Think back to the first time you met your spouse.
No, I’m not talking about when you decided to move in together.
Go back way further.
I want you to remember what it was like the first time you met.
Remember those feelings?
That’s when the wiring in your brain changed and you created an emotional attachment. Since then, I’m sure you’ve had ups and downs, but your relationship has stuck because of the attachment you created in the first few weeks.
The same attachment can happen with your customers. If you generate an emotional connection the first time they buy from you, the chances of them being a loyal customer skyrocket when compared to customers who have an average experience buying from you for the first time.
It’s why Apple spends so much on the “unboxing” experience and why picking up a car at a Tesla store is a choreographed series of steps the company has thought through right down to the most mundane detail. Unlike a typical car dealership, where they try to sell you the floor mats or upgraded warranty when you pick up a new car, Tesla knows that when you walk into pick up your new ride, it’s a moment to galvanize your loyalty to their brand. A representative will offer you an espresso and then walk through the user interface of the car. You’ll learn helpful tips on how to program your home address into the navigation system and the benefits of a frunk. It’s all designed to ensure you connect emotionally to your Tesla and it’s another reason most Tesla owners will tell you their next car will also be a Tesla.
Marketers call this period “customer onboarding,” and the better the experience you provide, the tighter the strands of emotional connection between you and your customer are woven. Not surprisingly, improving your onboarding experience is one of the best ways to increase customer retention and, ultimately, the value of your business.
How Autoklose Maximized Retention
Shawn Finder started Autoklose, an email marketing automation software used by small and medium businesses. In the early days, Autoklose had a “self-serve” onboarding experience. Customers would sign up and be left to their own devices to figure out how to use the Autoklose platform.
The trouble was, many new customers couldn’t figure it out, which is why Autoklose had a churn rate — the percentage of revenue that you lose each month from cancellations and downgrades — of 25% per month.
That meant Finder was turning over his entire customer base every four months.
Clearly, something had to change.
Finder decided to hire a Customer Success Manager whose job would be to teach new customers how to use the product. Now most customers are delighted with their first experience with Autoklose, which is why their churn rate has dropped from 25% to 6%.
The improvement in churn was one reason Finder was successful in selling Autoklose in 2020 for more than four times revenue.
The moral? Recurring revenue is a key driver of the value of your company. It’s one of the eight we measure over at The Value Builder System™. Protecting your recurring revenue stream is therefore the secret to driving up the value of your business, and the best way to improve retention is to make sure your first date with a customer is unforgettable.