F.B. – Although the following article talks about churn of clients, it’s equally relevant to franchisee selection. Just change the word “client” to “franchisee” and you’ll see what I mean.
This post originally appeared on Anthony Iannarino‘s website and is republished here with permission.
New business is sexy. The thrill of the chase and the resulting win is exciting. The brand new money from a brand new client is worth reporting. The challenges you have executing are all-hands-on-deck affairs that are worth solving.
Old business isn’t sexy. The chase ended a long time ago, and the newness has worn off. The old money is routine; it’s an annuity. The challenges and your existing clients have to together aren’t worth anyone’s time, theirs or yours. Until you are competitively displaced.
Running In Place
It’s difficult to grow if the new clients you win are only replacing the clients you’ve lost. Even selling more to your remaining clients may not be enough to move the needle when it comes to revenue growth.
There is no reason to win new clients only to lose them. It doesn’t make sense to acquire a new client and lose them for the same reason you lost the client they replaced.
When you are running in place, your heart rate increases, you sweat a lot, you expend a lot of energy, but you don’t go anywhere.
Retention + Acquisition
Lost clients are negative revenue. When you lose a client, you lose their revenue. This is anti-sales. While you are busy trying to make sales, lost clients are creating anti-sales, and all the bad things that come with it, like reputation damage.
The same effort that goes into winning new deals and solving your new client’s problems needs to be applied to your existing client’s problems so that you can retain them. When you retain clients, all new clients are accretive, they’re growth instead of replacement revenue.
If your existing client was a prospect, their challenges would be sexy enough for you to solve if it meant you would displace your competitor.