With Newsletter Marketing Systems recently purchasing Strive Designs (my graphic design & print business), it has made me look close and hard at the numbers in the business.

Over the past 2 and a half years, Zac and I have been juggling a couple of businesses each, and slowly we have been dedicating more and more time into Newsletter Marketing Systems. During these last 3 years, my turnover for Strive has been pretty stable, I noticed some customer had left, but I wasn’t concerned because my turnover hadn’t decreased much.

I expected the decrease in turnover because 2 years ago I intentionally stopped marketing to stop the flow of new customer for design & print work, I did get the occasional referral, but all in all, I had stopped my growth to focus on Newsletter Marketing Systems.

My gut feeling was that about 15% – 20% of my clients would leave each year and no longer purchase, and I felt that I replaced most of them with new customers… I never checked the numbers, and figured I was earning the same amount year to year, so wasn’t particularly concerned, because I was able to dedicate my time to Newsletter Marketing Systems.

I always looked at the dollars (The P & L’s) rather than the actual number of customers. But the other day I did… And, I’ve gotta say, it was quite a shock when I did the calculations.

As you can see, over the past two years I have lost 30-40% of my clients each year! DOUBLE what my gut feeling was, and I’ve only added about half of them back through referral.

Zac and I like to use the analogy of a leaking bucket to describe customer churn. Your business is the bucket, and the water you put in the bucket is your customers. Unfortunately every business has a few holes in it and some clients leak out, they go to a competitor, move away, are unsatisfied or there is something that stops them from continuing to purchase.

The bigger the holes in your bucket (business), the more water (customers) you need to add.

So what now? What about growth for 2014? I want to grow my print & design customers by 20%, I’m going to start marketing again!

My business has about 100 customers, so 20% growth would be 120 customers by December 2014. Typically, most businesses would think, okay we need to add 20 new customers… But if we go by past churn stats, if I do nothing to combat it, I can expect to lose 30-40 customers over the next 12 months, which means I need to add 50-60 new customers this year to meet my growth goals.

I have 2 choices in 2014 to reach my goal:

1.)    Keep my business as it is and just add more and more customers (60+), knowing that 30-40% of my existing customers will leave.

2.)    Find a way to patch up the leaky bucket, so that I know the new customers I add are going to stay longer and less are going to leave.

Luckily Zac and I know have some solutions to fix the leaks in this bucket. We will be adding all my existing print customers to our monthly customer Newsletter list to build a relationship, deliver value and give them regular reminders that we are here. They will receive our e-zines, we will make follow-up up calls, send greeting cards, reward them with after-purchase gifts and of course give them the best customer service we can deliver.

Hopefully your bucket isn’t leaking too much… Consider though, if you haven’t done the actual calculations, it could be DOUBLE what your gut is telling you!

If you’d like to find out a little more about how customer churn is affecting your business and find out ways that you can better monetize your existing customers call us on 1300 120 106 or visit: www.lifetimecustomers.com.au to register for your free Existing Customer Opportunity Audit.

Dan Kennedy talks about the greatest income explosion comes from when you transition from being a doer of ‘thing’ to a marketer of ‘thing.’

Now, there is a very fine distinction here – income explosion. Income is made and it gets spent. It is transient. And if it is achieved transactionally, high income is not enough to build wealth.

What isn’t transient are the customers that you generate almost as a by-product of creating this income. In your business do you:

Get a customer to make a sale?

Or

Make a sale to get a customer?

If you want repeat business and referrals then you need to be thinking in terms of the latter. Ben and I have laid out the strategies you can use to monetize those customers you have and what you need in place before making a sale to get a customer becomes a source of wealth.

When you shift from income seeker and leveraging the biggest asset you can create in business – your existing customer base, you can move form income producer to wealth creator very easily.

You can create stability in your business.

The worst place you can be in is being desperate for the next sale, the next job. This desperation is obvious – your potential clients can smell it. Many business are stuck in this feast or famine cycle – they almost never take the time to use their existing customers to create stability for themselves.

After stepping up and taking responsibility for the marketing of your business – the next most important idea is going from income earner to wealth creator using the most powerful asset you can in your business – creating wealth through existing customers.

They are a gold mine in so many ways. Don’t let them go to waste. (If this doesn’t make sense go and read our report The Business Owners Guide To Getting More Repeat Business and Referrals.)

Fresh out of university I started my ‘career’ in direct sales.

