Joseph Ratliff Writer, Researcher, Thinker

Category Archives: Business Building Secrets

Case Study: Moving The Free Line, And Building Lifetime Customer Relationships

A current client of mine, Jeanette Hauser, represents not only an ongoing business success story in development, but also a solid case study in moving the free line and developing lifelong customer relationships from the start.

Aside from a couple of very brief conversations in the fall of 2009 that initiated based on articles I had written on the 5-Star Affiliate Forums…

The story of how our relationship really got started and initially developed to another level is a great examination of where I think most businesses miss the boat in 3 key areas big time:

  • The initial customer experience.
  • Moving the free line.
  • Demonstrating value and building trust from the beginning of a client relationship.

So let’s cover each of these 3 areas in detail, using my experience with Jeanette as an example (I’ve gotten permission from her to use her name and experience for the purposes of this lesson).

You may think some of this is basic, and you might even say “Well duh!” to yourself as you read this, but I guarantee that most businesses do not operate this way 100% of the time (mine is close, but not perfect), so if you claim to, I would love for you to tell me your story via email.

Let’s get started…

The Initial Customer Experience

My initial interaction with Jeanette (after the brief ones mentioned above) came as a result of a forum post on the SSWT internet marketing forum operated by a good friend of mine (and very successful marketer herself) Lynn Terry.

I didn’t realize that Lynn had decided to close the forum and posted some content on one of the sections.

Jeanette read that content, and PM’ed me letting me know that the forum was closing, and  that she missed my additions to that forum (free line technique) in the form of articles and participation…as I hadn’t participated in awhile.

She also asked for any advice/suggestions that I might have had to help her with her online business that she was frustrated with.  Here is where we get into the “meat” of initial customer experience…

I could have ignored her request for what most would consider “free information”, or I might have considered her request an attempt to get some free time from me…but I didn’t.

Trust me, I’ve seen so many examples of so-called consultants, marketers, “gurus”, etc… complaining about these very things, that it makes me sick to my stomach.  To me, business should be more personal than that, no matter how big your company gets (and yes, it’s possible, but that’s for clients only 😉  ).

But I digress…

I didn’t ignore Jeanette’s request, or even put it off, I sent her an email in response (taking the interaction from the forum, and to a more personal environment).

In that email I gave her my Skype ID and office phone number, and asked to chat with her about and letting her know I did have a spare moment if she needed it.  Her reply to that email is the inspiration for this case study…and I don’t understand why more people don’t take time like this to build an initial relationship with at least some of their clients (By the way, don’t say you don’t have the time, that’s complete B.S., if you feel you don’t, then you’re not managing your business or time effectively).

In Jeanette’s response, she indicated that my reply “surprised” her, and that she hadn’t been surprised in quite awhile.  (Quite sad to me actually)

She also indicated that she wanted to “schedule” some time with me, taking advantage of my offer for a “free chat”.  While I could have done what many would have done, I could have “scheduled” that time (and maybe never delivered on it)…I didn’t…and here’s where I took a simple action that “surprised” Jeanette even further (she’ll tell you I’m full of surprises 🙂  )…

I picked up the damn phone and just called her (her phone number was in her email sig file).

Unbelievable eh?  When Jeanette picked up the phone on her end, I said something that was in our email exchange, and she immediately knew it was me.  Needless to say she was pleasantly surprised by initiative, which to me is sad to say, as I figured that would be a “normal” thing for most business owners to do.

Surprises don’t necessarily have to be in the form of a phone call by the way, so I don’t get the email that says “But Joe, I only sell digital stuff, I’m not a marketing teacher!”.

Initiating business this way  isn’t the “norm” unfortunately, hence the inspiration for this post.

Now it’s time to “move the free line”…

Moving The Free Line

Returning to our story…

I just picked up the phone and called Jeanette, and gave her a “blank check”, I believe my words were “Jeanette, unload all of your business frustrations, and let’s get to work!”.

