Most businesses are not great at retention.
And man… it’s heartbreaking.
You work your ass off to get the word out about your business, nervously “putting yourself out there.” You try to be available as often as possible to follow-up immediately on leads. You finally convince a fellow human to trust you and make a purchase!
You enthusiastically deliver your service offering. And they are very, very pleased. And they are getting great results! In fact, they start sending their friends to you. The friends are “pre-sold” and purchase your services, sight unseen.
Your work relationship moves towards a bonafide friendship. You talk about their dating life over drinks, you debate the next binge-worthy show on Netflix via text message, and you even develop your own inside jokes.
^^^ …and then you feel like this. ^^^
If you’re like most small business owners, every single client matters to you.
Now, you understand that sometimes people move. You understand that sometimes their financial situation changes. Hell, you understand that sometimes people just need a change.
But it still stings like hell when you see them posting on Facebook about having such a great time with their “shiny new” service provider.
(SIDE NOTE: Howard Schultz, founder of Starbucks, wrote the book Onward. In the book, he talks about being gripped with remorse if he ever sees anyone drinking a cup of coffee that’s not Starbucks. I find this both TOTALLY crazytown… and unsettlingly familiar.)
And with all due respect to your feelings, the business stakes are actually even more concrete.
Consider these facts:
- It costs 6-7 times more to acquire a new customer than retain an existing one. – Bain & Co.
- The probability of selling an existing customer is 60-70%. The probability of selling to a new prospect is 5-20% – Marketing Metrics
- On average, loyal customers are worth up to 10 times as much as their first purchase. – White House Office of Consumer Affairs
A 5% increase in retention can improve a company’s profitability by 75% – Bain & Co.
So what went wrong?
And what can you do to improve retention?
Let’s start by conceding… retention is rarely discussed because it’s a challenging topic.
First of all, it’s difficult to determine what’s actually affecting your client’s decision to stick around. Maybe this is why you don’t see many business “gooroos” talking about retention. Logically, this is the holy grail. But your retention is based on many factors, and there are no silver bullets here.
Secondly, It’s also not as flashy or sexy as marketing and sales. Unlike a tweak to your FB ad headline, the strategies you pursue don’t provide immediate feedback. It can be tricky to know where to start, because retention is a lagging indicator.
And finally, there will always be times where your client’s decision to stop using your services truly has nothing to do with you. Sometimes people genuinely love you, but life happens, things change, and they need something new.
But rest assured… there are things you can do to improve retention.
I’m going to lay out three ways to keep the romance alive with your clients.. This will make your marketing cheaper, which means your business will be more profitable. You’ll be less stressed about “filling the bucket” and will spend way less time with the far more labor-intensive onboarding of new clients.
And most importantly, you’ll receive one of the sweetest gifts that business can offer. You’ll build meaningful long term relationships with your clients and customers by taking world-class care of them.
1) Recognize and reward your most loyal customers.
The first pillar of improving retention is to find ways to focus on the clients you already have.
Many businesses become hyperfocused on lead generation and sales. And the reality is, you do have to make sure you’re always paying some attention to your marketing. Your retention is never going to be 100%, and you need to ensure a steady stream of prospects.
However, it’s far too easy to do this at the expense of your existing clients. And that’s a big mistake. Remember, it’s costs 6-7 times more to find a new client than to keep an existing one.
There are all sorts of ways to recognize and reward your most loyal customers. But you’ll want create some systems in your business that consistently recognize your long term clients. Loving on your clients is way too important to do randomly.
You want help creating systems? Great! Enjoy this primer HERE.
You can recognize your clients for:
- Length of time working with you
- Total number of purchases
- Total lifetime investment
- Anniversary of first purchase
For instance, at Mark Fisher Fitness, we have special tank tops we give out to reward certain milestone numbers of classes or training sessions. We’ve also just launched a new loyalty program called Founders Club. It consists of three different tiers to thank our most loyal and dedicated Ninjas with all sorts of perks, from free services, to special booking privileges, to exclusive events.
Yes. Founders Club IS as awesome as it sounds and we’re very proud of it. Email me at email@example.com and I’ll happily send you a link to look over so you can model it.
In addition to honoring their time and financial investment in your business, let’s always remember the best thing you can do is “see them as a human.”
By all means, you can and should create systems to honor them for the above behaviors. But don’t underestimate the power of celebrating their birthday or sending handwritten cards to commemorate life events.
You can make this a system by simply committing to doing this on a regular basis. In most cases, somewhere between once a month to once a week will be a sweet spot. Yes, it’s a time investment. But since most businesses aren’t willing to do it, all the better. You’ll be demonstrating your client-centered values in action.
If you want great retention, you’re not looking for a “transactional” relationship. You want one that’s truly personal and based on seeing them as a unique individual.
Want to learn how to make your client relationships less “business-y” and more “human-y”? More thoughts in this article HERE.
2) Gather and respond effectively (and consistently!) to feedback
The second way to improve your retention is to maintain a robust client feedback loop at all times.
This starts with asking for feedback. ALWAYS. You won’t know what your clients are thinking about your services if you don’t ask.
