Out of the 7 key performance indicators increasing leads is the most time consuming and costly.
One of the least time and money consumers is the retention of clients.
What is your current retention rate?
If you’re not tracking it, start today.
What does it cost you to acquire a new client? If you don’t know, calculate it today.
My educated guess is, that it’s costing you ten times more to get a new client than retain a current client.
Let’s look at the financial impact of retaining clients.
A subscription or membership-based business is the greatest example of the impact of client retention.
The physical fitness industry relies heavily on its monthly income generated from its members.
In this example the gym started with 250 clients, that paid them a monthly membership of $20.00, totaling $5,000.00 a month in revenue [month one].
Their goal was to retain 100% of their current members and grow by 100 members each month.
They met both goals. The annual result was $192,000.00.
In the next case, the clients set a goal to just grow by 100 new members each month.
They only retained 75% of their current members.
Their annual income was $84,380.00
The difference, $108,000.00 less than the clients who retained 100%.
What happens if your retention rate is only 50%?
Your annual income? %50,000.00. That’s a whopping $142,000.00 difference!
By loosing 50% of your clients month over month (even though you’re gaining 100 new members a month) your monthly recurring revenue slowly declines as well!
Focus on your retention
- Increase monthly revenue
- Increase annual revenue
- Decrease marketing costs