Security NetWorkings
You Don’t Miss Your Water Until the Well Runs Dry
CUSTOMER RETENTION
WE ARE SEEING MASSIVE SHIFTS in consumer preferences as technology continues to evolve and deliver services that are cheaper, faster and better than the old technologies that were “new” five years ago. Look at the growth of smartphones, the rejection of landline services and how the increase in internet video streaming is cutting into old school cable and satellite services. Wherever you look, technologies are changing.
In our business, the explosion of DIY video and security systems is taking a big bite out of our monitored customer base. When customers are pounded with DIY product ads across all media forms, there is bound to be a growing erosion of residential and small commercial accounts.
The best customers you have are the ones who have a) been using your services for multiple years; b) pay their bill promptly; and c) aren’t very aggravating to service. These “good” customers are the ones you can’t afford to lose. While new businesses and restaurants come and go, often stiffing their alarm companies in the process, the good customers keep your lights on. But, they are being pushed by big money advertising from well-known companies away from your service onto something else.
I have some opinions and ideas about how we can retain our accounts in this volatile market. I’ve thought about this for years, but the concept really crystallized after a simple phone call to my insurance company.
Like many, the Engebretson household budget has been damaged extensively by the COVID-19 situation. This has caused me to closely examine each and every bill that gets tossed over the transom at the bunker in Bucktown. Can some money be saved here?
I was looking at my auto insurance bill, from the company we have been with for 12 years — think gecko-land. We have never had an accident or claim, and I saw that my insurance bill has increased to more than $2,000 per year for our two cars and drivers. I know I’m old, but two grand is a lot of money to me, so I decided to chat with my insurance carrier to see what could be done.
It took a couple of attempts and about 20 minutes on hold to actually talk to a human about my insurance; during the hold time, I went onto a competitor’s website (think Flo) and typed in the info they wanted. By the time the human from gecko-land spoke to me, I had a quote for the same level of auto insurance from a competitor for half the price I was paying.
The representative from my current carrier said they have special terms and payments for good customers like me (what a surprise!) and promptly slashed my annual auto insurance payment by $1,000, with the same coverage levels.
While I was initially ecstatic over my superior negotiation skills, I soon rethought the process and realized that I had likely been overpaying for my auto insurance for years. And the green team at gecko-land never reached out to me with this offer; I had to threaten to leave them, and then they miraculously chopped my bill.
Think about your “good” longtime customers who have been paying their bills and adding to your bank account for years. What are you doing to make those customers stick with you when they are bombarded with low-cost options?
Nothing irritates me more that seeing an ad for a service that I have been paying for and using for years being offered to new customers at a much lower cost — I pay every month, so where’s my special price?
Here’s an idea for our industry: Identify those customers who are deserving of a special offer from your company as a reward for their loyalty. Then, create a program that will get their attention and make them feel special. Maybe it’s $5-10 a month off of their monitoring bill or one “free” month for every year that they continue to use your services (which would come with a contract extension).
One of my two alarm companies is telling me that they need to change/replace my transmitter due to it being on the 3G cellular system. They said it will only cost a $5 per month upcharge for this replacement. But they might not be weighing the obvious issue — if/when 3G dies, maybe I don’t get the alarm monitored anymore. Rather, I slap in a lick and stick DIY system and tell the alarm company goodbye. In this scenario, they are gambling $60 a year in increased revenue versus $360 a year if I punt their service. Is this $5/month gamble worth the risk? Wouldn’t they be better off replacing the transmitter for “free” if I sign an additional 2-3 year monitoring agreement?
I know your bean counters will scream, but I pose a simple question: In the long run, is it better to retain your good customers at a reduced rate, or lose them completely to the competition and/or the DIY tsunami?
Good customers are just that, and we all need their business to continue. I believe you should offer your best deal/price to existing customers to cement your relationship while you sell new systems to new accounts.
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