Building customer loyalty for your equipment rental business is a complex but critical process. Because customer experience and loyalty center around how a client feels about your company, it can seem like there’s a lot left up to psychology or luck. It’s also a bit more challenging to calculate ROI on the efforts that go into creating a legion of faithful customers because it’s a long game, and the variables can be confusing to define.
So why should you bother trying to improve customer engagement and retention?
Often it comes down to some common stats that illustrate how valuable long-term customers are:
- The probability of selling to an existing customer is 70-80% vs. 5-20% for a new customer.
- The Pareto Principle: 80% of your revenue comes from 20% of your customer base.
- 93% of consumers are likelier to repeat purchases at companies with excellent customer service. (smallbizgenius)
Some of those stats are more related to direct B2C sales, but the same patterns also apply to B2B rental businesses. Across the board, customer retention is good for business while giving you a huge edge in an already competitive market. And you retain customers by building relationships with them based on trust and value.
So, how do you invest in the customer allegiance?
Here are 5 ways to improve your customer experience and build loyalty for your equipment rental company.
1. Track Customer Lifetime Value
To improve something, you need to be able to measure it so you can set a benchmark and track your progress over time. That means getting clear on some data related to your customers and their rental history with your company.
The Customer Lifetime Value (CLV) metric calculates the monetary value of a customer relationship to your company, specifically how much cash flow that client will bring in throughout their affiliation with you. The better their experience is, the longer they will return for repeat business and the more money they will spend on your products and services.
There are many ways to calculate CLV, from very simple to highly complex. You can go with the basic equation below or include data from other customer related KPIs. At its most basic, CLV is:
Revenue generated by a customer times the number of years they stick with you minus the original cost to acquire them.
CLV = (Customer Revenue * Years) – Acquisition cost
Hypothetically, if it costs you $2,000 to acquire a customer and they bring in $10,000 a year for 10 years, your CLV would be $98,000.
(10,000 * 10) – 2,000 = 98,000
To flip that, if you had a new customer each of those 10 years bringing in $10,000 once, with a $2000 acquisition cost, you would theoretically end up at only $80,000.
(10,000 * 10) – (2,000 * 10) = 80,000
That’s a considerable difference on a small-scale example. The numbers here are smaller and rounded for easy illustration. Also, the impact is almost certainly higher than the 19% revenue difference. Management, administration, coordination, and resources to service 10 customers for less revenue rather than one has considerable bottom line impact.
Retaining customers is valuable, so if you want to build better retention and loyalty, you need to track some relevant stats about your customers. Besides this very simplistic equation, you can factor in many other types of customer data. Research different CLV calculation methods and decide what’s most relevant to you.
If you have a centralized ERP system, like Microsoft Dynamics 365 Business Central for your business, you should be able to pull information about all your customers from there, and create a variety of reports and dashboards in Power BI. If you don’t have an ERP yet, it’ll be a little more work, but you should be able to get some of the data you need from your customer relationship management system (CRM) and some of it from your accounting system.
2. Communicate Consistently
Staying in touch with customers is critical for maintaining relationships. But there’s a balance between too many annoying sales emails or so little contact that your company is forgotten.
Whether you’re currently working with a customer or not, it still pays to be in their inboxes consistently with information that they find interesting or valuable. This sometimes can include a discount or sales message, but it should also be in the form of a soft sell to generate brand awareness and solidify your company’s reputation as their go-to source for information. Here are some ideas to consider moving forward:
- Share industry experience and knowledge
- Share best practices
- Send updates on relevant industry developments, from tech to regulations
- Offer incentives for repeat business or referrals
- Talk about new developments you’re working on related to customer feedback
- Create content that adds value to your relationships
Consistent communication doesn’t have to be overly complex; it’s most important to be genuine and relevant. Customer segmentation in your CRM will help with this and developing drip or nurturing campaigns for different types of customers will also simplify the process.
3. Empower Customers with Self-Service Opportunities
It used to be that a customer could pick up the phone and, in just a few minutes, have an update on their order or end up in an hour-long conversation with a chatty account manager. Besides the generational preferences for avoiding phone calls, this is more challenging now simply due to the volume of business, inventory, and inquiries that companies deal with every day. Then there’s the whole automated phone systems problem that no one enjoys dealing with.
Your customers want to get information on their own terms and time. A customer portal is a great self-service option that engages your customers and builds trust by letting them be part of the process. Giving them access to frequently requested information like price sheets, availability schedules, and order status helps make their life easier and frees up your time to handle bigger issues.
For example, the ODT Rentals app released a Customer Rental Portal this year. With 24/7 availability and access to information at their fingertips, clients can quickly check rental availability, search for equipment options and pricing, look up past invoices, and complete administrative tasks when it’s most convenient for them, without having to call or email and wait for a response.
Although it may seem simple, customer-centric features like this will drastically improve the customer experience.
4. Improve Service Speed
Life and work move at the speed of sound these days, and with that is the ever-increasing need for instant information. Turn around time is critical; whether it’s access to equipment or information, customers need to know ASAP if the item they’re looking for is available when they need it and what the cost will be.
The faster your customers can get quotes, prices, and availability, the better. The more you can deliver this service quickly and smoothly, the more you win trust and the coveted repeat patronage. You can use tools like the popular Visual Rental Availability Calendar in the ODT Rental app to provide customers with up-to-date information on your products immediately. Your team can quickly create bookings without worrying about double-booking equipment in your rental fleet.
5. Listen to and Implement Feedback
Perhaps one of the most important things you can do to increase customer loyalty is to show that you’re genuinely listening to what your customers say by implementing the feedback they give you.
Start tracking feedback from your customers so you can see what issues they’re consistently identifying. Ask for observations, ideas, and suggestions in surveys or in conversations with customers. Using your products regularly, they offer a gold mine of ideas to improve your existing products or even come up with brand new product ideas that would be valuable assets for their work.
Better Customer Retention and Engagement is Better for Your Bottom Line
Finding the best ways to improve customer experience and deliver more value is an investment that your equipment rental business will reap the benefits of indefinitely and will help support your growth. Getting to know your data and numbers, communicating effectively, empowering customers, improving service, and listening to feedback is the foundation for building strong, profitable customer relationships based on trust.
As technology and equipment rental industry experts, Open Door is here to help you improve your customer experience. Reach out to our team to learn more about the customer experience tools that support this profitable endeavor!