All roads lead to Rome, but only four to growing a business.
- Winning new customers.
- Getting customers to spend more.
- Getting customers to spend more frequently.
If you have been following Market Fit for a while, you know that these are the three levers of growth by Jay Abraham.
I love these and they make perfect sense for leaders who want to grow their business.
Guess what they all have in common. That’s right; each of them increases value.
Winning new customers is about increasing value. Increasing spend or basket size and increasing the frequency of spend also increases value. That got me thinking. There’s a fourth way to grow your business.
Getting customers to stay longer.
You see, the critical customer metric that I look at is customer lifetime value. This is the value of the customer to your business over their total lifetime. Look at increasing the lifetime that the customer has with your business and you increase your profitability.
Imagine, you buy a little tomato plant for your balcony and each year the plant grows a little more and you get many more juicy tomatoes.
So, if your tomato plant, sorry, customer stays with you for an extended period, they end up spending more often and more frequently. Sounds simple enough, right?
So, how do you get your customers to stay longer with your business?
Well, you could sign them into air-tight 15-year contracts that they can’t get out of. Just kidding.
Read on, here are three ways to increase the time a customer stays with you:
1. Incentivise the customer to re-contract or resign.
Offer something special to your customers, and in return, they re-sign. This is most Telcos’ favourite trick. They usually offer things like fancy handsets or similar gadgets. Simple trade-off. If you want a fancy gadget, you give me your business in return.
2. Figure out why they want to leave you in the first place.
Work out what the reason for churn is. Are customers going to a competition? Why? Have they outgrown your services? Understand why customers churn and fix that problem.
3. The third way is to work out the most significant disadvantages or pain points that customers are experiencing.
Are there areas you can improve? Customer service perhaps or lacking support options?
The easiest way to get this information usually involves utilising surveys like NPS. What are the negative thoughts that customers have? Focus on improving your business practices or products to remove those barriers.
These are three ways for how you can ensure your customers will stay longer. You will continue to grow your business and subsequently increase your profitability.
If you have questions or you would like to utilise my framework to help your business become more profitable, I would be happy to share it with you on a call.