Want to Keep Your Customers? Sign Them Up!

Want to Keep Your Customers? Sign Them Up!

Service Contracts Offer Low Cost Method to Retain Clients

With loyalty programs and other customer retention initiatives popping up everywhere these days, many small business owners ask themselves the question “What should I be doing to retain my clients?” Since you don’t have the resources to launch a brand new loyalty program for your business, you may not be able to compete toe-to-toe with the expensive loyalty programs offered by large companies to draw customers in and keep them, such as “AirMiles” programs. However, there is one thing you can do…sign your customers up for life today using Service Contracts.

Service contracts are essentially an agreement between your business and your client that outlines the services you will provide to them in exchange for a stated “membership” or “service” fee. You can see this theory in practice at some local warehouse clubs, where a yearly membership fee entitles you to buy items at wholesale prices.

Service Contracts at Work

Here’s an example of how a service contract can benefit a small business. A friend of mine runs a small plumbing business, competing against a national plumbing chain. Every time he visits a customer, he brings a contract with him. For a small fee, the customer can sign up for a list of annual maintenance services offered at no additional charge. In other words the client pays once and then receives yearly plumbing maintenance. Many customers sign up for the deal because my friend offers them a discount on their existing repair job on the spot to sign up. Often the discount is equal to the cost of the membership, hence the services in the contract are essentially free.

Getting “The Call”

Where’s the business benefit? Simple…”the call”. Whenever someone has a plumbing problem, where is the first place they go? It’s usually the Yellow Pages, to look up a plumber who can come out to fix the problem. With my friend’s service contract in place, who do think “the call” goes to now? I’ll give you a hint…it’s not the major plumbing chain with the big Yellow Pages ad. By having such a contract in place, you become the “first call” for a client, a critical piece in the client retention puzzle.

The annual services are not a burden for the business. The routine maintenance takes very little time and is well received by customers. Often, a problem may be located during an annual inspection that requires repair, hence my friend generates business by locating the problem and bringing it to the homeowners attention. Whether it’s legal services, computer repair, web hosting, or web design or any other type of small business, you could come up with some kind of annual service to offer your clients as part of a service contract.

Think about the applications for your business. Imagine if you could make yourself the first call a potential customer makes then they require a service or product like yours. Imagine if you got the call, and not your competitors. Small businesses spend so much time and money on advertising and other promotional efforts to just to be that company that a client calls first. Using a service contract, you might be able to get that call free.

The next time you are frustrated by a loyalty program that you think you can’t match, look to yearly service contracts to provide a weapon against your larger competitors.