In my last post, I lamented the fact that too many companies focus on the top of the funnel, awareness, before they have figured out how to optimize leads and convert them into happy customers.
I said the most important area of the funnel is the bottom.
But actually,there is something even more profitable than converting leads into happy customers. And that is retaining those customers over time. Companies with recurring revenue models understand this truth. That's why it's so hard to cancel your mobile contract, magazine subscription and gym membership.
It's also true of companies who have multiple products or frequent (paid) upgrades. It is much cheaper and easier to get someone to buy more than it is to get them to buy once.
The best businesses use retention metrics to ensure that they are maximizing lifetime customer value, and getting the most out of their marketing spend.
Repeat business is the low hanging fruit. Maximize repeat business before investing in new business, especially if profitability is more important than (unprofitable) growth.
