In the business owners guide to getting more repeat business and referrals, Ben and I talk about churn:
The idea that so many of your customers are going to turn over in a given year.
And that if you want to keep your business at its existing size then you have to be adding customers in order to replace the ones that go.
Then if you want to grow you can add customers after you’ve replaced the ones you’ve lost.
Not too hard now is it?
We seem willing to take a lot of things for granted. One of them is customer defections.
We just accept them. We never try and get them back when we lose them. Or should I say go out and get them back?
We don’t try and keep our customers around for longer. Which is the reverse side of churn.
The longer you can keep a customer the lower your churn rate. I was talking with a client recently, she has a capacity of about 200 customers in her business.
Her clients typically stay for about two years. They should be staying closer to 5 and if she gets them for five there is a good chance to turn them into lifers.
This means at the moment that she needs to be adding close to 100 customers per year in order to keep her business full.
Now if she was able to keep those customers for 5 years that would mean that she would only need to add 40 customers a year (200÷5) in order to maintain her business at capacity. That is much easier to do compared with adding 100 customers a year.
Want to know the easiest time to raise your prices?
It’s when supply exceeds demand. So if your business is full then it is really simple, you can raise your prices and there is none of this begging or making excuses stuff.
“Our suppliers put their prices up…”“Utilities and fuel have gone up…” “Blah blah blah”
Your customers don’t really care about that sort of stuff. That is pitiful excuse making. They buy because the value exceeds the price they pay. And when they know there is someone standing in line behind them with cash in hand ready to take their place, they are going to pay up and make sure they get their money’s worth – so you get a better client to boot.
Nothing is more powerful than having that line of customers begging to buy from you.
Sadly, most people try and turn the new customer wheel. The easiest way to go about creating the line of customers is making sure that once you’ve gotten a customer they don’t leave.