#23: Why is client retention important?

After getting mentored by some of the biggest names in the marketing industry...
I discovered a pattern.
Many of them are focused on client acquisition.
They obsess about teaching how to get more leads and sales.

I seldom hear them talking about retention.

To build a durable and sustainable business...
Retention plays a bigger role than acquisition.
Otherwise, the business owner keeps running on the acquisition hamster wheel.

The business will struggle once ads and client acquisition costs increase.
It struggles once conversion rates drop and only a few new clients enter.
It may even start making losses if the backend sales can't cover the ad costs.
This is possible if retention isn't designed and built from the start.

In this post, we'll explore why retention is rarely covered...
And why is client retention important?

Many marketing practices work great in acquiring clients at the start.
But it's only for the short-term.
In the long run, those practices destroy retention.
It makes churn inevitable.

Imagine...
You signed up for a program titled "Make $10K per month in your coaching business within 90 days!"
How do you feel if you don't make $10K per month by the time 90 days are up?
It's normal to feel disappointed.
Because the big claim in the program name already sets the expectations.

Disappointments erode trust.
When multiple disappointments accumulate...
Clients leave quietly.

This is just an example.
There are many other examples of trust leaks.

But here's a critical point to note:
Whenever expectations are misaligned...
That's a seed for retention failure.

These types of things happen often.
Over-promising and under-delivering seems to be the norm.

Some call it a scam.
These businesses simply rely on using big claims to attract new clients.

Now you know why the market is filled with skepticism.
Many people have been burned by those profit-focused businesses.
So they stop buying readily.
Sales cycles take longer now.

When clients leave after experiencing disappointments...
They seldom return.

This also means their lifetime value has hit a ceiling.

Let's do some math.

You'll see how focusing on retention can create a huge impact in your business...
In terms of lifetime value and profitability.

Scenario A

Your ad campaign brought you 100 clients.
Each of them bought a $7 offer.

But the cost per acquisition (CPA) is $20.
So you've made (100 x $7) - (100 x $20) = -$1,300
You're losing $1,300 on the front-end offer.

If you're able to retain 50% of the 100 clients...
And they return to make a second purchase.
Let's say the second offer is now a $200 program.
You'd have made (50 x $200) = $10,000

In total, you'd have made $10,000 + (-$1,300) = $8700

Now, let's look at Scenario B.
All numbers will remain the same, except for the number of retained clients.
We increased the retained clients by 10.
And we'll see how much more profit will be made.

Scenario B

The front-end offer is $7.

CPA is $20.

You'll make a loss of $1300 for acquiring 100 clients.

Now you retain 60 clients, instead of 50.

If 60 clients return to make a second purchase.

Each of them buys your $200 program.

You'd have made (60 x $200) = $12,000

In total, you'd have made $12,000 + (-$1,300) = $10,700

Comparing Scenario A vs B,

Just increasing retention by 10 clients has led to an increase of 22.9% in profit.

If you lose the client just after their first purchase, the client's lifetime value is only $7.
But if you retained the client and they make the second purchase...

The lifetime value increases to $207.

Now, let's look at some intangible benefits that can't be directly measured by money...
But they will lead to monetary returns anyway.