13 Retention Tactics That Doubled Customer Lifetime Value at School

22,265,736 total users on School as of today. And to get that big, we had to know how to retain users. And one of the biggest places we learned this from is the communities on the platform itself. And so in this video, I'm going to break down what we've learned so far that you can use to retain your customers longer in any recurring revenue business. And this is a special shout out to the School and Sam. I'm

taking all the learnings that he put in the School News and I'm trying to make them public cuz I think they're awesome. So number one is think of churn like a leaky bucket. And then diagnose what's actually happening. So your MRR, meaning your monthly recurring revenue, grows when new members are greater than churn members. So for example, if you sell five people and you lose four, your MRR will grow. If you sell five new members and

five churn, your growth will be flat. You begin declining when you have fewer new people than people who leave. And so tactically, what you want to do is track those two numbers on a monthly basis, joins versus cancels, and then force yourself to label the businesses growing, flat, or declining based on that. That's thing one. Thing two. You want to use retention benchmarks. And so this way you can know if you're good. And so I'll just

give you the School platform averages. Now to be clear, this isn't uh churn for like an insurance premium or an alarm system. But if you sell anything that is, I would say, a tradi- you know, a consumer service that's not like a home service, but just like a weight loss service or anything that you'd help somebody uh or remote service or anything that's like an online service, um these metrics will probably be much more correlated to

what you're at. And so the platform average across School is 80% monthly retention. So said differently, it's 20% churn. So 80% stay, 20% leave. That's the platform average. Now the best groups have less than 10% churn, aka 90% retention month over month. The not good groups have less than 70% retention, aka 30% or higher. And so tactically, if less than seven out of 10 people want to stay on a monthly basis, you probably need to work

on your retention more than anything else. It'll be the highest ROI lever. Now, to put this in context, if you take your turn from 20% to 10%, or said differently, you take your retention from 80 to 90%, you didn't just get a 10 or 12% boost, you got a double in the LTV per customer. Meaning customers stay twice as long when you make that change. And so, one of the big things that people get confused about

these small numbers is that the smaller the number, the bigger the change by percentages when you make these small tweaks. And to be clear, this is all monthly in comparison to others, not in comparison to have like a sellable business or anything like that. Real quick, I'm going to show you the exact 10-stage roadmap from zero to 100 million plus that less than 1% of companies finish. I've now done multiple times, and so I can say

with a lot of confidence that these are the stages as head count increases that you need to get through. And I broke each of these down by eight different functions of the business, what the constraint feels like, like what are the symptoms of it when you're going through it, and then what steps we actually took to graduate. And we've done this across software, physical products, uh service businesses, brick-and-mortar, all of this, and it works. And it's

my gift to you, it's absolutely free. And so, the link's in the description, but you just go acquisition.com/roadmap, just enter your info, and it'll spit it right back to you all free. So, number three is the biggest rule is that churn drops dramatically with time. All right, so this is like this is a very cool inference that that uh Sam shared with me that I thought was really, really interesting. So, it it it's very easy to

think, "Okay, my average churn is, call it 10% a month." But when you actually look at cohorts of churn, meaning people who are at their sixth month versus people at the second month versus third month, etc., the averages across platform are also very different by month. And so, for example, month one to three are the highest churn. So, they're 20% plus during these months. Now, if you keep someone 90 days, which seems to be the first

kind of big churn drop-off point, it drops to around 10% or less. And you're like, "Huh, that's kind of interesting." Basically, it drops in half if you get people to day 90. Now, by month six, so another 90 days after that, churn gets extremely low. So, it goes from like 10% to 2%. All right, so a 5x decrease or a 5x increase in LTV, depending on how you want to see it. And so, the implications of

this are huge because a lot of people will obsess, myself included, about like, "How do I get my my monthly churn down, you know, over and over again?" An easier way to think about decreasing your churn is not, "How do I make this number go down?" but, "How do I get someone to stay past day 90? How do I get these people to stay past month six?" Because those become much more tactical in terms of like,

