Not All Customers Are Equal

Arran Saunders, SEO Copywriter at Gas Engineer Software, discusses the merits of turning to existing customers for repeat business rather than endlessly finding new ones.

Countless heating and plumbing companies find themselves busy with work, yet their bottom line says the same every year. In times like these, rising costs are a real concern. You’ve probably thought about how you can boost profits and take home more money – all without work hours continuing to eat into your evenings and weekends.

One of the most impactful ways of doing this is to look inward at your customer base.

We all know how important new customers are, but not everyone stops to consider how costly they can be. Finding them is difficult enough, but advertising your services, taking their details, and the risk of having to chase up payments all mean hours of unpaid work. With all this on their plates, many business owners don’t have enough time to examine their accounts to understand the true value of their existing customers.

For a clearer picture, we decided to look at all the jobs invoiced through our software during the first half of 2023. On average, from the over 5,000 heating and plumbing companies using our software:

• 75% of jobs are billed to existing customers
• 25% are for new customers. Yes – jobs for new customers are often bigger, but the total revenue is still less than that for existing customers:
• £69.6 million came from existing customers
• £47.2 million from new customers

This should give an idea of how important existing customers are. Even if your business is doing far more work for new customers, you may wish to consider refocusing your efforts. This could help you save time and make even more money.

Weighing up the benefits

The delicate balance between new and existing customers will vary from business to business. There are pros and cons to each side, and factors such as location, business goals, and more will influence the perfect ratio.

While we shouldn’t forget that new customers are, of course, valuable, existing customers offer benefits that can’t be ignored. For example, completing jobs for existing customers is far more efficient. You already have a record of their information, have previous job histories, and know whether they are reliable customers.

With the search for new business no longer taking up your time, instead you can aim to carve out some time to start improving your service quality. This will help you impress and keep even more of your customers.

Looking at revenue, one of our biggest and most successful heating companies completes a staggering 95% of its jobs for existing customers.

This could suggest that many heating and plumbing companies are not prioritising their existing customers enough. We would even go as far as to say that you should strive to book at least 90% of your jobs for returning customers before focusing on finding new ones (excluding, of course, very young businesses who do not yet have a built-up customer base).

It’s important to emphasise this approach doesn’t always work for everyone, however, and you should always do what you think is best for your business.

For example, another company completes very close to the average rate of 75% for existing customers, but has recently been on a new customer drive and is spending up to £5,000 p/m on advertising.

This company has clearly decided it needs to find more customers to expand its business. The investment is a risk, but since many of its customers are coming back for new jobs, this is a justifiable decision that could pay off in the future.

Closing thoughts

From the above, it’s evident that a clear focus on customers you already know is beneficial – not just for the short-term profits, but the long-term success it sets up. Only when a significant majority of your jobs are booked for existing customers is it beneficial to start finding new ones.

At the end of the day, a company that mainly books one-off jobs gets far less out of a new customer than one that encourages repeat business year after year.