Retained Business Is The Best Business
I have an entire profit formula that can really help your business. There are a couple of areas that are really worth focusing on and for me, I’ve decided to focus on the frequency of purchase.
In the context of a membership site, this means reducing churn or increasing retention.If you can keep your members happier for longer and sticking with your business that’s the equivalent of making more sales to the same customer.
If you can improve that number it’s going to have a much greater impact than improving on another metric like new leads or increasing price since it’s all the way at the end of your sales funnel.
It’s a universal law of business that it’s more valuable to keep an existing customer than it is to convert a new one.
I want to share with you a few ideas I have on how you can apply these retention strategies to your own business.
The main thing I do for my members is that I turn up. It was one of the main criticisms I had of other membership sites.
So often I’d see the founders build up their community and then disappear leaving members to talk among themselves.
I’ve turned up, and I’ve turned up consistently since day one.
This sets me apart from the status quo in the industry and all my members notice it.
It’s not just turning up online, but I also turn up physically in real life with local meetups all over the world.
Once you connect with people face to face it really takes your relationships to the next level.
A member is less likely to leave you if they have that deeper level of connection.
A lot of entrepreneurs are abusing their memberships thinking of them as cash cows that they can use to make easy income when their accounts are low.
They’re putting their own needs first and not thinking of their commitment to providing value to their audience. I’ve heard them discussing it behind the scenes! I take a different approach.I think of my customer’s and what problems they have and then what solution I can offer them. Then I think about how I can continue to serve that customer forever as a lifetime customer.
I agree with Jay Abraham’s philosophy of having a “duty of care” to my clients.
This is why I offer different levels of access and information to provide for my clients as their businesses grow and they’re ready to take on more success.
If you’re going to build a building and rent it out as offices there’s a lot that goes into it. You need to design it, get it constructed, get the right approvals, be competitive in your pricing, and so many other skill sets required.
Not everyone has the right mix of skills to accomplish the entire project alone.
A membership site is similar, it seems like a simple way to grow a passive income stream, but anyone who’s built a successful membership will tell you there’s nothing passive about it.
I prefer to think of a membership as “leveraged income.”
I calculate how leveraged my membership is at any time by working out my effective hourly rate.
I do this by recording the number of hours I work against my monthly profit.
That gives me my hourly rate. If one is making $10k a month and working 25 hours then they are making $400 an hour.
That’s a guideline you can use to see if your time would be more valuable spent somewhere else.
- Plan real-world meetups with your members if possible to create deeper relationships.
- Provide different levels of service to grow with your members as they find success.
- Calculate your monthly profit and your total hours worked monthly.
- Use this number to find your effective hourly rate to better understand how leveraged your membership income is.
Result You Will Achieve
Retain your members longer and a method to know if you’re spending your time appropriately in your membership.
This article is based on an EHQ interview with the mentor.