August 29, 2017 by Razvan Rogoz
How Many Customers Do You Keep?
From the desk of Razvan Rogoz,
I’m currently waiting for customer support. I’m trying to get into contact with a leading financial provider, because they’ve shipped my debit card to a wrong address. I’ve been waiting for 30 minutes and I have 20 minutes remaining. The level of frustration I’m experiencing now made me want to share a very important lesson from my experience as a copywriter.
I’ve been in the position to work with amazing customers, businesses and people. In the first month, it was okay. In the second month, it was okay. Then, ironically, the better the relationship was, the less I was invested in it. If in the past I used to reply to emails within hours, I started replying in days or not replying at all. If deadlines were sacred for me, I’ve started missing them, not by days but by weeks.
This happened years ago, when in all matters and purposes, I was just a young adult. It happened at the beginning of my career as a copywriter. Yet, it is a lesson that I’ve learned very fast. People have expectations from you and if you want to keep those people paying you, you must satisfy them. In a way, it is similar to dating. In the beginning, he’s bringing her flowers. He’s taking her to dinner. He’s doing everything in her power to impress her. Maybe he even starts going to the gym.
After they get married, he stops doing all those things and watches TV all day. The same happens with most solopreneurs or self-employed. The more a client is invested, the more a client pays, the lower the quality of service that person gets.
And honestly, this is the worst thing you can possibly do. I was talking about this key concept a few days ago with a copywriting student of mine. I was explaining to him that the natural impulse is that when you finish a work, a project, is to go and find another person to work with. The rational and logical thing is that if someone paid you, that person is happy with your work, to find something else to do for the same person and to not spend 4 – 5 hours in lead generation and qualification when you can simply continue an existing relationships.
It is counter-intuitive but when it comes to customers, focus your efforts on keeping the ones you have and less on getting new customers. It is the most common sense thing in marketing yet so few people understand it. Your priority comes in the form of those that already pay you and are engaged in a relationship with you. They are putting the food on the table and your revenue comes as a consequence of having them. So serve them, keep them happy, find more ways to help them (while getting paid) and keep them on board as much as possible.
As a coach or trainer, it is not a big accomplishment to get 20 new customers in a month. If we were in the same place, I would show you how one day of cold calling can bring you 20 new customers. This is not an accomplishment because it is a game of numbers. The big accomplishment is developing a relationship of trust and mutual benefit with each of the people you work.
Why? Because a person that just entered the door may buy your $19.97 eBook but a person that has been with you for three years will invest in your $1997 workshop. How much someone is willing to pay with you is based on trust, not good marketing. Sales funnels are designed to sell products that start cheap and end expensive, not to promote the high ticket option at the beginning. Someone like Tony Robbins may sell a $3000 retreat directly to a cold lead because he is Tony Robbins and everyone knows him but most people have to gradually build a relationship based on increasingly higher products that build trust and value.
It is hard to sell the high option to someone from the start and each time you focus on bringing new customers, you are reseting that counter. It is like someone who got 40 kilometers into a 42 kilometer race and then goes back to the beginning.
Every business consultant knows that you don’t judge a business’s health by revenue because you can have $1.000.000 revenue on $1.200.000 costs. You don’t even judge it on profit because it is too general. You judge it on two things – ROI, what you’re getting out for what you’re putting in and how long your customers stayed with you. While your CPA is not going to put this in your financial statement, it is the best way to determine where a business is heading and how healthy it is. A high turn-over of clients in a consulting based business means that clients are not satisfied, are not treated right or that there are not enough products and services to satisfy their needs long term.
My focus as a marketer is to maximize customer lifetime value a lot more than getting new customers. There are some fields where new customers is everything, like in software or in online platforms. In my field, I would rather get five people now and work with them for 24 months than get two people per month, for the next two years.
There is yet another reason why this makes sense. There is a cost with every new customer. This cost is first in the form of marketing, getting him to become a lead. Second is the sales process. Third is getting to know this person, as you can’t quite help someone before becoming very familiar with their problems. In some businesses, this cost is higher than the front-end value of the transaction, leading to what is called “a loss leader”.
It is not virtue how many people you serve. It is how well you serve them. The focus on size is like an obsession in the business world, most define success by how big they are. In practice, size and success have little to do in common, you can have a 10.000 people company that is going under. ROI is what determines value and a ROI of 50% on a company of five people is far better than a ROI of 10% on a company of 100 people. A true achievement is to have 10 people that you’ve helped for five years in a row, selling higher and higher priced services and them coming back to you because no matter how much you charge, they know that what you’re doing works very well.
Saying that I’m working with 50 customers in a year is not praise. It means that I either don’t know how to sell to them, I can’t identify needs that I can help them with or I do something that makes them leave. Saying that I’m working with only five people means exactly the opposite. And yes, after I’ve ended my “young and dumb” period, I’ve realized that this is the solution and in all honesty, while I don’t know your specific business model and product line, I tend to think this is the solution for you too – maximizing customer value and serving a particular customer for as long as humanly possible, instead of replacing him with a new customer at the beginning of the trust scale.
When you’re using economy of scale (distributing fixed overhead over a large number of products), then size matters and customer acquisition may be more important. When your product doesn’t have a follow-up (like a writer selling a single book), then getting market share is more important. But as a coach, as a trainer, as someone who sells his or her time in exchange for money, the best thing you can do for yourself and for your market is serving a few people for a long time as opposed to many people for a short time.
This is a mistake I’ve done and I regret dearly and only by doing it, I know how important is to nurture commercial relationships instead of constantly seeking new ones.
Let’s see how you can do this in your own business? I’m giving you a complimentary 30 minute session in which we’ll discuss ways to maximize customer value and other means in which you can succeed, from a marketing and copywriting point of view, in your coaching or training business.
Please use the link below to get started.
The Self-Improvement Copywriter