Latest / Travel Agency in a Year / Day 277: What Is Client Appreciation, and Why Does It Matter So Much for a Small Business?
Transcript
- Rachel: Welcome back to the Travel Agency in the Year podcast. I'm your host, Rachel K. And we are on day 277. If you don't know who I am, go to elevatewithrachelk.com. I'm a travel agency owner. Let's get everyone listening to this podcast. Into the multiple six figure gross revenue land, put it out in the universe. I don't care if you're like seven million, let's do it. I'm shooting for eight eight figure. Not seven million, seven figures. I'm shooting for eight figures in five years in my travel agency. Minimum every single year. I have my reasons. It's not greedy. Look at me trying to like attempt to redeem myself. I want to make 20 million a year, but it's not just for me. Alright. Let's get to Lulu. What is client appreciation and why does it matter so much for small businesses? It's days 277. Yesterday we covered specific ideas for client appreciation that go beyond the branded magnet or bottle opener or t-shirts. Stainless steel tumblers. Today let's step back and answer a more foundational question. What is client appreciation actually? And why does it matter as much as it does for a business your size? Cuz guess what? You're a small business owner. Let me see. I'm Googling something. Stick with me. Retail and services until you make over eight million dollars a year in gross revenues, you are still a small business. Dang Ooh, you probably don't have a small business. Alright, now I'm on Reddit. Sidetracking for a second. According to the US government, a small business has revenue between one and forty million and or one hundred to fifteen hundred employees. According to the SBA, the small business has an annual hmm. So, until you hit a million in revenue, you are not a small business owner. What? Okay, this is why we all need to make a million a year in revenue. Let's be small business owners. Not a micro business. Or you can be a micro business, that's cool too. isn't that crazy to think about? You're totally capable. Anyway, client appreciation is a deliberate ongoing practice of acknowledging and valuing a client beyond the transaction itself. Communicating through specific and genuine gestures that those people actually matter to you as a human being and as a business relationship, not just a source of revenue. It's distinct from customer service, which is about delivering what was promised. Appreciation is about what you offer beyond what was technically owed to them. Okay. Let's talk about the economics behind why this matters. research from Frederick Reicheld of Bain and Company. Sorry for butchering your name, sir. The inventor of the net promoter score. Suggests that even a modest 5% improvement in customer retention can increase profits substantially, with estimates commonly cited in the range of 25 to 95%, depending heavily on the industry. While the exact figures have been debated and vary considerably by context, the underlying direction of the finding is well supported across a large body of business research that retaining an existing client is consistently far less expensive. No doy people. Why am I reading this in my notes? Considerably more profitable than acquiring a new one. Well, no doy. I talk about this and know your numbers also, because you do have client acquisition costs. I don't care if you're like, but I'm market on social media for free. Guess what? It takes your time that you can't spend doing consultations, getting fees, and closing bookings. That's costing you money. You all have client acquisition costs. I'm getting an attitude. Okay. But that's pretty common knowledge, right? It costs far less money to maintain a client than it does to acquire new ones. And if you didn't know that, there's your light bulb moment for the day. So, story time. Back in the day I worked at Cole's seasonally, and then they offered me a full-time job because I'm super special. Department stores. I was a cashier for the holidays, and we had credit card goals. Okay. No one taught me that the store's goal was written at every single register. I thought it was your individual goal for the day. So I became the number one credit card salesperson, I guess, for like the entire Midwest. For every Coles Department store in Midwest. I was like top, I don't know. I was in the top for the Midwest or something, and then like number one for the region, or I was number one in the Midwest and in the top nationwide. To the point where they pulled me from the register and I just went around the store with credit card applications. And I just tap people's shoulders be like, You wanna save thirty bucks? You want those pants for free? Fill this out. Destroy your life with credit. I was young. I didn't realize how badly people's credit could be messed up. but I got really good at objections when people be like, Well this is my daughter, she's a brand new student at college, you're gonna ruin her credit, and I'd be like, Well, not if she immediately pays it off. She charges this purchase to this card she gets approved for, she can walk right over there and write a check, and she'll get this vacuum cleaner for free. Like that's how I did the credit card applications. I would tally up their total if it was a thousand bucks and they got 20% off. I'd be like, you want a free vacuum today? Well, what do I do? Give me your credit card social security number. It's fine. but I didn't understand why it was so important. To have people sign up for credit cards and it was for customer attention. I had it explained to me by one of the management teams. I was like, what does it matter that we have credit cards? So also sidebar, I thought the entire store goal was my daily goal, and until they told me you're like top in the country for this, I was like, man, I only got 15 credit cards today, and the goal was 21, because nobody told me for months that 21 cards was the Entire store from open to close. But I wanted that extra buck fifty per application because I was like, that's an extra three dollars an hour if I get two an hour. So and we all know how much people at Kohl's make. Okay. So then the management explained it to me. They had the research that found I think it was tied with like Chase Bank. I c I can't remember what bank it was tied to. But they found with store credit cards the Even though you give them all these special promotional discounts, for every thousand dollars in credit that someone was approved for, they would spend an extra five thousand dollars a year at that store. Because there was the perceived idea that they're getting all these discounts. Because you back with the Coles card back in the day, you'd get like extra Kohl's cash in the mail, and like super secret promos, things like that. And that was how a lot of retail stores and maybe to this day still do, because I refuse to sign up for any of those store cards after learning that. I'm