"This is what I can do." Now, to be clear, if your community or recurring revenue thing is less than 90 days old, then your churn is always going to be inflated cuz you haven't even gotten those customers who've made it past that point that would, over time, decrease your monthly churn. If it's less than six months old, it's the same thing, just a little bit less. And so, to be clear, don't overhaul your entire business because

your month one churn sucks. Uh that's normal for it to be higher than the other months, unless basically everyone's leaving, in which case, yes, you should go fix that. All right, so that's number three. And I think that one's like really, really big, and I want to like hit on that. Like, I would say, if you had to focus on three tactics, have a very specific strategy for getting people past the first month cuz that's the

biggest month of churn. So, that's going to come from activation onboarding expectation setting, selling the right promises on the front end, showing up every day, making sure that you're providing content in that in that environment. Day 90 is probably going to have to deliver some sort of outcome, some sort of change in behavior for them. Month six, it's usually them connecting with other people within that community. All right, and so, this is kind of as these

things develop. Now, number four, ask people why they canceled, and then look for the patterns. So, I would say, earlier on in my career, I would just like when someone says, "Oh, it costs too much." I would just ignore them. I'd be like, "Oh, they just don't understand the value." But over time, I've learned to appreciate that like I'll tell you a a cool little thing. Sam has the head of customer support sits right next to

him in the whole office. And the reason for that is cuz he wanted a very tight feedback loop between the problems that customers are experiencing, the reasons they're canceling, and the things that are getting built. And that's why School is such a strong platform, it's so good. And so tactically, message people who are canceling say, "Hey, why are you canceling?" And don't knee-jerk, you know, on one response to be clear. They'll be like, "Oh, this one

person canceled." Like, look for patterns, collect enough feedback uh to see them. And so tactically, you can create a simple DM script, and then you can tag the reason that people have in an Excel sheet. So, it could be like price, overwhelm, not using, it's missing a feature, or it's not what I expected. And you can look at that, and for every 20 cancels or so, review the top one or two reasons, and then fix those.

Really tactical advice, please do this. Number five, ask your best members why they stay. So, we're asking the bad people why they leave, we're asking the good people why they stay, and then do more of that. So, identify the longest tenured people, aka the most engaged members, and then ask them like, "What made you stay? What's the number one value that you get here?" And so then tactically, whatever shows up repeatedly becomes your kind of retention

engine. And so everything else after that is really optional. And I would I want to emphasize this point. If you can only do one thing that gets people to stay, why would you do five? And this is a lesson that took me too long to learn because often times, we believe that in order to fix things, we need to fix them through addition. When often times, we need to fix them through subtraction and amelioration, aka making

it better rather than adding more stuff. Because if you were to simply fulfill the promise that you originally made, they'd probably stay. So, if you think about, "How do I improve the quality of a product?" You make a promise, and then you remove all friction associated with getting that thing. And so the businesses, the products, and the services that win are the ones that simply make all the things that suck about achieving the good thing go

away. School fundamentally helps people get started online. And so all we've done is try to optimize to make it as easy as humanly possible, and that doesn't mean adding more features. It means making everything in the background just vanish so it just works, which leads me to number six. Price objections. You don't want to guess, you want to tier based on evidence. So at School, so us eating our own dog food, we had a bunch of

people canceling saying, "It's too expensive." And so what we did is we created a lower tier while still keeping the higher tier available with some additional, uh, you know, metrics and, you know, additional admins, things that, you know, unique URLs, you know, no no sidebars of competitor groups kind of advertising the same area. We kept that for the high-level people, but the people who are lower-level, who are just kind of hobbyists, who are just getting started,

we created a 11 times cheaper tier from $99 to $9. Right? And so this was important for School because a lot of hobby groups are people getting started and maybe they're not necessarily making a ton of money. They got to figure out a few months, and the difference between $100 a month and, you know, uh, $9 a month is pretty huge. And so that allowed the people who were like still figuring it out to still be

able to use the tool and stay and then ultimately be successful longer term. Now tactically if your ideal customers, this is a very important point, if your ideal customer say the price is the issue, then you can add a lower tier or a standard plan. If non-ideal people say it's too expensive, just ignore it. That means that the price is actually acting as a good filter, right? Like if you if you're like, "I want a community

for a million dollar plus business owners," and people who are not a million dollars plus say this is expensive, then it's like, "Great. Bingo. It's working." All right? Um, same thing with whoever your avatar is, which leads to number seven, overwhelm. So let's talk about this. The number one reason people churn, outside of price, is overwhelm. It is the churn driver. And this is why doing less can often retain more. And so, the core idea behind

