Marketing Without Advertising

Churn and growth

Most businesses have a steady stream of new customers replacing customers who left. That replacement is called churn.

In some instances that churn is nearly 100% as is the case with much retail and restaurant business. In other instances there is very little churn as is the case with telephone contracts, utilities and accounting firms.

Businesses such as banks, department stores, shopping centers and coffee shops are in the middle with churn as a definable reality of business.

In my first post-college job, starting the marketing research department for the Bank of America, I noticed that churn for this largest California statewide bank was very high. Nearly 1/3 of customers  opened and closed accounts every year.

I pointed out to management that simply reducing the number of customers leaving or finding a way to get them to return to the bank would be a major source of customer growth. Management had no interest because most of the churn was in retail customers and only corporate customers were considered important.

For most of my clients, over the past 40 years, retaining customers became the most important source of growth.  That is why Marketing without Advertising puts so much emphasis on helping customers explain their problems to the business management before they leave and giving them vast recourse opportunities if anything goes wrong. Don’t let them leave because of dissatisfaction, if possible.

Think about how fast your business could grow if the number of customers leaving were cut in half. In this era of Internet business it should be even easier to reduce churn.

Retail ice cream and coffee

There are two retail stores that I want to call to your attention.

The first is in San Francisco and is an ice cream soda shop called The Ice Cream Bar

As is true all over San Francisco, there is a wide variety of unusual ice creams at this store. What makes this retail outlets so unique is the bar at the back which is stocked with an arsenal of tinctures and syrups. The mixologist does what ice cream bars in old fashion drugstores used to do.

Before refrigeration was cheap and ubiquitous, the way a cold drink was made was to drop acid phosphate into soda water to create a bubbling, refreshing drink. All sorts of tinctures such as oil of lemon are put into the phosphate drink. Coca-Cola was originally a phosphate drink. Ask at The Ice Cream Bar and have one made for you.... make it a float too.

This is a wonderful store that lets you understand why drugstores were the home of soda fountains and ice cream.

It is a brilliant business, the kind that San Francisco is so prolific in creating.  San Francisco had already created the modern world of mixed drinks as a response to the perverted alcohol laws that treated the Japanese shochu as a wine (described in an earlier blog).

There is a new retail outlet in Venice Beach California that is equally innovative and representative of the kind of businesses generated on the Westside of Los Angeles.

It is called Deus ex Machina.  I will not say what that Latin phrase means to my sophisticated readers. The shop is a motorcycle coffee bar that also sells motorcycle accessories and has a motorcycle repair shop in the rear. The espresso is good.

Deus ex Machina is a slow development that took many years to come to fruition as an idea. Espresso entered our American daily lives 20 years ago with Starbucks. Starbucks entered the market at the top of the status ladder by carrying the New York Times and jazz. Deus ex Machina is here to show us that real style is at the bottom of the status ladder among motorcycle fans.

Of course this is America, where status has always been treated as a joke and this retail outlet is the perfect ironic joke. It is beautiful and well designed, just like a motorcycle.