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Creating A Zero Churn Business

Creating a business with zero client churn sounds like a dream, an unattainable or fanciful hope or scheme, but it’s possible. I’ve done it and I’m about to do it again, this time with a B2C brand.

I’ve been hustling products in and out of the tech space with an affinity for marketing and creating memorable client and employee experiences for over two decades. I’ve spent even more years in bricks and mortar businesses and I believe this has actually given me an advantage over people who have only had digital marketing experience, especially as it relates to client retention.

After having worked on seven different businesses, I’ve discovered that we naturally tend to overcomplicate our product marketing and go-to-market strategies resulting in unnecessary churn. Last week at TechTO I presented the four steps I take with any business, always with the ultimate goal of building a zero churn business. Here they are:

1. Go Narrow

I wrote about this specific step earlier this year.

Client turn-over or churn as it’s referred to in SaaS, compounds dramatically over time. The difference between a 5% and 10% churn becomes very scary as the months go on. See below.

 

There’s a really simple strategy you can take in order to avoid churn early on in your business and frankly, throughout the life of your company. Go narrow. Really, really narrow with the market you’re targeting. Start with one narrow and grow by expanding into new narrow markets each time. Sales Talent Agency is a great example of this, solely focusing on recruiting sales people for their clients and never wavering from this, just continually going deeper and deeper into the vertical.

Targeting small businesses is not narrow. Going after restaurants is not narrow. A market focus of consumers who share photos is not narrow. Yoga studios is narrow. Restaurants who operate a franchise is narrow. A photo sharing app for the LGBTQ community is narrow, but a photo sharing app for the transgender community is going really narrow. That’s what I’m talking about.

When I arrived at Kira Talent the churn rate was 3 percent per month. Sales and marketing was focused on any business wanting to save time during the interviewing process. Basically any business that interviewed applicants. Fast forward three years and the churn rate was 0.3 percent per year. Per year! When we went narrow and focused on schools of higher education, specifically the admissions department, our product, marketing and sales could align around a tight and targeted value proposition.

Attracting, engaging, and converting does not work effectively when you are trying to message groups of very different people, even if they are solving a similar problem. Just because someone wants to buy your product doesn’t mean you want them as a client.

2. Focus On The Coalition Of The Willing

I look for markets and client segments that are loud and opinionated. If I deliver the right product they will tell everyone and when I get something wrong they tell me quickly. Indifference is not part of their DNA. This is part of the reason why I’ve decided to focus my next business on vegans. Specifically, vegans who are vocal about their lifestyle choices, who are quick to let all of their vegan friends know when they find something they like. Finding a segment who are very committed to their cause can be a significant multiplier to your own marketing efforts. I call this the coalition of the willing.

Phish, one of the highest earning bands of the last ten years figured it out. Many readers will not have heard of them because they’ve never had a radio hit. Yet they are one of the most successful groups of the past few decades because they focus on the coalition of the willing. Phish doesn’t go wide, they go deep. The band was able to generate its success by creating an entirely different concert-going experience for fans and now, they regularly earn more than $100M/year. Rather than re-use set lists and performing songs to almost mechanized sameness, Phish guarantees its audience a different setlist and song performance every, single, time. It sounds amazing because it is, and is responsible for Phish’s unbelievable success.

My focus isn’t to sign up as many new clients as I can. Instead, I focus on signing up the right clients. Lifetime value is essential and controlling churn is more important for long term success.

At Kira we zeroed in on schools of higher education, but early on it became clear that we could be even more focused, on the coalition of the willing. We started zeroing in on graduate business schools. We met their essential need and they didn’t need social proof because they understood the value. The MBA schools became our coalition of the willing.

Bad Fit + Behind in Payment = Client Churn

3. Be An Expert In the Industry Even If You Aren’t

People want to deal with people who are inherently smarter than them. Subconsciously, it’s an attractive quality. I’m not suggesting you fake it until you make it or be fraudulent. What I’m suggesting is that it’s easier to be an expert than you think. Having a strong opinion on a subject that is backed up with some research makes you an expert. It’s a commitment, you need time to create content that delivers your opinion. You might want to skip this step, but I assure you it’s as important as any of the four steps in building a zero churn business.

At Kira Talent, Andrew Hastings really nailed it. In one year he took us from being a fringe player to a company featured in all the top business school publications. We were asked for commentary on the most pressing issues of the time and our content was referenced as expert and authority. Check out Sales Talent Agency’s Compensation Study only focusing on sales professionals. They are the experts by a long shot.

With Vegan Labs, my new plant based food business, we have opinions and articles on every ingredient, on what it really means to live as a vegan, meal plans (that do not even include our product), ebooks on the history of nuts, and much more. We will quickly become the experts in the industry.

4. Onboard The Shit Out Of Them

I see companies spending a shit ton of money on lead acquisition, then even more money on sales funnel strategies. I see people being shoved through a funnel they should have never entered. I’ve written about this previously – you want to get the right prospect into the experience funnel. If you are going narrow and focusing on the coalition of the willing your acquisition costs will be reasonable. In turn, you have money to invest in a (minimum) 100 day onboarding experience, then into the lifetime of the client.

You build a zero churn business by investing heavily in onboarding, educating and delighting the client every single day.

As soon as someone says ‘yes’ buyer’s remorse kicks in. So, step one in onboarding is always educate. It doesn’t matter if they are a $50 a month client or a $100K a year client, you can’t avoid onboarding, especially after you’ve worked so hard to acquire the client.

It’s hard to go into too much detail here because there are so many variables depending on your product or service, price point, B2B versus B2B. Consider this – you must re-educate them on why they purchased, you literally start over reminding them of the benefits, not features. It’s also OK at this point to be clear that what they were doing previously was weak and what you are offering is strong. Be bold, be challenging. I really believe buyers and consumers appreciate a strong opinion and want to work with companies they respect. What you want to avoid is a weak automated onboarding email campaign. Find ways to engage at a higher level, build trust around your brand, impress them.

After someone is onboarded, your work has just begun. you now have a lifetime of work ahead of you. The reason your work has just begun is because you are now on the delight phase and you need to do this each and every day. The problem is that most companies acquire a client, onboard them, then move back to acquiring more clients (often more poor fit clients). You can’t budget for acquisition and not budget for ongoing delight. You need to have a yearly delight strategy and budget. It’s not expensive to delight clients, but it takes time to plan and execute. The great thing about delight is that it turns clients into advocates, which in turn reduces your acquisition cost.

Go narrow, really, really narrow. Focus on the coalition of the willing. Be the expert in your industry, and onboard the shit out of them. If you do this, you are well on your way to building a zero churn business.