The fastest way to burn money
Attrition
Churn
Two curse words in the world of business.
It refers to the group of people who no longer do business with you.
It’s the opposite of client retention, and it kills our growth opportunities.
For any business owner that is across their numbers, we all know that the most expensive client is a new one.
Yet, we all get tied up in the world of ‘new’
New Leads
New Sales
New Clients
Once you factor in the costs of acquiring, onboarding, and acclimatising new clients to your business - it ain’t cheap.
It’s on our best interest to continue to add value, so we can have that reciprocated on our bottom line - Lifetime Value is where the true profits lie.
It’s not even our fault.
It’s because our brains are hard-wired for novelty.
We love the new experience, we actively seek it.
That’s why the junkie chases their first rush.
That’s why serial daters chase the feeling of the initial spark.
That’s why a lot of businesses ‘client blame’ and look to start anew with ‘better, more profitable clients’ without stopping to see if they can provide more value to the people that are already supporting them.
It’s important to keep engaging new customers, however, we are fighting an uphill battle if we fail to to recognise the value of the client’s we already have.
It might sound obvious, but you’re aiming for 10% month on month growth, and you’re losing 20% of your customers (1 in 5) in that same period of time, you actually have to increase your sales by 30% just to hit that 10% growth.
That’s a lot of ground to make up on a month to month basis.
3 x the ground actually.
As always, awareness is the first step - we need to understand why they leave.
Most people stop buying for 1 of 3 reasons.
1. Something totally unrelated to you happened in their life or business that caused them to temporarily stop dealing with you.
They intended to come back, but they’ve just never gotten around to taking action and doing business with you again
Over 50% of client churn is from mostly satisfied customers who just intended to temporarily stop but never got quite back round to starting back up again.
Maybe they needed a break or wanted to try something new for a while.
Maybe they overcommitted to a few different projects and just need to recreate space.
They are well-intentioned, but our worlds are noisy, and we all have a million things on our mind.
If you believe in what you do, there is an enormous opportunity to be proactive and reach out to these people, they actually want and need your help, they just haven’t prioritised it lately.
Sometimes you need to help people get out of their own way - they will actually benefit from you reaching out.
*** This is our biggest opportunity, in fact, I have seen huge increases in sales from doing our Prodigal Client exercise - reach out if you want to know how to use it - it’s been a game-changer for me personally, and many of our clients ***
2. They had a problem or unsatisfying experience that they probably didn’t even tell you about, so they’re turned off you and your business.
Most people that have a negative experience won’t even lodge an official complaint, they’ll just never come back.
Of clients that complain, up to 70% will purchase again if their complaint is resolved.
The figure goes up to 95% if the client feels the problem was resolved quickly.
More people actually stop doing business because of mediocre experiences that lead to indifference (I’ll address this in a separate article).
The answer to this is to regularly check in with your clients, create an open and honest dialogue where they feel important, appreciated, valued, or acknowledged - we all innately desire to be Seen, Heard, and Understood.
The important thing to understand is that we never intentionally offend, dissatisfy, or fail to acknowledge that client - we just don’t carry an awareness around it.
In my earlier years, I was afraid to ask these questions in case I got an answer I wasn’t ready to hear.
Truthfully, I was young and I can admit I wasn’t emotionally mature enough to handle the dialogue, and it lost me clients.
I allowed them to become indifferent or unhappy in silence, rather than being proactive and solving tiny problems before they snowballed.
I took them for granted.
I was reactive, not proactive and I’m not exaggerating when I say it would have cost me tens (if not, hundreds) of thousands in revenue over the years.
Thankfully, I’ve learnt the lesson and now help my clients do the same - it’s much more common than we think - we just need to take responsibility and listen more than we talk.
3. Their situation has changed to the point where they no longer can benefit from whatever product or service you sell.
In this case, the customer/client lifecycle is over - and that’s okay :)
Attrition and Churn is a natural part of business, however, we need to factor in what is reasonable and sustainable, verse what is creating sinkholes.
The important thing with these clients is to recognise and show appreciation - just because they aren’t personally padding your pockets doesn’t mean they don’t have value anymore.
Leave them with a great experience and express gratitude - you never know who they know, or when their situation will change again.
So, what now?
The major takeaway I want to leave you with is that 80% of all lost clients don’t leave for irreparable reasons.
There is so much power in acknowledging that.
At the end of the day, our bank accounts recognise a sale for what it is, not who it is.
It doesn’t care if you landed a new one, or re-engaged an old one.
If we put our ego aside and see the opportunity to continue working relationships we can grow at a much quicker pace.
Before you launch a new sales campaign and set your targets for new customers, take a second to pause and check-in to see if there is anyone that will feel like they’re going to be left behind.
I promise this will get you off the flatlining revenue hamster wheel quicker than any new sales campaign.
If you want me to run you through the Prodigal Client exercise, just hit reply - it’ll take less than 15 minutes to get it started.
Zac
ps. this goes hand in hand with our Metrics That Matter and Engagement Ladder workshops - it will help you understand what you can spend to acquire, retain, AND re-engage profitable clients, and what offers to present to them so you can create win-win scenarios for you both.