this is like, I don't have the time, I can't keep up, I can't utilize it. And usually just means there's too much stuff. So, I want to I want to break down a real-world example of this outside of school that applied the same concept. So, Planet Fitness uh is a $10 a month, you know, gym subscription. They have some upsells, whatever. And they were able to enter the market in a place that there's already tons of

gyms, there's already tons of health clubs, etc. But what they realized when they surveyed customers is that people joined health clubs and they were paying $59 a month or whatever, and they had basketball courts and racquetball courts and uh cardio and pool and all this other stuff, right? And when they surveyed people, the vast majority people just used the cardio equipment and a little bit of weights. And so, they were like, wait, so these have these

massively built-out things, but people are only using 10 or 15% of the facility. And so, what they did, they said, what if we just took out that 10 or 15% put it over here and then charge way less for it? And by doing that, they had a superior value proposition. Now, here's where it gets really interesting. When you have five things that you pay for, but you only use one, you feel like you're only getting 20%

of the value. If for the same price, you just offer that one thing, people feel like they're getting 100% of the value. So, someone is more likely to churn in this scenario because you added more stuff because now they feel like they're using not enough of it. Wild. So, us as business owners a lot of times we're thinking, oh, I'm going to I'm going to add this, you know, I'm going to add all this extra stuff,

but the reality is all we did is we gave them more reason to cancel because they never used it. And so, we had a community on School where they found out about this, they deleted content that they had, and they took their churn from 30% month-over-month to five. They had a six x increase in LTV by simply having fewer things. All right? A simple version of this is, and I'll I'll give you a tactical uh I'll

give you a couple tactics on this. So, you can make a a little form and just simply ask your customers, hey, if I were to delete everything, what one thing would you fight for? And on the inverse, if I were to keep everything and just remove only one feature, which one thing would you not mind seeing go?" And then if you chart those on a graph, what you'll find out is what the number one and number

two most valuable things are. And often times it's really outsized. And most of the time, you just need to do those things and basically forget about everything else. Cuz one of the big things we have to remember is that people who are using your services are not full-time using your stuff. They have lives. And so we want to think about value per second, not seconds of value. And in the digital world, that might mean just one

post, one call recording, or just one single action that you need to take that's valuable for them. That's it. If someone just gets that every week from you, they're in. Which leads to number eight. Design for the extremes. Have a busy path, like the person who's just kind of like a dabbler dipping their toe in the water, and then also have kind of like the power user depth. And so a busy member should be able to

get value from a distance. They should be able to keep up and not feel like they're left behind. On the other hand, a hardcore person should be able to go deep all day. And so tactically, make an explicit start here {slash} weekly cadence flow for the busy people, while leaving optional kind of like side quests and depth for the kind of like heavy users or heavy Yeah, the heavy users. Nine, move the ladder closer to the

front. So front-load the thing that people love. So we use snakes and ladders as a concept. So you want to remove the snakes, aka the friction, the confusion, the overwhelm. And if there's a long ladder, the thing that makes people stick, put it in the onboarding. So tactically, if the calls are the stickiest thing, or this specific service, or this specific implementation, or onboarding, or activation, the best call replay, whatever it is, the pin post, put

that sticky sticky thing up front. And you want to pin, this is now a school-specific thing, but it still works with any onboarding, is you want to pin the fast win up front so new members hit that value ideally within the first 24 hours. And this works for any recurring business, whether you're teaching someone how to sell, teaching them to work leads, teaching them how to pickle pickle jars, whatever. Like, as long as you have a

way to get people a win fast, they will like you more. 10, show up daily and care. So, this is something that we saw across all communities is that the owners who showed up in the community on a daily basis had significantly higher retention than the people who didn't. Big surprise. Now, we've basically never seen this fail. And so, if a member feels like the owner isn't active or doesn't care, they leave. And so, a tactile

minimum would just be like, put an alarm, make it part of your daily routine. And so, on a small level, you can clear notifications, DMs, you know, uh report whatever content or, you know, deal with content that people might have reported. Now, this is talking about school, but you can apply this to your own business, which is like, what am I doing every day to show up for my customers and can I make that a repeated

action that I do that's high value and high leverage. This also means like, read the complaints every morning of customers who are dealing with issues. Because if you if you want to hide your head in the sand, uh you will be well, I guess your head will be in the sand and that will suck cuz then you got it in your ears and your nose and it's like, you know, how are you going to live, right?

