Building a business in any industry is a huge endeavour, and it is easy to get bogged down with the day-to-day tasks, making it hard to focus on big-picture aspirations like scaling your company. Developing and building lasting relationships with your customers provides you with reliable income, helps build your brand, and can help you scale your cleaning company.
In a recent edition of ISSA’s Straight Talk!, Jeff Cross chats with Jeff Carmon from Elite BSC, who offers valuable insight on looking long-term with your customers for lifetime value and growing existing relationships, rather than solely prioritizing the next job.
Focusing on “customer lifetime value,” means looking at what your customer is worth over your entire relationship, rather than conducting an analysis of revenue over a set period time. Carmon suggests that this perspective will encourage business owners to look at what it takes to maximize that value – by evaluating the overall revenues and subtracting the acquisition costs over the course of your relationship.
This approach will inevitably change a business’ approach to sales and marketing, too. Rather than creating campaigns that focus on short-term ideas, the goal becomes to acquire customers with the potential to stay long-term and the strategies to make that happen. Carmon suggests when that the quality of leads becomes more important than the quantity of leads, lead generation and messaging tends to shift. “I want to find customers that I believe can create the longest customer lifetime value for us, and that means understanding the sales process, knowing when to add sales staff, managing sales targets, and how much annual recurring revenue is being generated,” he says.
How can cleaning companies encourage that lifetime value? According to Carmon, pursuing price sensitive customers can become an issue, so it’s important to consider how willing your leads are to change vendors “for a few dollars,” before you invest in that pursuit. Additionally, retention is a key priority in this strategy, so having an operational plan to strengthen a new relationship in the first 90 days is important, relying on consistent service, the ability to react to issues when they come up, and being proactive in building that client’s business to add more revenue and lifetime benefit to the customer.
Carmon also makes the point that this strategy means pricing job with less focus on “wining the job today” and more about the total value of the relationship over time. Acquisition costs, size of the account, and likelihood of increasing services or locations, should all be considered when pricing out the contract, and this could mean decreasing margins at the beginning to establish a long-term relationship.
Cleaning companies looking to build a lifetime value strategy need to look at their prospect lists, narrowing the list of names to fit your desired customer profile to include customers you think will lead to a long-term relationship. Also, a focus on retention can really help companies develop these relationships right from the start, so creating a very tight service plan to keep customers for a long period will set companies on the path to success.
