How to Drive Revenue with Memberships
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Is it worth the time and manpower required to sell memberships (service agreements)?
Absolutely, says Jaime DiDomenico, president of Cool Today, a 50-plus-year-old, multi-trade company based in Sarasota, Fla. DiDomenico built Cool Today into a $23 million business with a bottom line bolstered by 17,000 memberships (that’s not a typo). Over the years, and across the trades, he says memberships have accounted for 20 to 40 percent of total revenue.
How? By delivering real value to customers through various membership programs.
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Here are the key takeaways from DiDomenico’s presentation on a recent ServiceTitan webinar hosted by Jackie Aubel:
1. Don’t believe the myths.
DiDomenico mentioned all the excuses he’s heard regarding the difficulty of selling memberships, including:
They’re hard to sell.
They only work as a discount.
They are not worth the time.
It’s easier to sell large ticket items.
They’re hard to manage.
You can’t get people to renew.
In each case, not true, he says. In 2009, after joining Nexstar, he boosted memberships from 5,000 to the 17,000-plus he has today. Revenue increases have been the result. His next goal: 20,000 memberships.
2. Know the difference between “transactional” and “relational” customers.
Plain and simple, relational customers—ones who purchase memberships—are worth more to your bottom line, DiDomenico says.
“Ask your techs if they know the difference between transactional and relational customers,” he says. “If they’re not sure, ask them if it’s tougher to sell a first-time customer or somebody who knows you and trusts you.”
At Cool Today, he says the average ticket for a transactional customer is $687. The average ticket at his company for a relational customer is $1,538.
At one point, DiDomenico did an accounting survey and found that customers who bought and renewed a membership at least two times accounted for nearly triple the revenue of first-time customers.
3. Customer retention benefits are measurable.
Unfortunately, DiDomenico says, most general managers are more focused on the bottom line than they are on the benefits of creating loyal customer base, such as:
They drive referrals. Loyal customers who have become members talk your company up to their friends and family.
Memberships can lower marketing costs. On one hand, those referrals help you market. In addition, if you’ve got customers coming back again and again, you don’t have to spend money on direct marketing campaigns to find new customers.
Pandemic protection. “COVID hit everybody hard,” DiDomenico says. “Customers didn’t want people coming in their house. But with our loyal customers, they didn’t cancel appointments. They trusted us, and they shifted appointments to later.”
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4. Sell memberships by creating value.
The value that comes from memberships is highly marketable, DiDomenico says. It’s important enough to dedicate pages on your website to it, he says. The primary value points are price, time and peace of mind.
Price. Customers are quick to look for ways to save money. An example: Cool Today gives members free minor plumbing repairs (such as a faulty flapper). “Find ways to translate a low-cost item into a high-value selling point to a customer,” DiDomenico says.
Time. Everybody’s time is valuable—yours and your customers. Cool Time offers members a four-hour response time. If that response time isn’t met a cash discount is given.
Peace of mind. “If you’ve got preventative maintenance, you know that if it gets hot and the air conditioning breaks down, we’ll be there to fix it,” he says. “People are willing to pay for peace of mind.”
5. Tips for promoting successful membership programs.
It takes internal and external efforts to create a successful membership program, DiDomenico says. “Showing your appreciation leads to loyalty that leads to lifelong customers,” he says. “And showing that appreciation to your employees also motivates them.”
Send thank-you notes to new and repeating members. Just a few words can go a long way toward a renewal.
Invite members to events. It’s a nice and fun gesture that builds the relationship.
Create a VIP package. If you’ve got members who have renewed 10 times, send them a gift package—maybe a t-shirt or a restaurant gift card.
Compensation. CSRs and techs should both be selling memberships. And both should be rewarded financially—with bonuses and commissions.
Extra incentives. Along with bonuses or commissions, look for ways to add perks for employees who go the extra step to sell memberships. For example, give standouts the opportunity to go out on preferred calls.
Recognition. Hold an internal event and publicly recognize top sellers. Everyone wants to look good in their coworkers’ eyes.
6. Do it now.
DiDomenico says business owners should strategically plan to create a membership base, and do year-to-year projects based on 15 to 30 percent conversions.
“It’s worth creating an internal team to focus on this,” he says. “Want to know my only regret regarding memberships? I wish I had gotten my head out of my you-know-what earlier on and started sooner on this.”
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ServiceTitan is a comprehensive software solution built specifically to help service companies streamline their operations, boost revenue, and substantially elevate the trajectory of their business. Our comprehensive, cloud-based platform is used by thousands of electrical, HVAC, plumbing, garage door, and chimney sweep shops across the country—and has increased their revenue by an average of 25% in just their first year with us.