Part 4 - Higher Retention
Retention Is Won During Sales, Not Onboarding.
Instead of tackling the root cause of the increasing churn rate, MDs treat customer retention as an operational task. Sometimes they even get nervous because of the high churn rate or because of the complex management of some customers. They then change the account management, add more client-success check-ins or even completely change the onboarding process.
Most MDs treat client retention as an operational task that can be fixed by tweaking the end of the customer lifecycle. Their churn and account management problems are already ‘locked in’ by the time the client reaches onboarding. Churn isn't an account management failure, it’s a positioning and sales failure.
The Cause: Selling Misaligned Expectations
A loose value proposition combined with a failing sales process forces the commercial department to manufacture alignment with prospects who are not a good fit for your service. To close the deal, the sales process sells a fantasy.
The reality of the situation will eventually surface as your Account Management team attempts to service this newly acquired account. They will be required to deliver customized solutions, instant access to necessary resources, and specific results that your core architecture is not designed to deliver.
The Effect: The Onboarding Trap & Churn Spiral
Poor positioning is merely masked by high-touch account management:
The Onboarding Shock: Before the first deliverable has been executed, your prospective client already experiences disappointment as soon as the kick-off call ends. He expected something else than the standard framework of your account manager.
Reactive Firefighting: Rather than delivering the highest value to your clients as a high-touch account manager, you will be busy managing the ‘friction’ in their account and ensuring that the basic scope of work is being met and that they are not being misled by the promises of your sales team.
Artificially Capped LTV: These are clients who are treating your offering as a disposable expense because they are not willing to commit to extensions of the 12-week implementation, yearly retainers, etc. Therefore, their high LTV is artificially capped.
Predictable Churn: No number of additional touches such as gift baskets, additional status updates or more apologetic calls on Zoom will be able to save the account from high levels of friction and resulting churn of high lifetime value (LTV) clients.
High lifetime value (LTV) is not something that you try to fix with high-touch account management after you have positioned poorly and sold something that your system is not even capable of delivering.
How does a tight, disqualifying sales model permanently suppress your customer acquisition costs?
In Part 5, we explore why the cheapest, most efficient marketing system in the world is powered entirely by high-fit, retention-ready clients.
