Keeping the Revenue Bucket Full Through Retention
I remember the days when I was a club manager, and the acquisition of new Members was my main priority. Or so I thought it was my number one responsibility. In my world, Members are customers who not only pay for the right to walk in the door, but if you make a mistake, they still come back the next day. In the rest of the world, distraught customers never return but speak ill of you and your organization across town.
Maintaining a full Member Roster is paramount for a club to not only survive but thrive. Focusing on new ones is counter-productive to growth if you are continually having to replace those who quit.
It’s the same in every business, including nonprofits. Growth and sustainability go hand in hand with retention1. Keeping those involved with your organization is paramount to long-term sustainability and capacity building. To think otherwise is naïve.
Naïve is how you could describe me in my early club management days. My knowledge was limited at the time because I looked at the new initiation fees and growth in the dues, but I ignored a simple truth. Keeping those happy who are already contributing to our profitability cost very little, while acquisition was ten times more expensive. Once I got my thinking straight (I pulled my head out of…)and developed a comprehensive Member retention process, the club prospered.
But that was then, this is now. Generating leads and performing online donor acquisition is how business is performed in the digital age. Everyone with a smartphone or computer searches for goods and services online. They can search by brand, item, cost, you name it. What is being said about the company or the brand online on social media? How is XYZ Company doing against its competitors?
These are the types of evaluations going on routinely, and if businesses wish to stay atop their positions on social media, they had better respond to every comment, good or bad.
But nonprofits might be a bit different than the typical small business. Sure, social media is a valuable tool and should be maximized. New interested parties might seek you out after seeing your postings online frequently and consistently. If there are negative reviews posted, it’s not the end of the world. Responding sincerely to every comment can mitigate negative reviews.
The Revenue Bucket
Like the image above, it doesn’t matter how much revenue you bring in, if it is draining out of your business, what’s the point? The holes in your customer retention program need equal attention, lest you run empty. Should your new acquisition revenues not exceed the losses of inefficiency or poor retention, you will not sustain.
We all know that the value of a customer (or donor, patient, or client) far exceeds that of a new acquisition. If a customer remains loyal for an extended period of time, it is easy to calculate Customer LifeTime Value (CLTV). CLTV equals the length of the average donor, times the average dollar contributions over time, minus the cost of acquisition and fulfillment. This is a simplified version of the formula. You can learn quite a bit more here.
Customer Satisfaction
Service is typically the area of focus for a company to ensure the satisfaction of its stakeholders. We also know that leaving it up to only a single department is nowhere near correct. According to Business Insider3, more than 20% of online reviews are fake. While it is hard to control what a disgruntled employee, hacker, or even a real customer might espouse, a solution is far from out of your control.
Everyone on the team should be involved with good customer satisfaction. Of course that is easy to state, it’s not so easy to initiate and control.
Online Reviews and Your Online Presence
In this digital age, customer retention is built by online reviews. Those critiques shape the opinions of researchers as well as referrals from friends. According to Myles Anderson of BrightLocal on the SearchEngineLand Blog, as many as 88% of customers trust online reviews.
Conversely, the same holds. Negative reviews can kill sales, sales momentum, and productivity of a company, eventually wearing down its customer base by having to trim expenses to meet revenues. It’s a downward spiral to the bottom.
Reviews Tied to Individual Performance
Each time an employer is performing an evaluation with an employee, there are chances that the most recent actions influence the report. It’s human nature, almost unavoidable unless there are excellent records of employees interacting with customers, etc.
Now there is. Customer satisfaction reviews, and online surveys that are aligned with the business and those operating it can be tied directly to individual performance. This is a terrific tool by which to evaluate periods when you do not oversee employee actions, but from the customer’s perspective, the review says it all.
The Author
David J Dunworth is an international best-selling author, speaker, and direct response marketing, copywriter. He has been a consistent supporter of servant leadership dating back to 1970, having managed Officer’s and Non-Commissioned Officer’s Clubs internationally for eight years.
Dunworth has served on many boards of nonprofits, including Chambers of Commerce, Restaurant Associations, Mental Health Centers, and the current Board of Directors Chair for SynerVision.
Keywords: Customer Retention, Loyalty programs, revenue bucket, online reviews
Links:
1 https://se-partners.com/customer-loyalty-problem-solving/
2 https://blog.hubspot.com/service/how-to-calculate-customer-lifetime-value
3 https://www.businessinsider.com/20-percent-of-yelp-reviews-fake-2013-9
4 https://searchengineland.com/88-consumers-trust-online-reviews-much-personal-recommendations-195803
