Customer Acquisition and Service based businesses
Like any business acquiring and keeping customers is essential to constant growth. Growth insinuates that your business keeps more customers than it loses. Growth is essential to any business, especially those within service based markets.
On-boarding new customers is expensive. Each new customer acquired has a cost associated to them and in the service based industry your cost per customer can be well over the price paid by the customer. Hence why it is so imperative that we retain as many customers as possible.
We started www.maidforyou.com.au (a house cleaning agency based out of Sydney, Australia) with a marketing budget of about $1000 per month at launch. The marketing channels we utilized were mainly cost per click campaigns via Google and Facebook.
To begin with our customer acquisition cost was well over $150 AUD per customer. This meant for every customer acquired we’d spent 15% of our total marketing budget for the month.
Which meant without referrals the maximum amount of new customers acquired per month was capped at less than 6. Of those customers perhaps 1 or 2 would be recurring. After paying out to our teams and taking our 20% referral/management fee. We were left with somewhere in the vicinity of $302 net profit for the month.
This meant we incurred a loss of close to $800 per month, which would only spiral us into debt, negative cash flow, stress and ultimately, the closure of the business.
Fast forward 22 months www.maidforyou.com.au is profitable, has over 300 reoccurring monthly, fortnightly and weekly customers and month on month growth of well over 10%. This growth is attributed strictly to the acquisition and keeping of customers. Here’s how we did it.
Exceptional customer service
Our organisation prides itself on great customer service. We do the unprecedented in this industry. We make sure all emails are replied to within 10 minutes between 9am and 5pm. This not only cuts down on unnecessary phone calls. It eliminates any anxiety our clients might have regarding when their cleaners may arrive.
Providing customers with great customer service may cost money but on the flip side, it increases the amount of bookings received from referrals (those customers who choose to book with us after hearing about our service from someone). This lowers our customer acquisition cost significantly, instead of one customer costing us $150, with this method we obtain two customers. Hence decreasing our customer acquisition cost for that particular consumer by half.
The cleaners are provided with incentives to make sure each customer is turned into a recurring one. remuneration is the greatest form of motivation. You can provide free massages, holiday pay, extended leave opportunities, work barbecues, after hour-drinks but the best form of motivation is remuneration. If our cleaners receive good feedback, they receive a bonus in the form of money. If our cleaners convert one time customers into regular customers, they receive a bonus in the form of currency.
Reoccurring Discounts
Providing our customers with discounts for regular use of our service is a great means of turning one time customers into regular ones. Customers are naturally drawn to discounts and making sure to highlight this through our sales process will increase the amount of customers acquired and lower our customer acquisition cost.
Providing a Great Quality Service
Good business is providing a great product. This becomes even more relevant in the service industry, were issues can be foreseen.
We make sure our customers are wowed every clean. This is easier said than done. The most difficult part of providing a great service is to make sure every service is exactly the same.
It’s actually impossible, there are too many variables that are out of our control to be able to promise a universal service. However we vet all our teams to make sure their quality is as good as possible, every time.
As a result of all the aforementioned points, Maidforyou.com.au has continued to grow. Our customer acquisition cost has dropped from $150 to about $1.75 and our marketing budget has dropped to basically $0. This can be attributed to providing a quality service and excellent customer service which leads to obtaining more customer’s through word of mouth. All this naturally increases our organic SEO which is the key to a profitable business.
Follow me and on this journey we’ll learn how to improve your service based business, decrease costs, increase customer retention and get the most out of your current customers.