The Leaky Bucket List
Last year, I consulted with a speaker who was experiencing a dip in revenue. His cash flow was hurting a bit with the change in the economy, new speaking gigs were harder to attain, and repeat bookings were not occurring readily. As we evaluated his offerings, his system for handling new bookings, and his strategies to stay connected to the event planners that booked him in the past, it became quite clear where his leaks were. First, he had no real system for quickly handling a speaker booking request, so event planners were underwhelmed with his follow through. Second, he had no routine communication process in place to stay engaged and connected to the event planners in between gigs, so it was “out of sight, out of mind.” Third, he was so focused on generating new speaking gigs and selling his books and CDs at events, he was completely missing a huge profit center: His excited, raving audiences eagerly invested at events, but needed more support once they got home. By being “new lead”-centric, he was concentrating his resources on the most expensive form of revenue generation, and he’d neglected the simple techniques to expand the retention, repeat and referral side. So what can you do to increase the three “Rs”—retention, repeat and referral business—so you can build revenues, even in a recession? Here are five techniques that you can use to plug your leaky bucket list:
Aim for a World-Class Culture The fact is, you remember really bad and really good service, but mediocre service just fades away. We all believe we have great value to offer the world, but do we have a way of delivering world-class value? A world-class culture starts by deciding what we want our 24 | SPEAKER | January/February 2011
clients and customers to say about us to someone else. Every business has a reputation. Unfortunately, many businesses become tarnished because they didn’t decide early enough how they want people to experience them. Think of a business you absolutely love to frequent. What do you say about it? Consider Zappos.com as an example. Every strategy, person and element of its environment was chosen to be in complete alignment with its world-class culture and deliver “wow” through service. This company thrives because it built the entire business with a clear value system from day one (and Tony Hsieh delivers this message on stages all over the world now).
Imagine the lifetime value of a client is $5,000, because an average sale is $2,500 and they reorder, on average, at least once. The retention mindset would suggest that if an issue arises, it would be worth investing $1,000 if that meant keeping that client longer. Most of us think: “Wow that’s a lot of money!” But truthfully, think what it cost you in marketing and sales resources to obtain that client in the first place, plus what the client could spend with you if you could extend the lifetime value. After all, who wouldn’t invest $1,000 to get an additional $4,000 in revenue?
Shift into the Retention Mindset
Not too long ago, a friend of mine was milling about a store and the salesperson kept giving her free samples. She was so taken aback by the generosity that she bought about $100 worth of products that she had not intended to buy when she walked in the store. Generosity is the grease that leads to reciprocal action. In other words, generosity is one of the easiest ways to generate more repeat and referral business in a world-class culture. Ask yourself, “How generous am I in my business dealings?” Do you go the extra mile, or do just enough to be socially acceptable? Do you give generously first without expecting anything in return, or do you secretly hope that it will make the person want to reciprocate? There are two types of reciprocity: strategically planned and responsive gestures. Strategically planned reciprocity is thought out in advance, whereas responsive gestures are how we react to a situation or event. For instance, a strategically planned reciprocity act might be sending out a copy of your new book to the top 25 to 50 influencers in your target market, with a little note inviting them to let
Think back to a time when you received a customer complaint. What did you do? Defend yourself? Figure out the fastest and cheapest way to fix it? Did you just leave it alone and say to yourself, “Oh, well, I didn’t like working with that client anyway”? Or did you get creative, and determine how you could overdeliver to keep the client happy in the face of a potential issue? A retention mindset means you are focused on keeping a client. When you run the numbers on the lifetime value of a client, you can see why it’s so important: Estimated Average Lifetime Value = (Average Sale) x (Estimated Number of times customers reorder) Go ahead and calculate this figure right now. 1. Your estimated average sale is _______________. 2. The estimated number of times a customer reorders is ________________. 3. Now, multiply #1 by #2 to get _________________. This is your estimate for the average Lifetime Value of a customer.
Leverage the ReciprocityGenerosity Connection