In part 7 we talked about how we can boost your profits using the power of geometric growth. Here we are going to talk about the hidden reason why your existing customers can make it easier to grow and boost profits.
It’s how you rapidly boost your top and bottom line using only your ‘existing customer assets.’
The next great growth source for your business is actually subtly hidden. It’s customer retention. Yes – it’s overlooked because it isn’t paid attention to and so it isn’t measured.
Let’s go back to Zac’s stomach and the Thai restaurant from part 7 {link to part 7} again:
There are other Thai restaurants that are within driving distance of my house – they are direct competitors, then I have maybe 50 places I can buy dinner at within 20 minutes from my house. They are all competing with that Thai restaurant for my money when I decide to eat out.
I am fairly loyal when I have reason to be. If I decide I want Thai food I will go to them. However, if I decide that I should try someone else and they are ‘better’ I will switch to them and they will get my $840 per year.
So let’s say my average stint as a loyal customer is two years, and that is fairly average for their customers – that means that for each additional year they can keep me that is an extra $840 in their pockets.
Got it? Okay good. Just if they retain me an extra year I go from being worth 1680 (840 X 2) to 2520 ($840 X 3) and at year 4 I am now worth $3360 to them ($840 X 4). Doubled my life time – double the revenue.
We don’t necessarily see this in our business unless we are A grade tracking ninjas. But it’s there and it can be tracked over the years. The easiest way to track it is what percentage of your list has become inactive over the last 12 months?
Just keeping a customer purchasing at their current levels for longer is reason enough to investing in your customer relationships – so they are iron clad. Buyer Psychologist Dr Glenn Livingstone has said on more than one occasion “second and subsequent purchases from your customers are driven primarily by whether or not the buyer LIKES you.”
Yep. Loyalty is about being liked. Not necessarily having the best or the cheapest.
So while sounds airy-fairy, building relationships and rapport with your customers does tangibly turn into dollars. Trust me, that is why Dan Kennedy works so damn hard to be positioned as the NO BS guy and he inserts a whole lot of salient facts about his life into all of his newsletters, books and products. And as he says – “we can compare tax returns if you want to dispute that it works,” and his stories about customers who have been with him for 20+ years and spent 6 figures with him in that time.
In the next email I’m going to talk about how retention and customer acquisition together can supercharge your growth.
For the first time ever, we are revealing our step by step blue print to build an ironclad bond with your customers, so that keep purchasing from you for longer, they buy more of your services from you, they buy in larger quantities and take your other products and services that you might offer (if you don’t have any there is nothing stopping you from finding some).
And finally getting them to refer without you being seen as pushy!