Text Box: Understanding the Math of Loyalty Client Path Marketing’s highest purpose is to help you enjoy the benefits of customer loyalty. The math is compelling (see Bucket analysis). But too often we have no plan or methodology to build client loyalty. Step One, emphatically, is data. If we don’t have it, we need to round it up and make it actionable. Step Two is micro-communication that touches existing customers on a personal, relevant basis, offering them added value and excellent experiences. Text Box: The Basic Math of business success or failure can be analyzed using fifth grade concepts: We need $X each month to pay our bills and realize a fair return on investment. Our average customer spends $Y per month. Therefore we need $X / $Y = Z customers each month. Since few of us love math, it’s tempting to simplify our marketing plan. “I’ll advertise to enough Strangers to attract 200 Prospects because we always close 20% of our Prospects and that’ll provide 40 Customers. Good enough!” Client Path Marketing demands that we look deeper. What if we could improve our 20% close rate? If 20% could become 40% by better selling and follow-up, we could cut advertising costs in half! Does Our Bucket Have a Hole in It? We must look deeply into the role of existing customers in our ongoing revenue stream. If we build enough loyal customers that 40 of them buy every month, we don’t need to advertise to Strangers at all. Two keys, of course: our attrition (Customers who fall away or greatly reduce purchasing) must be low enough that our word-of-mouth advocates can replace customer losses. But too often we ignore the value (and compelling math) of existing customers. We spend very little trying to maintain their loyalty. Our bucket soon has a gaping hole as competitors woo and win our customers; so we must resort to expensive Stranger advertising to refill the bucket.

The Math