The Demand #
Tomorrow, run the math on your own drain. Calculate what your current Guest attrition is actually costing you in a year, using Reichheld’s numbers as your baseline: a 5% increase in retention can lift profits 25 to 95%, and a new Guest costs 5 to 25 times more to acquire than an existing one costs to keep. Decide whether your next marketing dollar goes to the faucet or the drain.
The Work #
Your current repeat visit rate, as a stand-in for how open your drain is:
Your current marketing budget allocation — estimate the split between acquisition (faucet) and retention (seal):
Using the 5-to-25x acquisition cost multiple, what does one lost Guest actually cost you to replace:
What have you been spending on ads, promotions, and deals in the last quarter — the faucet spend:
What have you spent, in the same period, specifically on strengthening relationships with Guests already choosing you — the seal:
Faucet or drain — where does your next marketing dollar go, and why:
The one action you will take this week to start closing the drain before you turn up the faucet:
