5 Reasons Membership Site Owners Should be Focused on Retention More than Acquisition
Marketing is oh-so-sexy.
All a marketer has to do is show up and droves of people come out of the woodwork, clamoring for attention.
“Pick me! Pick me!” every business owner seems to scream.
Yet, it’s a fool’s approach.
After all, there are two things far more important than acquiring new clients:
Making an offer that attracts said clients and
Retaining the clients you’ve got
Unfortunately, my experience tells me that most people fail to focus much attention on either element.
In this article, I’m going to show you exactly why that approach may be costing you more than mere money, and how well you’re able to shift your focus is apt to determine the fate of your company in the long run.
Saves Marketing Costs
Subscriber acquisition is a major driver for membership businesses, but it is also a major cost. The cost of acquiring new members ranges anywhere from $15 to $150, and that figure fluctuates depending on the subscription’s baseline price and customer lifetime value (CLTV). The longer a member stays enrolled, the higher the CLTV is, which in turn lowers the cost of acquisition.
Typically, memberships acquire subscribers at a loss. Getting more and more members is akin to a hamster running endlessly on a stationary wheel. The time, energy, and costs required to simply get that subscriber are too expensive when compared to the costs needed to retain that subscriber and keep them happy. Retaining rather than acquiring subscribers is far more effective at driving down expenses and setting the path for long-term growth in the membership landscape.
2. Loyalty Pays
Loyal clients buy more often and spend more than newer clients. They've learned the value of a product or service and keep coming back, again and again.
For a majority of businesses, 80% of future revenue comes from 20% of repeat customers. That’s because existing customers don’t require hardcore selling efforts. In fact, the probability of converting a current customer to buy from you again is 60-70%, while the chance of converting a new lead to buy is just 5-20%.
Long-term clients are less expensive to serve, need less hand-holding, and cost less to onboard.
3. Affordability
The costs associated with bringing on a new member are astronomical. First, and most notably, there’s the onboarding process. For a membership site, that's generally the first 3-4 weeks a person is a member, and covers everything needed to acclimate someone to the features, benefits, systems, and procedures needed to maximize a program.
This is make-or-break time, as it’s really when new clients are in the awareness stage of your marketing funnel. They need time to consider alternatives, compare prices, and see the reviews before committing to your brand.
On the other hand, your existing members have already gone through all these stages and have bought into how awesome you are. They have already been through the consideration stage and onboarding process with success.
A 5% increase in customer retention at this stage can increase company revenue by 25-95%.
4. Returning Members Turn Into Salespeople
There’s nothing quite like a strong referral to snag a sale. And there’s nothing quite like a happy customer to snag a referral.
Across industries and across platforms, word-of-mouth marketing always shows up as the most powerful way of convincing people to buy – and the best part is, it’s free of charge. Therefore, in the long run, it becomes clear that customer retention = customer acquisition.
5. Informs Future Product Development
Once a prospect enters your orbit, your relationship with them has begun. They now know about your business and you know about them. You know their interests and the products that they prefer. This information can be used to market your products more effectively and provide customized offers.
Moreover, customers who frequently purchase from you would know which areas of your business could be improved. Taking their feedback will help you discover new opportunities and lead to increased retention and sales.
You also have a targeted community to solicit feedback, especially within your private forum, and to test out new products and service offerings.
When you dedicate time, energy, and resources to improve member retention, your current clients will be pleased and want to continue doing business with you.
To build out a customized retention strategy specific to your industry, schedule a free consultation today. We can utilize my 4-step methodology to develop a unique approach that makes sure clients want to stick around for the long haul.