Importantly, getting constant feedback isn’t just about finding out where you can improve your services. You also need to hear what they specifically love about you. This way you can keep doing it, and if appropriate, do more of what’s working.
Based on your business, there are many ways to gather feedback. The most common are simply asking clients in the moment, online surveys, or good ol’ suggestion boxes.
Your next step is to thoughtfully consider the feedback. Once you’ve gotten the information, it’s important to create some sort of system to aggregate the input. This could be as simple as a master spreadsheet you and your team reference. Ideally, you want enough feedback to separate trends from one-off comments.
As I’m fond of saying…
Feedback is just data.
Say it with me aloud this time!
Feedback is just data.
While you want to take all feedback seriously, you don’t want to overreact to every single data point you collect. Ultimately, you still need to analyze the feedback in the context of the big picture of your business. This can be hard to do when feedback feels personal. But you’ll need to consider the broader context of your business when deciding what action to take (or not take).
From there, you’ll do one of two things:
- Make a change to your services.
- Have the constitution to go your own way. Feedback isn’t always reflective of what will actually serve the entire business.
Respond to Feedback
Now here’s the final step many people miss: always, always, ALWAYS close the loop.
Feedback is a gift. Your clients are under no obligation to take the time to think critically about your business. It’s crucial that any time they give you their perspective, you both genuinely thank them AND follow-up to let them know the outcome whenever possible.
This lets the clients know you genuinely care about their perspective.
If you’re looking for great retention, feedback is a big piece. When you sincerely ask for someone’s perspective, really listen to what they say, and respond appropriately, you’re showing you care about them.
Do you ever get bummed about negative feedback? Yeah. I did for a long time too. Find ways to process it effectively HERE.
3) Never stop improving your core service offerings
Finally, we come to the foundation of improved retention:
Kaizen is a Japanese word that means “ceaseless and never-ending improvement.”
Never rest on your laurels. Never be satisfied with your business’s offering. Always be looking to make your services better. If you have a brick and mortar location, constantly be reinvesting in facility improvements. Relentlessly look for any elements of friction in the user experience to smooth out.
By all means, you’ll need to create new products and services to sell. Even your most die-hard clients will benefit from engaging with your business in a new and totally novel way. And sometimes the best way to address a challenge for your clients is indeed with an entirely new program or solution.
But don’t forget, your core clients are the ones using your existing services. And nothing in the universe successfully stays the same. If you’re not looking to improve, odds are you’re getting worse.
Here are a few ways to make sure you’re constantly raising the bar:
- See Point 2
If you’re effectively compiling feedback, you should be getting a pretty steady stream of suggestions from your clients. This means you’ll always have ideas to consider to improve your services.
- Train Your Team on Systems
And never stop. “Amateurs practice till they get it right. Pros practice until they can’t get it wrong.” Make sure you (and your team) drill and drill and drill the basics. This way you’re able to consistently deliver your current service standards. And whenever possible, use checklists to make sure everyone is on the same page and no steps ever get missed.
- Create a Vision of the Ideal User Experience
By creating your dream version of how your clients interact with your business, you may come up will all sorts of great ideas.
An example of this is a brilliant technique used by Airbnb. While the hospitality industry usually ranks service on a 5 star scale, Airbnb hired a storyboarder to work with their staff and brainstorm all the way up to a “11 star experience.” This can be adapted by any service industry business looking to take their offerings to the next level.
- Study Your Industry Deeply AND Study “Adjacent” Industries
Always be looking to benchmark against the best of the best in your field, but don’t forget to look for inspiration outside your industry. It’s no secret that MFF has always looked to hotels (and theater!) for examples of outside-the-box service ideas to bring to fitness. By taking ideas from one domain and implementing them in another, you’ll be setting yourself up for novel ideas to take care of your customers.
Creating world class service is a craft. By making every day an opportunity to do a better job, you’ll not only find more joy in your work, but you’ll keep your clients engaged for the long haul. They’ll see you actively working to improve their experience on a consistent basis, and in turn, they’ll be far more likely to stick around.
Retention is a big topic. Frankly, retention is about everything your business does.
But rather than simply burying your head in the sand, you’ll be far better off if you dedicate headspace (and time and money) to the above items. Yes, it will be hard. But if you make it a focus of your business and track results, even small improvements can have massive leverage over time.
And one final thought…
Ultimately, you’ll still lose clients. This is life. There is no such thing as as business that doesn’t lose clients. You can be doing everything right, but for reasons having nothing to do with you, they may simply wake up one day and need a change.
By all means, do everything you can to make your services so valuable that you create lifelong fans. But never lose sight of that none of us are entitled to our clients.
Every day we have an opportunity to recognize our clients, listen to our clients, and see if we can make their lives just a little bit better. And for as long as they give us this gift, it’s our privilege to serve them. And if we do it right, we get to sleep well knowing we’ve made our corner of the universe just a little bit better.
Retention is one of the most important but least discussed elements in all of business. Leave a comment below with any ideas you’ve implemented to improve retention in your business.