Upselling and Retention
This is the sixth and final installment of our blog series on Sales Best Practices for the Green Industry. In this post, we’ll be discussing how to retain and upsell your existing customers.
The Research
There’s tons of fantastic research on the importance of both upselling existing customers and the impact of intentional customer retention. Let’s look at that and see how these things can make a difference for your business’s bottom line.
Importance of Customer Retention
According to Wheelhouse Advisors, “Statistics show 61% of consumers take their business to a competitor when they end a business relationship.” When people cancel services with you, they’re going to your competitors. If that’s not a sobering statistic, I don’t know what else will convince you.
Also, per Outbound Engine, “Acquiring a new customer can cost five times more than retaining an existing customer.” You read that correctly – it can cost five times more to get a new customer than to keep the customer you’ve already got.
Still not convinced? How about this insight from the Harvard Business Review, which states, “…consider research done by Frederick Reichheld of Bain & Company (the inventor of the net promoter score) that shows increasing customer retention rates by 5% increases profits by 25% to 95%.”
I don’t know a single business that can ignore a strategy that offers a minimum of a 25% increase in their profits.
Importance of Upselling
Here are two telling statistics from that Outbound Engine article I referenced above. The first is “The success rate of selling to a customer you already have is 60-70%, while the success rate of selling to a new customer is 5-20%.” This means that, at a minimum, you’re three times more likely to upsell something to an existing customer than you are to sell that same service to a net-new customer. You’re 14x more likely to upsell a current customer in the best-case scenario.
The second quote also has to do with the likelihood of customer behavior. They stated, “One customer experience agency found loyal customers are 5x as likely to repurchase, 5x as likely to forgive, 4x as likely to refer, and 7x as likely to try a new offering [compared to net-new customers].” Again, we see that working with people who already trust you is an exponentially easier way to grow your revenue than simply finding new customers.
If you’re not taking advantage of this information, you’re only harming your own business.
How to Retain Customers
There are a few best practices here, and you can quickly implement most of these strategies. Following these guidelines will help keep you on the right track toward profitable growth.
Customer Experience
I wrote a long post on this a few weeks ago. The short version is this: if you put together a thoughtful plan that ensures customers enjoy doing business with you, you’ll retain them at a higher rate. Go back and read the blog for full details – it’s worth the read.
Customer Experience is a critical way that brands build loyalty. Great customer experience means attention to even the most minor details of how people interact with your company. From the usability of their products to the fact that iPods came fully charged out of the box (revolutionary at the time), Apple has made it a point to deliver exceptional experiences for their customers. This experience is why people were willing to wait in line for hours to get the newest version of the iPhone.
Communicate Well
A common frustration for lots of customers is the unknown. They don’t know when their subsequent lawn care treatment will be or when the crew is coming back to finish grinding the stump. Customers can become frustrated when they expect to have their edging and mulching done by mid-May, and instead, it’s mid-June before you show up.
Without communication, our minds go to worst-case scenarios. Just ask any parent who has ever waited for a teenager to get back after curfew with no call or text.
Don’t do this to your customers. Tell them when their service is scheduled (to the best of your ability). Giving them a date range is better than just not communicating.
Make it a priority to let customers know what to expect from your business. Hearing “We’ll be out to do that shrub trimming in about four or five weeks” is better than hearing nothing for five weeks and then getting a call telling them you’ll be out tomorrow.
Pro-tip: When communicating with customers, giving yourself a little buffer is always better. Tell them it will be eight if you think it might be six weeks until service is performed. This way, if you give yourself the chance to delight them. If you call three weeks after they signed the proposal and say, “Hi Mrs. Johnson! We will be able to come out and do that shrub trimming in about three weeks. Does that work for you?” you’ll look like a rockstar.
If you told Mrs. Johnson it would be six weeks, and it goes over that, you’ll look like you broke your promises. Give yourself some wiggle room for the unexpected, like weather, staffing issues, or supply shortages. This way, you’ll consistently deliver.
Have a “Cancel Save” Plan
You’re going to lose some customers. It happens to even the best brands and companies.
In the service industry, those repeat customers are essential. They’re the fuel that keeps the engine running. Planning for cancelations helps you from having a ton of “churn” in your business.
If you run a Landscape or Tree Care business and set your pricing appropriately, you know your profit margins and how much cushion you’ve built. If you run a Lawn Care business, the profit margins are even higher.
Empower whoever answers the phone at your business to offer a discount when a customer calls to cancel. Set those boundaries based on the service line. For example, you may tell your team that they can offer 10% off the canceling customer’s Lawn Care program for this season if they decide to stay, but for Maintenance and Design/Build, they can only offer a 5% discount.