like, buh. I don't want to get tricked. And once I learned that also, I stopped really putting any effort. Because I'm like, we're ripping a bunch of people off to make them think that we actually care about them, but it actually just brings in this much more revenue a year. Cool. Anyway, it's much cheaper for them to give them a credit card than run more ads. So that's what I'm saying. This is the point that I'm getting to. It's in every business. If you can get someone to come back, don't sell them a credit card. Don't do it in a shady way. But if you can get someone to come back, it's a lot less expensive than trying to spend your time, money, and effort acquiring new clients constantly. So this goes back to the 2x rule from day 232. Client appreciation is one of the most direct practical levers for actually improving client retention. The 2x rule, if you don't know, you should have a goal in mind of having every single client booking a minimum of two trips with you. So how are you gonna maintain, how are you gonna get that client retention? sidebar, if you're doing destination weddings, focus on the couple or a handful of like closer family members booking a second trip with you. Not everyone in that group, because some people are booking with you against their will. They're like, I have to go to this wedding. I'm just gonna book with the travel agent. Okay. Alright. Anyway. That's an easy way to suss out how you want to improve your client retention, which in turn directly supports the repeat booking and the referral value that we've talked about in many, many episodes. Why does this matter for a small business specifically? A micro business, if you will, because I had to Google the revenue for it to be counted as a small business. You gotta hit a million dollars. So a large company can survive a certain amount of client churn. If you don't know what churn is, it's clients work with you, never come back. That's what churn is. But larger companies can handle handle that simply through the sheer volume and the marketing spend that they have. A small boutique micro travel agency model built on the relationship-driven model that we've discussed back on day 217 doesn't have that same cushion. I mean, you will spend more time marketing, like I said, your entire growth engine depends heavily, can depend heavily on repeat bookings and referrals that come from clients who feel genuinely valued. Not just adequately served. So appreciation for business your size isn't a nice extra. It's a pretty close to core growth strategy. Now again, if you are niching in destination weddings, I've got two points here. Please understand, you can't have a group of 150 guests all be like, we totally want to book our next trip with you. You're if there's 150 people, including the bride and groom, you might get five repeat bookings from that or referrals, you know. And they're not necessarily all going to be groups, but they could be. what was my second point here? nope. I forgot my second point. I'm sorry, I was going on a tangent here. Let me look at my notes really quick. yes. Also, secondly, I want you to understand If you don't get a lot of repeat clients right now or referral clients right now, that is okay too because there's plenty of business for all of us. So if you need to refine your client retention strategy over the next few months, that is fine as well. Just understand it's a lot easier to maintain a business if you have constant repeat and referral bookings, especially a small business, versus constantly having to market to new business. And it takes several years to build that book of business up, honestly. Like if you do, let's say, one to two million dollars in bookings, great, but the likelihood of in that one year, all of those people coming back is not nearly as likely. Like, don't worry, I've done the research. People take international trips about every other year in the United States. So if you did a million dollars, let's say you did two million dollars in booking value in one year. Most of those people aren't gonna book again for two more years. So you have to build like a solid book of business. Okay. Alright. Please don't think I'm trying to discourage you. We're all fantastic. So what's the distinction between genuine appreciation and transactional appreciation? We gotta be honest about the trap here. Appreciation done purely as a calculated retention tactic or to get a five-star review without any real warmth behind it tends to come across as hollow. Clients often sense the difference. And yeah, they might leave you five stars on your whatever site. but they're probably never gonna book you again. The research, I mean, but if you're cold hearted, who cares? You get 400 five-star reviews. That you paid for. You know? Okay, research supports appreciations. Business value. But the actual gestures need to come from genuine care for the relationship. The way that we've discussed regarding stewardship earlier this year. The business benefit should absolutely be real, but it shouldn't be the only reason you're doing it. You actually like these people. You see them as human beings. There's a sense of some sort of love, like affilia, brotherly love. Or storgay. Affection. Like you have affection for them. At a minimum. We're not gonna do romantic love here. It's not full on agape. Storgay Filia somewhere in there. Okay. Gotta make sure you're doing this more than just your own money and your own online reputation. So client appreciation is deliberately acknowledging a client's value beyond the transaction, distinct from your basic service delivery. Don't promise this in your packages, don't promise this as part of your clothes because that becomes the baseline expectation. It needs to be surprised. Widely cited retention research suggests even modest retention improvements have a significant impact on your bottom line and your profit margins. Though exact figures do vary by industry. But let's say you do one small thing to improve client retention over the next year. And let's say your book of business right now is 20 clients. Keep it really small, Rachel, right? But that one small improvement. leads those 20 clients, not all of them, but of those 20 clients, four people refer you to two new clients each. So that's eight new clients, which is a s what is that? 60, no, 40% growth in your book of business, essentially. Not everyone's gonna refer you, even if you do these gestures, even if they love you, even if they refer you, that doesn't mean those people are gonna come work with you. But they're more likely to book their next trip with you, too. Tomorrow we're gonna look at how bigger businesses practice client appreciation at scale with real numbers behind their programs to give you some more ideas on client appreciation. And you're gonna be like, what do you mean this is all the get me to come back for client retention? It's fine. They do appreciate you. All right, have a good day.