TruGreen is the largest lawn care provider in the United States and Canada. It’s four times larger than its nearest competitor and is the official lawn care provider for the PGA Tour and for Minor League Baseball. Despite its dominance in the market, three years ago it faced retention rates much lower than its competitors.
While the industry average neared 80% and TruGreen’s own franchisees hovered around 85%, TruGreen’s retention rate remained stuck around 70%.
When Ben Dunham, TruGreen’s CFO, saw the company’s flagging retention rate and that TruGreen had penetrated just 3% of U.S. households, he saw room for growth and customer experience as the answer.
“It highlighted the way to drive that higher penetration within the business was really driving customer experience and therefore customer retention,” Dunham told attendees at the Qualtrics X4 conference in Seattle last week. “For me, and I think for all of you that are here, retention and customer experience, those metrics really drive or tell you how good you are at what you do in your business.”
It’s rare for CFOs to champion customer experience, let alone sing its praises during a keynote session to thousands of experience practitioners.
“The reason it doesn’t happen often is because CX is often measured in CX-specific metrics that don’t necessarily have an obvious and direct connection to the top or bottom line,” Forrester Principal Analyst Judy Weader told CX Dive in an email.
But Dunham saw the numbers add up. The company set a goal to reach 80% retention within five years.
“And one thing that we always knew at TruGreen was that this made financial sense,” Dunham said. “We had a rule of thumb ... one point of customer retention would drive $10 million in revenue and about $5 million in EBITDA. What we didn't realize was that was only in year one. That number continues to grow and compound over time.”
To galvanize the organization behind its 80% retention goal, Dunham looked further out. To get to 80% over a five-year period, TruGreen would see 40% improvement in customer growth, $500 billion in revenue, and a $175 million benefit increase in EBITDA, Dunham said.
“It really was a game changer for our business because we started saying that it wasn't just $10 million of revenue that this was going to drive, but actually $70 million per point of retention improvement,” he said.
How customer listening and retention can turn into profitable growth
Advocacy and satisfaction metrics don’t always correlate to retention or relationship growth, but Weader encourages CX practitioners to get into the habit of talking in terms of business outcomes — not just CX metrics.
“If you’re a CX practitioner who’s done the math and can show that a 1-point improvement in a CX-specific metric correlates to $X of spend or Y% of account growth or Z% of retention, your CFO will be more willing to invest in the initiatives and activities that will boost that metric,” Weader said. “The CFO can be a natural ally of the CX practitioner if they’re both talking in the language of business outcomes.”
With the company behind the goal, TruGreen partnered with Qualtrics to roll out a customer experience platform.
Prior to using Qualtrics, TruGreen relied on customer service representatives to try to stop customers from canceling and record their reason for canceling. That old methodology pointed to pricing as the biggest issue — making up 29% of cancellations.
But after using Qualtrics AI to listen to the calls, TruGreen discovered the root cause of the problem wasn’t price. In fact, price made up only 6% of cancellations.
The real issues were “service quality and being able to do a better job at having results in the long run,” Dunham said. “And so when you think about that, that's a huge unlock because if you're focusing on the wrong things, you're clearly not going to get the results you're looking for.”
TruGreen was also able to get more customer feedback. It had previously only sent out NPS surveys once in a while to avoid survey fatigue. But it began sending smaller surveys, sometimes just featuring a thumbs up, thumbs down, with a question asking: "How was your service today?"
The business went from receiving only about 500,000 responses from customers to about 500 million.
“That was really important because it really enabled us to be much more proactive,” Dunham said.
Following the belief that “clients will never love a company until employees love it first,” the business also rolled out an employee experience program.
Three years later, employee engagement has improved by 20 points, from 53% to 73%. The engagement has turned into keeping frontline employees, with the retention of frontline employees now at 40%.
“If our employees love TruGreen more, you'd imagine our customers start to love TruGreen more because they're the ones that are actually providing that experience for the customers,” Dunham said. “And so our NPS score, which is the net promoter score, has gone from 4 to 34.”
Anything above 20 is good, but TruGreen is chasing after 50, a sign of being best in class, Dunham said.
On the client retention front, TruGreen has bumped retention up to 73% and is still striving for 80%.
Though it has yet to hit its goal, the business has already driven about $280 million of revenue growth through its retention efforts, according to Dunham.
