The “No New Customers” Approach to Running a Plumbing or HVAC Business

Wolseley PRO Pipeline Blog

By Greg Weatherdon, Small Business Expert

What if one day you awoke and found out that there were no new customers to be had. How would that change the way you did business or ran your company? What would you do differently? How would you treat your existing customers?

Although this may be a fictional scenario, it does present a real-life opportunity to rethink our businesses with a focus on existing customers. Generating recurring revenue from existing customers will greatly enhance the profits of any business.

New customers can cost 10 times more

I regularly work with contractors who over the years have created a client base that numbered in the thousands. When I ask them how much of their business comes from their existing customers, most don’t know because it’s not something they’ve thought about.

What they don’t understand is that it costs between five and 10 times more to get an order from a new customer than it does from an existing customer. Think about that for a second. How many hours do you spend chasing leads, visiting prospects, preparing quotes and following up all in the “hope” of beating out the competition?

Now compare how much easier it is to deal with an existing customer. Hopefully, you’ve built up a level of trust and if you treated them fairly in the past, they simply expect the same the next time. In many cases, you’re not even having to compete with anybody.

Increase your profits by focusing on existing customers

Here’s another reason to focus on existing customers. By increasing purchases from existing customers by just 5%, you can increase your profitability from 25% to 85%. In many cases it’s simply a matter of suggesting add-ons or improvements to their existing mechanicals.

3 things to deepen your relationship

But in order to take advantage of these opportunities, you must rethink how you currently do business. So here are three things you can do right now to deepen your relationship with your existing plumbing or HVAC customers while increasing your profitability.

1. Inventory their mechanicals

Don’t be in such a rush to get to your next job. Take 10 minutes to do a complete inventory of the clients’ existing mechanicals. For example, if you’re an HVAC contractor, record the make, model, serial number and year of install of each piece of heating and cooling equipment.

By doing so, you can have an intelligent conversation with the customer about their current and future needs. For instance, if they don’t have humidifier, you can ask if their house is dry in the winter months? Or, do their moldings or hardwood floors gap during the heating season? Do they know the energy saving value of a programmable thermostat or the benefits of a new Wi-Fi enabled version that allow remote access?

Plumbers can do a similar inventory and inquire about future renovations or additions like a basement bathroom. What about letting them know that you install dishwashers or water treatment systems or winterizing outside fixtures?

Finally, you should always be asking for referrals to the friends and family. You can even offer a simple 10% off parts and labour for both them and the referral on their next service calls.

cellphone-communication-connecting-10939052. Email reminders

Other than your time, this item will cost you nothing by availing yourself to of one of the free email services. So, while you’re gathering all the equipment information, make sure you also get their email addresses. I am shocked at how many companies do not get this critical piece of information.

These reminders can run the gamut from deals on annual maintenance and equipment, to a simple service reminder. I recently tested sending an email to an HVAC client’s email list that simply said, “Don’t forget to change your furnace filter” and stated a few reasons why they should do so every 3 months. We received approximately a dozen emails thanking us for the reminder. Talk about generating goodwill and we’ve continued doing so every 3 months.

3. Annual service/maintenance programs

Annual service/maintenance programs are not new and are a great way to keep clients loyal. Considering that the mechanicals you service are critical to their comfort and safety, it’s a good idea to schedule annual maintenance of their equipment. This high-margin activity also serves as a great filler when things get slow.

For those customers who do agree to the annual maintenance, you can keep them loyal by offering a 10% discount on parts and/or labour for the following year. Offering an annual discount is a simple solution that’ll go a long way to keeping clients loyal.

Don’t forget that many new installs require annual inspections for warranty purposes, so that gives you a great opportunity to be in front of the customer every year.

New call-to-actionMake sure they don’t forget you!

When you consider that many customers only call in an emergency, you need to understand that during that moment of stress, they may not remember you and call a competitor. What we fail to realize is that it’s not the customers job to remember us, but it’s our job to make sure they don’t forget us!

Creating an ongoing relationship with customers requires some effort. But reaching out to them on a regular basis is far easier and much more profitable than hunting for new customers every day. Wouldn’t it be nice to know that you have 20-30% of your annual revenue already in place every year?

By finding ways to stay in front of your customers, you’ll never have to worry if fiction becomes reality where someday there are no new customers.

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Greg Weatherdon is a small business expert and author of Get More LIFE Out of Your Business. He also produces The Small Business Minute Podcast, available on all major platforms including iTunes, Google Play and Spotify.