Retention, Referral and Raving Fans (R3) - Part 2
Black Holes and Advanced Recapture
You’ll want to Read Part 1 Here before going any further. If you’ve already read it, read it again… It’s been updated and improved. One of the fastest ways to learn anything is by experiencing it. I built a simple process that will take you through R3 - teaching it while you’re experiencing it at ExperienceR3.com. It’s two emails and texts over two days. If you just pay attention to those two days and take the action steps, you’ll be ahead of most.
Most prefer the certainty of misery to the misery of uncertainty”
- Virginia Satir
Part Two: Black Holes
The Biggest Profit Killers In Your Business
There are two concepts to keep top of mind throughout Part Two.
“We fail to appreciate when bad things don’t happen” - Nic Peterson, Bumpers
“Most prefer the certainty of misery to the misery of uncertainty” - Virginia Satir
If we celebrated a customer not leaving the same we celebrate new customers, we’d all have a much larger, more profitable business. Part two is just identifying and eliminating the biggest profit killers in our business.
We call these profit killers “Black Holes”.
These are areas in your business that cause your customers to leave. The scary part is most times you can’t see them. A vast majority of the time, no matter how well you know your business, you don’t even know the Black Holes exist because customers don’t complain about them. There is often no feedback and if there is, it’s a long one. But they have a massive effect on your bottom line.
When we work with new partners, it’s always painful for them to see the truth. To get the most out of everything that follows, you’re going to have to get out of your head and be willing to see reality for what it is.
There are typically between one and eight Black Holes in every business.
From a customer journey and psychological standpoint, Black Holes are areas in your business where the customer experiences some sort of uncertainty. Uncertainty makes people feel stupid and people don’t like to feel stupid so most of the time, they won’t say anything. They’ll just leave in an attempt to find somewhere that makes them feel smart.
Once again, emotion trumps logic.
The biggest cause of a black hole is the customer isn’t sure what to do next. Maybe they're nervous or don't know how to engage with you further so they just mentally check out and are never heard from again.
We’re talking about the ones who rarely leave bad reviews or give negative feedback, because they aren’t angry, they just stop using our product or service because they are confused or uncertain - they feel stupid or incompetent - so they leave.
More often than not, the owners of the business are losing more money in black holes than they are paying themselves. If you’re throwing $150,000 a year down the drain and paying yourself $150,000 a year…
Unnecessary Loss Is An Equal Partner.
Sometimes, the unnecessary loss is the majority owner.
See. Painful.
The good news is that it’s an easy fix. The problem is that the customers are uncertain or don’t know what to do, but the team and the founder do. Rarely does it require a herculean effort to plug the black holes, everything is already in place - except effective communication. Your company doesn’t have to build or provide anything new, it simply has to better communicate what’s already there.
Or they will leave you for someone who does. It doesn’t matter if you know your product or service is better…
Their emotions trump your logic.
The big black holes are easy to find. Any time your customer might be thinking something like…
“Well, am I supposed to call them?”
“Are they going to call me?”
“Should I email them?”
“What do I do when this happens?”
'“What do I do when that happens?”
“Should I hear from them today or tomorrow?”
That's a Black Hole. The basic allegiance capital exercise will plug most of them.
Any time you catch you or your team saying something like…
“Well we already told them that, I don’t know why they’re confused”
That's a Black Hole. It doesn’t matter what you think you told them (tap, tap, tap) - only what they heard. The Rocky Road exercise will plug most of them.
The lowest hanging fruit and highest return activity are to identify the areas where you and your team know what to do but the customer doesn’t - and then communicate better at that step. Every time you get frustrated at your customer for something, check for a black hole.
Simple. But the impact is profound
The Biggest Three Black Holes
The biggest black holes are the same in almost every business. Why? Because your customers are still human and black holes are emotional. Every relationship shares the same three points where emotion is the most likely to cause poor decisions.
The Honeymoon. “The Honeymoon Phase” is used as a warning for a reason.
The Handoff. Meeting the friends is fun. Until it’s not.
The Helper. When trying to help actually hurts.
Note: The stages below will be addressed later. These are the points where the psychology of the relationship shifts - so communication should shift accordingly. It woudln’t make sense to talk to a stranger the same way you talk to someone you’re casually dating. It wouldnt make sense to someone you’re casually dating the same after you get engaged. The nature of the relationship changes over time.
The HoneyMoon
The first big Black Hole is immediately after the sale. The marketing and sales process has created an emotional high.
Remember….
a peak is always followed by a valley
In the case of marketing and sales, the peak we created is an emotional peak. This means what follows will be an emotional valley…
Buyers remorse.
Since it’s an emotional valley, you can’t battle or mitigate this peak with logic.
The only way to mitigate an emotional valley is…well, emotionally.
So the question is not… “what are you giving them after they buy?” That’s obvious; it’s whatever they bought. It’s “How are we going to make them feel after they buy?”
