The Science Behind Your Real Repeat Rate

The Correct Calculation

A fair number of our clients calculate their repeat rate incorrectly. Part of our training process includes an in-depth look at your marketing efforts. One of the items we focus in is your repeat rate. Here is how ServiceMonster does it: Take the number of customers you have serviced in the last two years (C), then find how many of them used you more than once (R).

(R/C) x 100 = Repeat Rate %

The Incorrect Calculation

Most of our clients will calculate their repeat rate like this: Take the number of customers you serviced this month (c). Then find how many of them used you more than once (r).

(r/c) x 100 = repeat rate %

The main problem here is the length of time sampled. The rate can vary widely depending on how successful or unsuccessful your prospecting efforts are. Additionally, the two year timeline represents your true number of active clients. ServiceMonster research shows that getting a client to return after 2 years (specifically when they used carpet cleaning services) is more expensive than obtaining a new client.

Why you care

There are only 3 ways to increase your revenue:

1. Increase your prices

2. Offer more products and services

3. Service more customers

For most companies, servicing more customers is the quickest and least risky way to increase your revenue. The most successful cleaners have several things in common. In terms of financial stability, ServiceMonster shows us customer retention is the most important aspect of your business. If your repeat rate is under 50%, you are losing more customers than you are keeping and need to make up the loss through additional new sales.

Take this example: Let’s say both Company A and Company B start a cleaning company. They both pull in 20 new customers a month and have an average invoice of $250.00. Company A has a repeat rate of 25% and company B has a repeat rate of 60%.

Company A Company B
New Customers/Month 20 20
Average Invoice $250 $250
Repeat Rate 25% 60%
After 36 Months
Customer Base 640 1,200
Annual New Revenue $60,000 $60,000
Annual Recurring Revenue $20,000 $90,000
Annual Total Revenue $80,000 $150,000

In addition to the increase in base revenue, you will also reduce your expenses. Keeping your name in front of your client is far less expensive than trying to get a new customer. Not to mention that your cross sale potential increases radically if your current clients are aware of ALL the products and services you offer.

How to increase your repeat business

First, it’s time for a change. Rest assured, you will produce the same results if you make the same mistakes. There are many ways to do a better job of staying in front of your customers. Here are the common numbers we see everyday.

Repeat Rate Based on Direct Mail

0% – 15% No customer retention campaigns.
16% – 30% Inconsistent customer retention campaigns such as the occasional seasonal mailer, random newsletters, and random reminders. (2 to 3 mailings each year per customer.)
31% – 50% Consistent generic mailings such as newsletters and/or some basic reminders. (4-12 mailings each year per customer.)
51% – 80% Consistent targeted mailings such as ServiceMonster’s FillMySchedule (FMS). (4 mailings per year per customer.)
Over 80% Repeat rate of over 80% are usually urban legends or the result of an improper calculation. A few of out customers have repeat rates this high as a result of consistent client campaigns from all channels (email, direct mail, and phone) and the correct alignment of the planets.

If you fall into the first two ranges above, you seriously need to reevaluate what you doing for your current clients. If you are in the 30% - 50% range, doing just a little better will have significant results. Sending targeted direct mail pieces on an ongoing basis will improve your repeat rate rapidly. A simple card stating “Dear [First Name], it’s been 9 months since your last cleaning” is all it takes.

The hard part is actually doing it. Gathering the list of clients you serviced between 9 and 10 months ago, performing a mail merge to personalize the messages, and printing on the media are just a few of the problems you need to overcome. Then there’s the stuffing, sealing, stamping, and delivery to the post office.

ServiceMonster can help you with this in two ways. The marketing engine will make list gathering and mail merge simple. Then you can print and mail your reminders with a few clicks. Most of our clients use FillMySchedule and completely automate the process. We can gather the list, print, stuff, stamp, seal, and deliver your cards directly to the post office. Your thank you cards and reminder cards will never be late again. Consistent campaigns for consistent results. Our customers are averaging an 8 to 1 return with the campaigns we automate for them.

One simple way ServiceMonster can increase your repeat rate with just a few clicks.

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