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Repeat business is critical for residential service contractors who want to grow their business. Membership plans, maintenance agreements and other forms of recurring revenue form one of the foundations for building value in the industry. Along with technology and financials, recurring revenue is one of the most meaningful metrics for valuation – and for good reason.
Repeat business and recurring revenue deliver profound benefits to any company. With repeat business, contractors can generate predictable, year-round revenue and avoid the seasonal peaks and valleys that have traditionally challenged the industry. They can better manage their workforce and do more effective capital and long-range planning.
Repeat business is also an effective way for contractors to earn more of their customers’ wallet. Techs who visit a home for a tune-up or service call can quickly and efficiently inform the customer of additional services that are available. Companies that provide more than one service have even more opportunities for added sales.
Over the long run, lasting customer relationships help build up valuable experience and knowledge that can be leveraged in multiple ways. By consistently serving customers and their equipment over the course of several years, contractors will have access to deep intelligence and insights on all the critical systems in a home. That knowledge can guide future interactions with that customer as well as providing technical insights on their equipment.
Here are three tips for contractors who want to maximize recurring revenue and leverage it for growth:
Continue to serve the customer: There can be a false sense of security in a recurring relationship. It’s easy to assume that once you’ve captured contact information and other data, a customer is permanently locked in. They’re getting your marketing emails and you’re scheduling maintenance appointments, so what is there to worry about?
But even if they’re paying the annual maintenance agreement fee, if it’s 102 degrees outside and they can’t schedule HVAC service, they’re going to call another contractor. Treat each customer interaction as if it’s the only impression you’ll have a chance to make.
Recruit and repeat: As your customer base grows, it’s crucial to keep recruiting, onboarding and ramping top priorities. The chronic labor shortage in our industry will be a persistent challenge for the foreseeable future. For a business determined to grow, finding a solution is critical. Employment disruption is one of the major obstacles employers face and an impediment to customer service and growth.
On the other hand, continuity on your team ensures the kind of service that customers return for. A growing company with resources to pay competitive salaries and provide attractive benefits can transform a company into an employer of choice, driving top talent, great culture and delivering results – and repeat business.
Training: In order to deliver the high-quality service and experience that keeps customers coming back, make sure your entire team is continually trained in best practices, new products and new technology.
When we talk about training, we don’t mean the kind where everybody’s gathered in the same room once a month eating free donuts. Effective new technology solutions help serve repeatable and predictable training in the field when technicians need it. It’s not uncommon in our industry for techs to spend 30 minutes or more a day searching online for documents and how-to videos. Automation and artificial intelligence empower them to immediately access the information they need.
The capacity for ongoing on-the-job learning ensures productivity and engagement on the part of technicians. In turn, the elevated sense of purpose and satisfaction they experience enhances customer interactions, creating a loop of positive feedback and results.
Recurring revenue and repeat business are essential goals for contractors with an eye on growth. But it takes a holistic strategic perspective to create the conditions that bring customers back. Focus too closely on recurring revenue and you may lose sight of everything that drives it. When your company is firing on all cylinders, customers see it and feel it. They get the results they need. That’s what brings them back.
Strickland Tudor is executive vice president of sales for XOi, a leading provider of technician-first smart technology for commercial and residential field service companies.