Why Customer Churn is a Silent Killer with Daniel Craig

Daniel Craig on Why Customer Churn is a Silent Killer

Daniel Craig from ProfitCoach is joining us on The Property Management Show today to discuss the problem of churn and the value of retention.

Walk down memory lane with us for a bit, and you’ll remember that Daniel’s first benchmarking study led to the NARPM Accounting Standards and a new focus on property management profitability.

On our podcast, we’re discussing how client retention and client lifetime value affect your property management company’s profitability.

Churn Kills Profitability

If you have a low rate of client retention, your property management business has a leaky bucket. When it comes to your sales and marketing efforts, you’re investing a lot of money to ensure doors are coming into your business, but those new doors end up going out the back door.

The money you’re spending on sales and marketing doesn’t contribute to profitability because you can’t earn anything significant. Too much business is being lost.

Your customer’s lifetime value is what contributes to profitability. If you can’t keep your clients, you’re basically operating at a net loss on your sales and marketing spends.

When we look at overall profitability in any organization, profit increases when revenue rises.

It’s that basic. When you don’t have decent lifetime value from your customers, your rate of growth suffers. You lose the opportunity to make more profit off those customers. Doors have to stay with you for the long term, otherwise you lose money.

Reputation and Customer Experience

To really maximize the dollars you spend on sales and marketing, make sure two things are in place:

* A good reputation

* Delivery of a fantastic customer experience

You’ll undermine your entire marketing effort if you don’t already have a good reputation established. That reputation is a foundation upon which you’ll build with your sales and marketing dollars.

The customer experience is what prevents churn and the loss of existing profit.

Organic referrals are a big part of your marketing strategy. People don’t always think of it as a strategy, per se, but it should be considered exactly that. Referrals don’t just happen. They happen when an outstanding customer experience is provided. It inspires your clients to talk about you.

With a good reputation and a significant referral strategy in place, your sales and marketing efforts will work better. Creating the right customer experience will drive new business and retain existing business.

You can throw a lot of money into marketing your property management company, but if you’re not establishing yourself as a reputable company, your marketing dollars aren’t going to spread as wide for you. Leads will get more expensive, and your lead quality goes down. The people contacting you when your reputation is subpar may not be the right clients for your company.

Tracking Who You Keep and Who You Lose

Is your glass half full or half empty?

Meaning, are you calculating who you keep or who you lose?

From a metrics standpoint, it’s important to watch your churn.

But, don’t lose the real value in tracking that churn. You can look at it as a way of diagnosing the chinks in your armor when it comes to <a href="/taking-ow...