  • Could I have made this a total “teaser” session? Sure.
  • Could I have limited the “scope” of the session? Yeah.  But Jeanette actually did that herself (there’s just too much to cover, and most people respect that).
  • Could I have used this phone call to “sell” a private one-on-one session to her? You bet, but I didn’t, I let this initial phone call do the “selling” for me…and Jeanette actually moved us to the next step herself after I explained what the next step was (at the end of our initial call).

So where did I move the free line?

During the whole experience in this initial call!

I didn’t just focus on only one “thing” to move that free line…by opening that initial session up to an almost unlimited scope of conversation…that very conversation actually moved the free line by itself.  In other words, I just let the conversation with her “do the driving”.

And after a 3.5 hour call, which provided Jeanette with some solid direction and gave her inspiration to continue building her online business (she was very frustrated with her first attempt)…she wanted to proceed to the next step.

And by the way, yes, using 3.5 hours of my time this day did put me “behind” on some other things…but I saw the investment of that time with Jeanette as more important than “some other things”, which is what that stuff you “get behind on” usually amounts to.

But the most important thing, was that next step was natural, almost logical, and I didn’t need to “sell” her at all…as I had already proven myself to her by offering massive value upfront.

At this point, I had earned the trust of a client, but where most business owners make a grave mistake…I didn’t.

Most business owners think this is the point where they can “let loose” and think they have developed a “lifetime relationship” with the person who decided to do business with them.

In other words, they deliver their paid product/service, might do some basic follow up on the purchase/investment…and that’s it.  Epic fail. Because contrary to what most people think, I haven’t built the kind of trust required to separate myself from other coaches out there.

The type of trust that leads to the possibility of a lifetime customer relationship starts to get built when you over deliver on your product…

Demonstrating Value And Building Trust

So Jeanette and I decided on a private session to cover some important areas of her efforts thus far, and take those to the next level (along with her business).

She invested in the session, and we conducted the agreed upon session, where she was more than satisfied with what I delivered according to our agreement.

  • She had new direction…
  • She had discovered a real niche (at first, she was attempting to create an online business that would have required her to adjust her lifestyle goals)…
  • She was ready to get started building a solid lifestyle.

And sadly, this is where most business owners leave it. Client pays, the business owner delivers as promised (sometimes), and said client goes on some buyer’s list to get sold to again and again (not good enough in today’s hyper-competitive business climate I’m afraid).

And I could have left it at that as well, in fact, Jeanette said so (that I delivered as agreed).

But I recognized an opportunity to help her again, as it didn’t seem something was totally clear to me (our session uncovered an important need).  So I offered an “extended session” on another day (no charge) to make sure Jeanette was completely and more than taken-care-of.

The main point here is…I took the initiative to make sure she was taken care of completely and more, she didn’t have to issue a ticket at some “helpless-desk” to ask for that help.

Do you have processes in place to make sure your customers are taken care of, even when they might say they are?  And before I get the email that says “Joe, how am I supposed to know what will take care of my customers?”, while you won’t ever get to perfection (I’m not), most businesses aren’t even 50% of the way there, if at all.

Research, live, and breath your market…it’s why you have to get REALLY good at one thing, instead of focusing on one million things.  Use autoresponders, systems, and people to make sure you take care of the little things, because the “little things” that you don’t think matter…matter the most to your customers.

And here’s where the lifetime relationship starts to get built…

In our extended session, Jeanette and I hemmed and hawed, went back and forth…then something important happened…

Jeanette had what I would call an epiphany.

This epiphany was totally outside of the scope of the coaching that Jeanette paid for, and was the real reason I scheduled this session…because I wanted to make things “click” for her.

And “click” it did.

Now I had built the type of trust where Jeanette likes it when I call. 🙂  It’s the beginning of a lifetime of discussions and interactions between us.