There was a degree of irony about the world of an agricultural science graduate. The Ag-Chem companies wanted sales people with degrees in agricultural science and relevant sales experience. Kind of hard to do when you’ve spent the last 4 years studying full time and before that you were too young to hold a full time sales position…

Anyway, I didn’t necessarily want a career as an ag-chem salesman. I wanted to sell. Sound familiar? (Robert Kiyosaki’s advice ‘learn to sell’ had happened to me before I finished high school).

I landed a job door knocking for a roof restorations company. Every day from 4pm until sun down and Saturday mornings I would go to neighbourhoods with houses of a certain age and knock on doors. Trying to worry people into getting me to come back for a quote.

Thankfully, if you knock on enough doors (even when you are really bad) you get enough yeses to get enough appointments to make your sales. I hated it. Two weeks in and I was thinking about what next.

This was hard, soul destroying physical labour – grinding out a living, not a very good one at that I might add. I knew some people who are very successful at it. The one thing they all had in common was their ability to get leads from somewhere – the appointment getting was done for them.

It started me thinking – how do I get leads? If I could crack that the rest of this would be easy.

Weeks turned into months, months turned into seasons. (Winter is a tough time in this business – almost everybody worries about the outside of their house in spring and summer when they are outside – Autumn if something is leaking – so that winter doesn’t ruin their house).

I still had no answer except to pound the pavement. Knock on doors and not stop until I had my quota of leads.

I would do it again today if I had to because I learned so many lessons. I learned to sell belly to belly. The most important skill in sales.

If you can’t do that you will never succeed in business. However, if that is all you can do you end up ‘a long-in-the-tooth, direct-sales-guy who’s burned out.’ There is huge churn in this business and many like them because it is soul destroying work. You could see it in the veterans – often they were stuck. There was nothing else they could do and make the same money. But if something came up they would have jumped in an instant.

I knew that I didn’t want that.

After Two years of pounding the pavement, what I discovered was lead generation marketing. I figured that if I could do direct mail to the houses that needed a roof restoration I might get somewhere.

I cobbled together a pretty primitive flyer, (no sales letter) and put it in an envelope and mailed it to a list of people’s houses that I had door knocked when no one was home. I made a $1,000 commission for the $100 I spent on postage. In my defence I didn’t know what I was doing was called copywriting. But hey, it worked.

I did that until the laws changed and completely crippled the industry for 18 months by which time I had learned a different lesson – about cash flow management and the difference between making a sale and getting a customer for life.

I learned a lot about myself in those two years. About work ethic and the like. I also learned that a business that is a single transaction is not a business – the next time I was to journey into the world of an entrepreneur I was going to be sure I had more than just a single transaction business.

That experience informed the creating of Newsletter Marketing Systems the next time I looked at starting a business. (FYI I understood that writing copy, was not a business, I can’t sell those skills to a buyer one day. I am the one with the gift of the golden brain, or the golden fingers depending on how you argue it.)

From a long time now we have been in the business of helping clients get more repeat business and referrals.

So it should be quite obvious who doesn’t need a newsletter:

Businesses that don’t want anything to do with their customers after the first sale.

I know it seems odd to some business owners. But there are businesses out there – scam artists, con men and so on that definitely don’t want to see their customers again.

Strangely enough, I have seen “quit smoking in one session” hypnotists build a business with a monthly subscription newsletter and interview the expert CD. So even there you have an opportunity for repeat business.

Even some really apparently ‘one and done’ businesses can benefit from customer retention.

For example – we were talking to a potential client who is in the building industry and even they had a rock solid business case – despite being perceived as a ‘one and done business.’ Organically, 30% of their clients had repeat purchased from them in the past – so it would seem that you could increase that number of repeat purchases by actively working to retain your clients.

It takes a philosophical shift for a client like this to go from the ‘one and done business’ to the building of a customer database and strategically working to monetize them – which is what Newsletter Marketing Systems is all about.

It can be done and more importantly there is a business case to do it.

What was lacking in this case is something we aren’t so skilled at overcoming – a change in psychology and beliefs. While I could explain the maths to any 10 year old – who would confirm it makes sense. Getting the required shift in beliefs for a business owner to make this a reality is a little more difficult.

So What Business Do You Want to Be In?

Like I said, if you are only interested in creating ‘one and done’ customers then you certainly don’t need to be working with us. However, almost regardless of the business you are in you can decide to be in a completely different kind of business – a business built around monetizing your customers rather than selling a product.