The harder you work to create an emotional high before the sale, the greater the emotional valley will be on the other end. As much as possible, create as little of an emotional high as possible in the marketing and sales process. One of my favorite ways to do this is to move the marketing and sales tools, like bonuses, to after the sale.
Let’s assume someone is clearly better off after purchasing your product or service. If you were to draw a straight line from before the purchase to after the purchase it might look like this:
If we created a massive emotional high before and during the purchase, their emotional state might look like this:
Even though it’s the same starting point, same current location, and same progress, objectively - in the second scenario the customer is likely to misframe the situation because they are sitting at a relative emotional loss.
The great thing about emotions is that it doesn’t take much to swing them. We’ve all seen a well-timed smile change everything.
The Question:
How are you managing the customer’s emotional state both before and after the purchase?
The Handoff
The second big black hole is during the initial customer onboarding.
It’s that time after your customer has started using your product or service, but is not quite familiar with it yet. There’s uncertainty here, there’s a bit of a handoff or transition happening. The business doesn’t consider the transition as being weird or different, but the customer notices it. For example…
Perhaps the support team is using different language than the salesperson did
Perhaps the communication went from mostly Zoom to entirely email after the purchase - or vice versa
Perhaps the mood was serious in the sales process and more laid back inside the community - or vice versa
That’s not to say that these transitions are bad, they are just different. If they are not explained, it makes the customers feel confused or worse, feel stupid. Many business owners believe they are exceeding expectations by “overdelivering”, but “overdelivering” without communicating it effectively can be confusing.
I’m sure you’ve seen it. In an attempt to increase retention, the company gives people more stuff - and it has the opposite impact.
“Confuse the shit out of them” is not a great product upgrade.
Better managing their emotions and communicating the steps in the process will almost always be better than giving them more stuff - which just leads to more steps that haven’t been communicated.
The Question:
How are you making the customer feel smarter each time someone or something new is introduced? This includes new personalities, communication styles, products, services, etc. The onboarding stage is the biggest influx of “new” to the customer, which is why it’s such a big black hole.
The Helper
The third big black hole is the Raving Fan.
Have you ever had a family member, partner, or friend that loves and supports so you much they will do anything to help you win? Sometimes, they’re so eager to help they do things that cause problems for you and set you back.
That’s the third big black hole in your business.
It’s the customer who is thinking:
“Oh, my goodness. I love your brand. I love you. I love what you do. How do I share this? What can I do?”
Why is this a black hole?
Because they’re uncertain again. Believe it or not, they don't know if it's OK to spread the word about you or how to do it. They don't know exactly what you would want them to say or how to say it. It’s important to do something right here, particularly if you want referrals and word-of-mouth marketing to amplify everything else you’re doing.
Someone who wants to help but is not given instructions on how to help will either:
Do nothing and feel horrible about it.
Make something up, which makes them feel stupid and might end up having negative consequences.
Either way, the people who want to help you most - and are willing to do the most - are starting to feel negative emotions for engaging with your brand. It’s like the huge falling out in movies - the ones where you’re watching and thinking “You idiots - you clearly care for each other -just talk to each other and this huge blowup wouldn’t happen!”
You care about your best customers. They care about you. If you don’t communicate with them that relationship slowly becomes a ticking time bomb. This is arguably the most profitable Black Hole for many businesses to address first.
It has the least friction, the lowest volume of work for you, and the highest payoff potential. Ravings Fans are in an entirely different place, psychologically, than new buyers are. Learning how to communicate to them how they can help you is critical.
The Question:
Can you identify the customers that already love you? If so, how are you making them feel smart for sharing your stuff? If not, how can you identify them?
Obviously, the concept is simple: we want to eliminate as many Black Holes as possible.
The hard part is being aware of them, identifying them, and putting the fix in place.
More black holes will be identified in the following posts/chapters of this series. BUT… if you just look at the three areas above and apply the concepts from Part 1, it will move the needle.
Each Black Hole above has a question to answer.
Write them out and start working through it.
Do that, first.
Because things are about to shift….and it might throw your brain for a loop.
Part One covers the pillars of R3. It’s helpful to understand the pillars before doing anything super resources intensive - like rebuilding funnels and deliverables.
Part Two covers the most common and highest leverage places to apply the pillars in that specific context.
Part Three is where it gets funky. Moving forward, the most efficient and profitable way to implement everything you learn will be in exact reverse order. That’s right, back-asswards.
Once again, I recommend you take action on the above before forging forward. If you’re ready to forge forward, Part Three is right here.
I hope you found this helpful - or at least an interesting way to look at your business. Please feel free to share it with anyone that might find it interesting.
Live to Learn. Give to Earn.
PS. Speaking of referrals…we already have someone on the Leaderboard. It’s a safe bet that they’re going to get WAY more than expected. (Remember the emotional peak and valley thing, this is an example)
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