These pre-approved responses empower your team to try their hardest to keep a customer you worked hard to earn.
Things to Consider Regarding Cancel Saves
It would help if you considered some things regarding these cancel saves.
First, train your team to ask questions. Don’t offer the discount as a default response. For example, many Lawn Care clients will call to cancel because they’re upset. The real issue is they want to be notified the day before services so they can mow. Train them to ask probing questions first and use the discount as a last resort.
Next, figure out how much time and effort it takes to “earn back” the money you spent acquiring a customer. Using Lawn Care again, most companies will earn a profit from a new customer in the middle of their second season.
Keeping your profit margins in mind, saving 90% of their annual spend (or even 85%) is better than getting 0% of their money. Once you’re earning profit from a customer, as long as you’re not losing money, don’t feel you must be stingy with a discount for a loyal customer.
How to Upsell Customers
Upselling your existing customers is a balancing act. You have a great relationship with them already, so it’s low-hanging fruit. The danger is that you risk alienating part of your customer base if you’re too aggressive.
Upselling Effectively
The first step to doing this well is to identify the services you offer that go well together. I’ll give you an excellent example from my career.
One of the most innovative salespeople I ever worked with came from a nursery background. She was an ISA Certified Arborist, too. And she sold a LOT of plant installs. This woman has a tremendous eye for detail, layering, color, and texture in her designs.
She also did one of the most brilliant things I’ve ever seen with her designs. She’d keep a running list of clients who had a large install job (over $5,000, let’s say) the previous season. In the Winter, she’d call them ALL, personally, and propose a Plant Health Care program.
I’m not suggesting you expand your service offerings. (If it makes sense for you, go for it!) You’re very strategic about seeing what a customer has already purchased from you and then recommending additional services that complement and add value to the core service they hired you to perform.
My coworker’s PHC sales weren’t a gimmick – they were a value-add. She’d frame conversations like this: “Hey Mr. Jones, I know you spent $8,000 on those plants last year. I thought about you, and I thought it would make sense to protect that investment with a Plant Health Care program. That should keep your plants looking great! How does that sound?”
What Does That Look Like?
If you’re a Tree Care company that offers pruning and Plant Health Care, offer PHC services for landscapes where you’ve done professional pruning. Or, if you know there’s an invasive species in the area, catalog the susceptible trees on your customer’s properties, and follow up with an offer to treat them.
If you’re a Landscaper and someone has hired you to edge and mulch their beds, be sure and follow up once weed pressure is peaking and ask if they’d like to have those beds weeded a few times a year.
Lawn Care companies should offer grub control, aeration, seeding, and soil amendments to customers with their basic (entry-level) Lawn Care packages as add-ons.
The point here is to ensure that the services are a natural fit for the core offering they’ve hired you to perform, they add value to your customer’s experience, and deepen that customer’s trust in your company.
How Often to Solicit Existing Customers
I would prioritize your efforts to upsell your customers as a general rule. Once you’ve identified those natural upsells we discussed above (related to the core service and adding value), prioritize the ones that are most important to customer satisfaction AND most profitable.
I’m an expert in cool-season turf, so I’ll use this as an example. You can upsell grub control, surface-feeding insect control, fungicides, aeration and overseeding, slice-seeding, soil amendments, and re-sodding the lawn in a single season. That’s a LOT of upsell opportunities!
I wouldn’t advise reaching out to customers about ALL your services. Prioritize the two or three that will have the most significant impact on satisfaction (like aeration and seeding – keeps the lawn thick) and most profitable (like grub control – reasonable markup if you’re doing it correctly).
I’d only reach out to these customers about two or three core services you’d like to upsell. Try calling them a couple of times (no more than twice!) about each one, and maybe send an email blast to your customer base. (The email should be a “soft sell” – tell them it’s the time of year to do it, why it’s essential, and ask them to call with questions. For more information about email marketing strategy, check out this blog.)
It would be best if you didn’t make more than a half-dozen phone calls or send more than three emails with a hard “ask” from your existing customers. Otherwise, you’re sacrificing customer experience for short-term sales gain. That’s not sustainable.
Conclusion
When customers cancel your service, they’re likely going to a competitor. A slight improvement in your retention rate can lead to a significant increase in your bottom line.
Upselling existing customers is the faster, cheaper way to increase your revenue (instead of finding new customers).
You should have strategies for upselling and retention that are deliberate, thoughtful, empowering for your team, and adding value to your customers. Communicate effectively, but avoid too many “salesy asks” to your existing customers that will turn them off to the idea of doing additional business with you.
Go back and read Part 5 – The Sales Call
Download the FREE Guide to Sales Best Practices for the Green Industry
Go all the way to the beginning of this series with Part 1 – Write It Down