In fact I called her today, surprising her again (which she’s getting used to, and should be, but she said she doesn’t take it for granted)…and she will be building the website for the online business that we discussed by the second week of May.  I will link that site to this blog post when it’s complete.

So, the big lesson here is, yes…it takes “going the extra mile” to develop profitable relationships with clients.  But if you’re not currently going the extra mile right now…aren’t your clients worth it?

You don’t want to join the Great Online Filtering do you?

How Do You Expect To Do Any One Thing Well, When You’re Trying To Do Many Things At The Same Time?

I’m going to go short and to the point here…

Multi-tasking is a myth…period. Get over it.

Quit trying to do so many things, that you never complete one thing in a focused period of time.

With your mind split into so many “pieces”, how on earth can you expect to do any one thing well?

How can you expect to increase your productivity by doing so many things…that your time frame to accomplish those tasks multiplies itself by the number of tasks you’re trying to accomplish?

Here’s the easiest way I can think of to illustrate:

If you have project A, B, and C…each of which takes 3 units of time to complete…and you have 9 units of time to complete all of these tasks…

The multi-tasker:

1 2 3  4 5 6  7 8 9

A B C  A B C  A B C

Notice when you’re multi-tasking…it takes 7 units of time to complete A…8 units to complete B…and all 9 units of time to complete C.  If you depended on any revenue from these activities…you would have to wait a minimum of 7 units of time to start to generate revenue.

Focusing on one project at a time:

1 2 3  4 5 6  7 8 9

A A A B B B C C C

Project A starts generating revenue at 3 units of time…B starts generating revenue at 6 units…and most importantly ALL THREE projects are generating revenue (including C) by unit 9 of time.

But the key difference is project A has already had 4 more units of time TO generate revenue using a focused effort rather than multi-tasking (it was completed at unit 7 above).

Project B has two more units of time to generate revenue than the multi-tasking method above.

C remains the same.

So, if you find yourself multi-tasking…trying to start multiple projects at once, even something as minimal as Skyping at the same time as writing a blog post…stop it.

Start to change your habit.

Catch yourself doing this, and pick the most important project and focus on those every day.

In fact, get up 1 hour earlier in the morning, and focus uninterrupted time (key idea there) on accomplishing one task that if completed, you would consider the whole day successful.

Then move to focusing on one task at a time, but accomplishing the two tasks that would help your day to be successful.

What you’ll eventually find, is you shift towards accomplishing the most important things, and you’ll also begin to realize just how unimportant all that “other” stuff really is to your business (you can even outsource that stuff so you can focus on more high-level stuff).

How To Give Away The House And Make A Mansion With Your Online Business…

I know, I know…huh?

“Joe, I am not going to give away my house to start all over again trying to make a mansion.”

I don’t expect you to literally give away your house.

But if it was guaranteed to make you 100 million dollars you would do it, wouldn’t you? That is what we are talking about here, a concept known as…

The Lifetime Value of the Customer.

This concept is so critical to the future success of businesses everywhere, yet even some Fortune 500 companies are missing the boat big time. That is what I hate about lists like the 500…they mean absolutely nothing in the big scheme of things.

Any one of those companies, under the right circumstances…

Can fold up like a tent, and get packed away in a suitcase.

But this post is not a rip on the big 500 companies in the world…because some of them do “get it.” They understand the lifetime value of the customers they serve.

So why put your business at risk? You probably don’t have the resources that the big guys do to stay in business even when times are tough, do you?

So, here is the concept in a nutshell…

Every customer of your business runs through a certain buying cycle…or lifetime. This is the cycle where a customer considers your offerings, responds to your follow up marketing attempts, and purchases or invests in all of the possible offerings you have that fits their needs.

When this cycle finishes, the customer no longer needs what you have to offer, and does not purchase from you again. In some cases, this cycle does not end until the customer’s life actually ends (real estate for example, if the agent does his/her job).

During this lifetime…there is a certain number of dollars purchased. Figure out what this dollar amount is, on the average, and you have the key in your hand to business success.