So, it's that's a tough life. And so, so, you know, encourage the good behavior that you that you have, the the people who follow what you want. People leave nice reviews, people leave nice testimonials. You want to tell people and say, "Good job." On the other hand, delete bad stuff and delete bad people. I cannot tell you how powerful deleting cancer is is. Like, if they do it in your body, you should do it in your

community or membership. Which leads me to number 11, which is a weekly call and a recording. And so, live voice / face deepens relationships. And so, recordings kind of just like let busy people keep up. There's very often that there's like weekly podcasts that have tremendous retention. It's just like it's just enough like I think about TV shows. Like obviously Netflix created the binge culture but the vast majority shows are like once a week. It's enough

that people can keep up with it. And too many of these kind of like extra add-ons, people kind of revert to that one thing and you want to make sure that the one thing they're consuming is the best one. So if you're unsure what kind of communication cadence to stick with, just default to like one big thing per week uh and then like a best of post. Very simple. So it could be like weekly call and

weekly post. That's all you have to do. Very very simple within a community structure. Let's go to number 12. So you want to add an annual plan with a discount. So the reason this works is that annual always has lower churn than monthly and it's because you only need to decide one time rather than 12. And so annual buyers churn less. And even beyond the they can't cancel effect, right? So like because they can't cancel because

they already paid is one element of that, but the other element is just that like typically those people are also more committed. They also got a lower rate. So there's a lot of and they're also more qualified because they've paid more up front. So there's a lot of and and and. So having that is valuable. Now a common practice here is 16 16 or 17% which is usually buy 10 get two. All right. So if you're

not doing this within whatever service you sell, have an annual component that you should implement like today, like right now, first thing you do after this. Announce it and expect a meaningful chunk of people to take it. And what that does is it stabilizes retention. 13, you want to build belonging via one-on-one relationships and 10 true regulars. Now this isn't a digital community, but from a business that has any kind of community that's involved, real and

person etc. Fostering one-on-one relationship which is thinking like what are the unique aspects of these people who are coming in and can I pair them with other people who are like them? Because if people find I think there's um Layla shared this out with me. This is on the employee side but it totally transfers which is if an employee has a friend that they are friends with outside of work, they stay five times longer at their

job. Think about wow that is. Just one friend outside of work or one person that they're like really good friends with. And so, like hack of hacks, like get them to make one real friend. Now, that's easier said than done, but the nice thing that you should have hopefully everyone should have one thing in common, which is that they're all uh patrons of your business. So, they at least have that interest someway in common. And so,

uh the fastest way to do this is also introduce some of the true regulars to the new members. And I used to do this at my gyms. Like, otherwise everyone just feels brand new. They feel like in-group out-group. Like, you don't want to have people feel like they're walking in on someone else's conversation. So, if somebody's new to a party, right? And you're holding a party and someone walks in, what do you do? Oh, this is

John. John, meet Tina. Meet you know, meet Jesse. Meet meet Trish. Uh you know, John's really good at X, Y, and Z. Trish's great. John, blah blah blah. Right? And so, it's just like just help them build rapport, which building rapport just comes down to like what things do they have overlap over? That's all it is. All right. Um but within the digital community, so going back to going to school, you can anchor engagement in community

with 10 regulars. That's it. You just need 10 regulars. The the tactical piece of this is that identify the top 10 people. These are your model citizens. The best customers. Your best avatars. DM them. Figure out their goals. Spotlight them, meaning give them public kudos. Invite them to contribute, not just like watch them do it. And if you can, again, publicly recognize in any way possible, it further reinforces the behavior. And you want to introduce the

new people to them. AKA matchmaking. Sometimes tactics can be very overwhelming. Uh but sometimes they're exactly what you need. Uh if you have a recurring revenue business, don't expect to implement all of the stuff at once. Just take one thing off the list and do it. Add it in consistently. And then once you get consistent with that one, add another one off the list. And so, conquering churn or you know uh trying to have an alliteration

for attention. Like mastering retention, but I need an R. Something retention. Uh remastering retention. Um just comes down to doing 100 small things consistently over a very long period of time. And so most people think that growth looks like this, when in fact, growth really just looks like a flat retention curve, and then what happens is it just keeps growing. And so I hope this helps. Keep crushing it.