117. How Small Client Experience Issues Lead to Big Money Losses

Phylicia Pough: 00:00:55

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Hey, friends. So last episode, I talked about three client experience mistakes that might be causing you to miss out on referrals.

But how do those mistakes or how do those issues in your client experience, how do they lead to what I mentioned in the title, Big money losses. So we already know less referrals mean less money. But there's something else. There's something else that's a part of this big picture.

All right, so let's get into it.

Now, this might be one of those episodes where you want to whip out your pen and paper, because I'm going to be giving you some numbers and some formulas. It's going to be a little bit more technical, but it's all so that I can kind of make this make sense to you. Okay?

So the first thing that I want to talk about is this idea of customer lifetime value. Okay?

So customer lifetime value is the value of the customer, or basically the amount of money that they have paid you for the duration of your relationship. Right? So let's just say you have a client and they purchase a package from you, but that's the only thing that they buy from you.

They don't, you know, hire you for any other services. And that package was $1,000, okay? So their customer lifetime value is $1,000. All right?

Now, in order to calculate the net profit per customer, what you are going to do is you're going to take that customer lifetime value and you're going to subtract the customer acquisition cost. So your customer acquisition cost is basically how much it costs you to acquire a customer. And there's a formula for that.

I'm not going to dig too deep into that. I'll put it in the show. The show Notes. But basically, it's your total sales and marketing expenses divided by the number of new clients acquired.

Okay, but I don't want to focus on that. What I really want to talk about is this net profit per customer. You find out your net profit per customer by subtracting.

You take customer lifetime value minus the customer acquisition cost. Okay, Customer lifetime value minus customer acquisition cost equals your net profit per customer. So what does this look like for your client?

Let's just call your client. I'm trying to come up with the name of somebody that I do not know. Let's see, what are we going to call your client? Let's call your client Trudy.

Okay, so Trudy, she purchased the package from you. It was $1,000. Let's just say your customer acquisition cost is $200. Okay?

So the $1,000 customer lifetime value minus your $200 customer acquisition cost, that leaves you with $800 in net profit per customer. Okay? So you might be thinking, okay, Felicia, where does client experience come in with all of this?

All right, so maybe Trudy did not have a good experience with you, and she decides that she does not want to work with you again. Okay, this might not be the case, but let's just say she does not want to work with you again because she did not have a good experience.

And you have other offers that you could upsell her into or downsell her into. Okay? She doesn't work with you again. So the net profit per customer is $800. But what if they do have a good experience with you?

What if they do want to continue working with you? So let's say you have a membership, right? And your membership is for. For math sake, Your membership is $50 per month.

And Trudy joins your membership, and she stays on for one year. So she pays you for the length of that membership. $600, right?

So now Trudy's customer lifetime value is the $1,000 package plus the $600 for the membership for the year. So now her total customer lifetime value is $1,600.

But your customer acquisition cost has not changed because you have not spent more money to acquire a new customer because Trudy is an existing client. So now that Trudy has joined your membership, her customer lifetime value has increased, but your customer acquisition cost has stayed the same.

r net profit per customer is $: 1400

It means that when you are constantly having to Acquire new customers, you are spending money for each new customer. And so what you want to try to do is try to retain your existing clients.

And the way that you retain your existing clients is by having a good client experience. When you're constantly having to acquire new customers.

Because maybe you don't have a suite of offers that might be something for you to look into, but if you do have other offers that you can sell people into and they're not going into it, you might want to look at your client experience. How are they feeling when they interacted with you in that first transaction?

Because if they are not coming back as a repeat customer, if you're not retaining them, then you are spending more money and it's eating up your profits, okay? So when you improve your client experience, ultimately you are increasing your profits.

So what I want you to do now, what I want you to think about are what are some ways that you can improve your client experience? Already encouraged you in previous episodes to do an audit of your own client experience. But what are some ways that you can improve communication?

Can you speed up your communication? Can you make your communication clearer? What are some ways that you can simplify your process?

Can you eliminate some steps that maybe are not necessary? Right? And then what are some ways that you can begin to anticipate your client's need? And what are some ways that you can make them feel good?

And to make them feel good can simply be just doing what you promised you were going to do and not having delays in your communication. So I'll say this from my personal experience. Even if you do a good job, even if you do a good job and you.

You successfully deliver the thing that you promised and your work is good. I have had experiences where the end product was good, but the experience throughout was not good.

And because of that, I chose not to come back as a repeat client or I chose not to refer out to other people because again, when I refer, that's going to be a reflection of me, right? And so this happened to me recently with a service provider. I love the final.

The final product that they gave me, but there were just issues with some of the mistakes that I encourage you to try to avoid. Communication delays in communication was a big problem. Once I submitted my information, I had to wait. I didn't know what was next.

And just having to wait for responses, it just made the process feel unprofessional. And I want you all to not have to have your clients feel the way that I felt with, with that particular service provider. Okay?

For specific, tangible ways to do this in your own client experience and you want to dig deeper into how to do this, join the Leads to Loyalty Challenge.

If you're listening to this after the challenge, then DM me on Instagram so we can continue the conversation and talk about what support might look like for you.

Okay, so thanks for tuning in and with grace and gratitude I will see you in the next episode where I'm going to share with you how I onboard my clients in 10 minutes and how you can do it too. Hey friend, I'm so glad you tuned in today. Before you go, will you take a moment to leave a review?

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