A new client might take $500 – $5,000 worth of money and a lot of time to win them as a client for the first time. That might seem like a lot of money until you factor how long the client might pay you per year and how long they stay with you for.
If a client pays you $7,500 per year and you keep them for 5 years, then they’re worth approximately $50,000. If the gross profit was 70% ($35,000) and it cost you $3,500 to win them then that’s a 1,000% return on your money. Pretty good in anyone’s language.
What if you could keep them for 20 years and a lifetime value (LTV) of $140,000. Even better you say. If you’re focused on a 20-year LTV, then your retention is 95% per year. You only lose 5 out of every 100 clients every year.
To retain 95% of your clients per year takes some work. It just doesn’t happen without doing anything. I’d like to think that to retain a very high number of clients takes PSV…
- Product(s) – a broad range of amazing products / services that the client uses often
- Service – an amazing proactive culture of client service
- Value – your product creates demonstrable value for the client
Having a great product is not enough. You can have a great product, great service yet the product doesn’t really do anything for the client. You won’t keep them. You might have amazing service and your product does produce value however using the product is difficult, cumbersome and just hard to use. You won’t keep them. Your product might be super easy to use, it produces results however the service is reactive, cold and difficult. You won’t keep them.
You need all 3 working in sync with each other. The more you have them working together the ‘stickier’ the solution and the more you’ll retain. However, it’s not just about retention.
It’s about referrals and ‘upsell’ as well. If your clients are thrilled with what you do for them then they’ll buy the next thing and they’ll refer new people to you.
Your product might be software, financial advice, education, professional services, hardware or consumer goods. In this day and age there is no excuse for inferior products. I don’t want to focus on product. You can sort out your product and what it does.
What I’d like to focus on is proactive service. It’s generic and can apply to any industry.
This is a list of activities that can be applied to all clients you want to keep.
- Returning phone calls / texts & emails same day – within hours
- Receiving a gift when signing up for the first time
- On-boarding / implementation within 24 hours of signing
- Training everyone who might be a direct user – continually training until they get it
- Booking telephone appointments and respecting each other’s time
- Systematically calling (pre-booked call is best) every 3-4 months
- Visiting with no agenda (other than catch up and see how they’re going) 1-2 times per year
- Sending birthday / anniversary cards
- Sending success tips, news, articles, videos and ‘how to’ content
- Constant messaging of new features and benefits added to the product
- Have multiple people known to the client who work with the client
- Inviting to seminars, conferences and user group sessions
- Creating a community so they can interact with other clients
- Collating financial data and creating an annual ‘benchmark’ report as to how they compare to others
- Performing an annual performance review on the client.
This list has a lot of time to it but very little cost. Ultimately you want to ‘get to know’ your client, get them to like you and get them to trust you. In other words, you want to build a relationship with them.
Many people say they have ‘great relationships’ with their clients. Building relationships take time and effort. You don’t build very good relationships by seeing (or speaking with) a client once or twice a year.
Imagine if you only saw or spoke to your life partner once or twice a year. What would the relationship be like? Some would say better!
When you invest the time you build the relationship, you get higher retention, more referrals and they might just buy the next thing you want to sell.
To get the payoff you have to invest the time. It won’t happen reactively.