing is like compounded interest – the true benefits requires continued application. It builds on itself, multiplying the effects, allowing low-cost marketing advantages for the earned loyalty, shorter sales cycle, easier upsells, more referrals, and a greater response rate.

For the “I’m Still Thinking About it” Group

The remaining 89% of contractors who leave their customer base at risk are either “hoping” their customers come back or must regularly initiate an incentive to generate new leads. Doubtless if you’ve read this far, you’re looking for change.

The first one is to change your mindset. And since it’s my job to be your personal tour guide for guilt trips, check this mind-shift:

• The “normal” contractor gets a customer in order to make a sale.
• The “marketing” contractor gets a sale in order to make a customer.

Admittedly, that sounds odd, and the scarcity of those who actually understand this mind-shift is almost the point. But this should make it clear…

The contractor who is wisely counter-intuitive in marketing wins the marketing. Period. Those who think, act, and do like everyone else get results just like everyone else. I’ve also noticed that his or her complaints are just like everyone else’s too.

So, by really understanding and applying the contractor marketing mindset, you’re automatically in the small segment that has differentiated from the pack. No matter how you initially get your leads and customers, make sure your effort to keep them proves you value them. After all, they’re customers, not clunkers.

Request a free Customer Retention Report and Fall customer newsletter sample.