Fill in the blank – “if we kept each member who left, for just 1 extra month, we’d earn an extra £_____ per year.”
People often talk about the value of customer retention in terms of the comparative cost to acquire a new customer. For example “it costs 5x as much to acquire a customer as it does to retain an exiting customer”.
But what about the revenue benefits of retention? Existing customers, who are enjoying doing business with you, are more likely to buy additional products/services and more likely to encourage their friends/colleagues to buy too.
What’s your value of customer retention?
But if that business case is not concrete enough, and you have a membership business with monthly subscriptions, try this.
Multiply the number of customers who churn this month, by the average monthly memberhsip price. That’s the amount of additional revenue your business could earn each month, from getting your customers to stay one month longer.
I’ve recently had this value of retention conversation with 3 people in the health and fitness industry, and their estimates range from £400-600k! Now I know not all churn is controllable, but I also know it’s possible for delighted customers to stay much longer and encourage friends to join.
So what’s the catch? You can’t retain more members if you don’t know why they’re really leaving. Not their tick box reason, but the reason they tell to all their friends.
How do you discover this real reason? By asking open questions and having the ability to capture and aggregate the answers. This means having the courage to see your brand experience through the eyes of your customers. If you assume you know the reasons, or if you use your assumptions to define tick boxes for members to choose, you won’t discover the truth.
So how much would 1 extra month of retention be worth to your business?