Let’s create an example (sorry, it’s from the offline world, but applies here too).

Two general automotive repair shops, in the same city, have the following similar stats:

1000 customers in their database, averaging $300.00 per each transaction.

The top 20% of each automotive shops customers average 3 visits a year. That is 200 customers visiting three times each, or 600 visits from the best customers.

So, at an average transaction of $300.00 each visit, that is $180,000 annually from the top 20% of the automotive business.

The average length of time each customer in the top 20% stays is 10 years. Then, the customer either moves from the area, gets another car and switches to the dealership etc… The lifetime of the customer ends at 10 years.

So…each customer in the top 20% spends an average of $900.00 in three visits per year. At the end of the lifetime of the customer…these customers spend $9,000 each.

And that is important.

Knowing that information, that a customer in the top 20% of your business spends $9,000 with you by the end of 10 years…

You have to do whatever it takes to acquire and keep customers initially to ensure you get your $9,000!

What are you doing in your business to acquire customers? Is it the same “ho-hum” stuff that everyone else in your industry does, or do you have the “stuff” in you to separate your business from the pack?

Let’s return to our example, and make a comparison.

Automotive Repair Shop A takes this information and does what everyone else does with it…keeps doing what they are doing. They are out of business in 10 years or less, period.

Let me repeat that, they aren’t just growing slowly, they are out of business in 10 years or less. In this hyper-competitive business world, where more than 80% of small businesses FAIL in less than two years…it is an absolute.

And the really scary thing is…90% of the business owners who read this post will do nothing with this information, absolutely nothing.

But what about Automotive Repair Shop B?

Automotive Repair Shop B sends out a regular mailing to keep in touch with its customers. They do an important bit of math though, that separates them from the rest of the pack…

They figure how much they want to invest in every customer of their top 20% to get their $9,000.

This is critical. So what does Shop B actually do that keeps them separated once they have figured out what they want to invest?

To acquire customers, shop B sends out a new customer mailer that offers 4 FREE oil changes.

Total cost (remember, this is cost, not retail) = $60.00 per customer.

To double the effectiveness of that mailing, if the customer refers one more customer to take advantage of the same 4 FREE oil change offer…the original customer gets an additional FREE oil change…for a total of 5 FREE oil changes.

Total cost now = $75.00 to acquire two customers plus another $60.00 for the second customer’s four oil changes.

Total cost for two, $9,000 customers = $135.00

So…how many times do you want to trade $135.00 for $18,000 over 10 years?

“But Joe, you moron…now I have to keep a customer for 10 years to gain that serious advantage!”

To which I respond:

“Uhhh, yeah. You didn’t get into business to lose customers, did you? You do know that is much less expensive to keep customers, than it is to acquire them, right?”

Which brings me to the last part of this lesson.

Keeping customers for life. We started out in Automotive Shop B’s example only investing $135.00 for TWO customers, that will average $18,000 over 10 years.

What on earth makes you want to stop there?

Do you want to ensure you get that $18,000 over 10 years to keep two customers? Keep in mind these are the top 20% of your customers, so they are the good ones to begin with.

You have to do better than $135.00 in this day and age. Sorry for the good news.

So, here is the kicker…what if, over the entire 10 years you invested a total of $1350.00 in exchange for $18,000?

Automotive Shop B gets this important piece of the puzzle…

For $19.95 a year, each customer can get FREE OIL CHANGES FOR THE LIFE OF THEIR CAR!

What a deal, huh?

Every 3,000 miles or three months they can get another complimentary oil change! No ordinary oil change either, one complete with vacuuming out the car, washing windows, topping off fluids etc…because Automotive Shop B understands that each opportunity for an oil change is an opportunity for an inspection, which results in additional revenue.

What a deal. So your questions and challenge for the day is…

What is your “oil change?”

What is the lifetime value of your customers?

What house are you going to give away to build your mansion?