Jay Sachetti joined Jeff O’Brien, partner at Husch Blackwell and Dyanne Ross-Hanson, president of Exit Planning Strategies talked about the market for mergers and acquisitions, exit planning opportunities for companies that don’t end up for sale and how companies can maximize their eventual sale price during an early October panel at the first Upsize on Tap event at Summit Brewing Co. in St. Paul.
When the state Legislature passed a law requiring employers to provide paid leave and safe time for employees, Justin Bieganek started hearing differing details from friends, colleagues and peers.
That means anything you can do to retain more clients, so they stick around and buy again, is a good thing.
First, you need to know where you stand. So, let’s figure out your customer retention rate.
It’s simple. Print out your client list for the last 12 months. Then print a similar list for the year prior. If you sold to 100 clients last year, how many are still buying this year? If 20 of those 100 clients are no longer active, you have an 80 percent retention rate.
If your annual revenue is $5 million and you have 100 clients, for example, each is worth an average of $50,000 per year to you. An 80 percent retention rate means you lose 20 clients annually. That in turn means you must replace $1 million in revenue every year, just to break even.
Yikes.
However, if you boost your retention rate to 85 percent, you keep an extra $250,000, based on the example above. Even a gain of 1 percent or 2 percent in client retention can greatly increase your profits.
So, how can you retain more clients and profits? Here are two ways, one old and one bold.
In the book You, Inc., Harry Beckwith writes: “Handwritten thank-you notes feel like gifts because you took the time to find the paper and envelope, write the note, affix the stamp, and gift-wrap your note in its package.”
In a world where your prospects and clients are bombarded with hundreds of impersonal marketing messages daily, the simple act of saying “thank you” in a handwritten note can position you and your business as thoughtful, memorable and trustworthy:
Thoughtful, because you took the time to buy a thank-you note, hand-write a message, address it, affix a stamp, and drop it in the mail. (A tweet can’t compare.)
Memorable, because people will smile and remember you favorably when reading your thank-you note. They may even keep your note for months or years. (An e-mail can’t compare.)
Trustworthy, because if you are organized enough to mail a thank-you note the same day you meet a prospect, they will think you can handle the details that come after the sale. (Not saying “thank you” can’t compare.)
Yes, it can be bothersome to spend 20 to 30 minutes writing and mailing three to five thank-you notes to all the important people you talk to each day. You know what’s more bothersome? Explaining to your family why you’re having macaroni and cheese again for dinner, because your clients aren’t buying.
A stick letter is simply a letter you mail to clients, to make the sale “stick.” It aims to head off buyer’s remorse and ensure that your clients remain happy “the morning after” the sale. For a tiny investment of time and money, you can not only delight your clients, but you can also stimulate referrals. That’s a double play.
Print your stick letter on company stationery and mail it, using a stamp. That’s right-e-mail will not work, for an obvious reason: You’re going to tape a dollar bill to the top of this letter.
See? I told you this was bold.
Here’s what I write in the stick letters I mail to my clients:
“As you can see, I’ve attached a $1 bill to this letter. It’s my way of getting your FULL attention as I say, “Thank you!” once more for your business, and it represents the first of many dollars you can expect to receive from the web pages, e-mails, and other materials I write for you. Here’s to a long and prosperous relationship!”
By the way, the dollar bill is called a “grabber” in direct-mail parlance. It’s an attention grabber that forces the recipient to read the letter and find out why you sent money.
Mailing a stick letter to clients within two to three business days of their purchase can make your business memorable, make your clients happy, and generate word-of-mouth advertising.
There’s really only one way to do this wrong: Mail a fake stick letter. Fake as in you don’t mean what you say. Fakery gives off a stench like a rotten halibut, so don’t write a single word in any stick letter that you can’t back up in person.
And, if mailing a dollar bill offends your sensibilities, attach something else to the letter, like a gift certificate for an “emergency consultation,” a lottery ticket or some other surprise. Meanwhile, the potential upside of mailing a stick letter – in terms of client delight, follow-on sales, and referrals – is huge.
Now, you may think, “Mail a thank-you note to clients? Everybody does that!” Fine. But are you doing it? And you may think, “Mail a stick letter with money to clients? Nobody does that!”
Fine. You can be the first to do it.
Key: test this (or any) new idea on a small scale, before rolling out on a large scale. No matter what you do to retain more clients, do something, because you’re probably not doing enough right now.
Want proof? Answer these three questions:
1. How much is your advertising budget, to get new clients?
2. How much is your retention budget, to keep them?
3. Why is the amount of money in 2 so much smaller than 1?
Think about it. There’s really no valid reason not to spend more time and money to retain the clients you spent so much time and money to acquire. It’s not particularly sexy or exciting; it’s just profitable.
Kevin Donlin,
Client Cloning Systems:
612.567.6642
*@******************ms.com
www.clientcloningsystems.com
