How to Dramatically Increase Your Client LTV

"The key to increasing client LTV is to give them 10x more than what they are paying for."

I heard this in my recent interview with Cooper Saunders.

Click here to listen to the interview

He's an incredible agency owner who has scaled to $8m per year, within 7 years, bootstrapped, and he's only 25 years old!

After hearing his comment on LTV, I honestly didn't believe that he is actually able to provide a 10x ROI, so I dug deeper.

"If you DO provide such an insane ROI to your clients, how long do they actually stay with you?"

"Good question. If we bring on 10 clients, about 7 of them will stay for 2 years", he said.

I was mind blown.

This means his monthly churn is 1.25%.

Which is crazy low given the fact that almost all his clients are small, local businesses.

And, about 20% of those businesses fail within their first year! (Source)

How was this guy beating the odds and retaining his SMB clients for so long?

After the interview, I reflected on my own agency and which clients I have had which have stayed the longest.

Here's what I realized are the THREE keys to an extremely long client LTV...

STEP ONE: FLESH OUT YOUR CLIENT SCREENING PROCESS

There is this thing that happens with new agencies where they are obsessed with revenue growth and take on anyone with a pulse.

Bad idea.

I wish I could say I never operated like this, but I did at the beginning because I didn't know any better.

As I've grown my agency, I've realized that the most important thing is to have a client selection process.

You have to ask yourself: "can I really crush it for this client?"

If the answer is no, then pass.

If you want to implement this screening process immediately into your organization, you can do the following things:

1. Conduct a "Complimentary Audit" of Their Account Before Taking Their Payment
2. A 10 Day Refund Window After Onboarding if You Learn The Campaign Will Fail
3. Build a "Work for Free" Option Into Your Business for Clients That Need More Time

By implementing any of these options, your business will start to grow faster.

STEP TWO: WORK WITH HIGHLY MOTIVATED TALENT

Cooper also told me, "one of the keys to scaling customer success is to always have someone available to call the client immediately if there are any issues with their account."

This got me thinking.

"Is my customer success team motivated enough to do this?", I thought.

So, I audited our team, and I realized that we were doing a good job, but we could do better.

The main issue was that we had not streamlined our customer support as efficiently as it needed to be.

Since this interview, things have gotten much better.

Because, we decided to immediately respond to people who had issues.

For us, this was a procedural issue that was easily fixed.

But, for you, if might be more serious depending on a variety of factors related to an unmotivated talent base.

You need to ask yourself:

• "Is my team actually motivated enough to make customer issues a priority?"
• "Are they getting paid enough to care?"
• "Have I fostered a culture of caring individuals and made it a cornerstone of my process?"

STEP THREE: CURRENCY ARBITRAGE OR OPERATIONAL MASTERY

In my opinion, most people who write about customer LTV look at it from too subjective of a lens.

Many times, the truth about customer churn has more to do with hard costs.

Simply put, if your service cost is too high for them to continue with you, they may feel that the service does not provide enough ROI for them to stay forever as a client.

This is why companies in the Midwest, like Cooper's, have such a huge advantage over companies in more expensive states.

Simply put, the cost of living is can be 50% lower in certain states in the Midwest.

If your service cost 50% less to your customers but you can deliver the same amount of results as you do now don't you think they would last longer?

This is why we moved a bunch of our operations to the Philippines, or other lower cost of living states in America.

I recommend you do too, because I guarantee your agency competition is doing so.

That being said, you should also focus on operational mastery.

Meaning, you should get your operations so dialed in that you make AT LEAST a 50% gross margin on your services regardless of which state or country your operations are in.

WRAPPING IT ALL UP

There are only two ways to scale a company in my opinion, more sales and less churn.

If you can do both at the same time, you have a wildly successful enterprise on your hands.

Increasing client LTV is as much an art as it is a science.

But, I hope that this article helps you get your LTV large enough where your business rapidly accelerates without needing more sales.

This means more profit and less headache.

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