Customer Service - the most valuable currency

Customer care is our top priority at Cinch Home Services. These words are printed right at the top of the Contact Us page for the Cinch Home Services website. I looked, but could not find anything else that referred to customer service or how Cinch thinks about its customers.

Let’s explore customer service principles:

1. Customer retention is far less expensive than customer acquisition.

Cinch Home Services has 1 million customers according to their website with a half billion in annual revenue according to their 2020 financial statements. 2/3 of their annual revenue is generated from home warranty renewals. This is significant as on average it costs 5 times more to acquire a new customer than it does to retain an existing customer. Cinch Home Services and the home warranty industry in general acquire new customers through new home ownership sales and strategic partnerships with realtors.

2. Existing customers are more likely to buy from you than new customers.

Again, this holds true for Cinch. 2/3 of their annual ½ Billion revenue is generated from contract renewals. Which is why Cinch ensures its customer service workforce personalizes annual renewal requests with a phone call. Although the workforce could be tasked with cold-calling new homeowners to solicit new contracts, this would have a low return on investment as the probability of selling to a new customer is 5-20 percent versus 60-70 percent for an existing customer.

3. Great customer service results in a reduction of overall problems.

This is pretty self-explanatory but Cinch Home Services could use some work in this regard. Although Cinch maintains an A- score on Better Business Bureau, its overall rating from complaints is only 1 ½ stars. This indicates a major concern for Cinch.

4. Excellent customer service improves public persona and strengthens your brand.

This is critical for any company because when customers feel like you do right by them then they are more likely to sing your praises and refer you to new customers without you having to do a thing. Again, referring back to the Better Business Bureau, I don’t really see any of the folks there referring their friends to Cinch.

5. You're more likely to retain your customers for longer.

Cinch Home Services has been around for 4 decades. So, at some point they were doing something right. In the home warranty industry, retaining customers is crucial. Home owners typically have their homes for decades so you are creating lifelong customers and you have the ability to service the original home owners and eventually their descendants.

6. Word-of-mouth advertising is the best kind of advertising that money can't buy.

As previously stated, a business will have to spend 5 times as much to acquire a new customer versus retain an existing customer. Additionally, the return on investment for the cost of a new customer is considerably lower than to retain an existing one. Also, you can’t buy a good referral, you have to earn it. But once earned, it is an extremely valuable currency to the company’s longevity.

7. It improves employee turnover in your business.

When employees see how their employers treat their customers it makes them proud to work there and it helps to reduce employee turnover which is extremely costly to operations. When reviewing employee reviews on www.indeed.com one can see that Cinch is not an ideal place to work. Numerous disgruntled employees speak about how Cinch abuses their customers and speak ill about the company. This sort of tone emanating from employees is not indicative of a great work environment. Cinch has over 500 employees and reading the reviews one can guess that Cinch probably has a problem with employee turnover.

8. Great customer service opens doors for new partnerships and other opportunities.

Cinch has a network of technicians and other strategic partners to run its operations. However, when technicians are not paid their worth or are not properly incentivized to treat customers well that continues to degrade the company’s worth in the marketplace.

9. It conveys strong moral values and beliefs in the company's mission.

This is extremely important for any company. A company should convey its moral center in a clear, succinct manner and embody those values through its Executive leadership team so everyone can visually see leadership walking the walk and talking the talk.

Cinch Home Services does not have a mission statement.

10. It elongates the life of any business.

Only 4 out of 100 businesses last through until the 10-year mark. Cinch Home Services has survived for over 40, so it has been doing something right. But the way things are looking for the company and how it treats its customers, it may not make it to 50.

In summary, good customer service is the secret Mumbo Sauce for any business. Without it, you are destined to fail. So Cinch should focus on treating people…like well people.