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Customer Bonding is the new Loyalty

This week's Newsletter:


CUSTOMER LOYALTY IS DYING! What is "CUSTOMER BONDING" and why is it the future? ↓

The results published recently in the 2023 Customer Loyalty Index are sobering...

• Customer loyalty continues to relentlessly erode, decreasing by 14% between 2022 and 2023 in the US (and worse elsewhere). 

• Most customer "loyalty" is not organic but incentivized, requiring discounts and rewards to keep customers around. 

• Even loyalty incentive programs don't work: 59% of "loyal" customers said they would switch merely to get a cheaper price.

In SaaS, the idea of loyalty has always been a fiction. SaaS was founded to accelerate the creation of new products and make switching easier and cheaper.

📈 The results are brutal. Our research at ChurnRX shows customer retention has been declining for many years. 

Most SaaS companies have found that their churn has steadily worsened even as their products and services have improved.


Amid these dismal trends, a small number of companies have discovered a completely different type of customer relationship that creates phenomenal customer retention and expansion.


This idea was introduced by the late Arnaldo Hax at the MIT Sloan School of Business. He believed that the strongest relationship between a company and a customer is not based on the experience, the price, or the product.

Hax famously said that business strategy is not like war ⚔️, but more like love ❤️, and that the sole purpose of strategy is to create bonding with customers.

According to Hax, Customer Bonding happens when the company shifts its focus from producing products to producing customer results. 

The outcome is Customer Bonding, which shows up when the customer can no longer visualize their success without your company.

❓But how do you create Customer Bonding?

Hax explained that the key to customer bonding is to stop focusing on your competitors and refocus all your attention on your customers:

► What are their objectives? 

► What results are they trying to achieve?

► How do customers achieve superior results?

This customer-centric understanding unlocks new opportunities to create value for customers...

✅ Understanding exactly how customers get results enables the creation of unique "total solutions" that fit each customer's needs.

✅ Focusing on results reveals the critical expertise embedded in the company that can be deployed to help customers win.

✅ Attaching directly to measurable results puts the company in a position to discover more opportunities to add value and increase bonding continually.


Arnaldo's ideas have aged remarkably well! He was too early to witness the SaaS revolution, but he presciently foresaw the dynamics now playing out.

I work with companies making the shift to customer bonding every day, and the results are phenomenal! 


Achieve Exceptional Retention in 2024: Let's Talk!

I work closely as a coach and consultant with business leaders to bring them the new models, playbooks, and skills they need to drive phenomenal results. Key roles that I regularly work with:

  • Customer Success Leaders

  • CCOs

  • CEOs, COOs, CFOs, Boards

  • Sales Leaders

  • Product Leaders

  • Marketing Leaders

I'd love to meet you and learn about what you are working on in 2024.


HOW TO BUY CHURN! 8 Ways Sales Causes Customers To Leave →

People ask what I mean when I say: 👉 WE BUY MORE CHURN THAN WE MAKE. 👈

How we sell matters. Customers stay to get measurable results, and sales often sets customers up for failure. Here are 8 RELIABLE WAYS TO BUY MORE CHURN ↓

⓵ Sell to Bad-Fit customers.

The single biggest cause of customer churn in SaaS is acquiring customers who CAN'T win. If a customer cannot reap the results of your product, then you shouldn't let them buy in the first place. BTW: It's your company's fault they think they can succeed based on over-hyped marketing and aggressive sales tactics.

⓶ Sell Features Rather Than Results

Customers don't want your product; they want the results it promises. When you sell features rather than results, you set customers up for failure. Many new customers don't know HOW to use your product to get their results or even know WHAT results to expect and how to measure them. When they fail to achieve measurable results, churn is inevitable.

⓷ Offer Free Trials

Our research reveals that customers who start with a free trial stay less than half as long overall as customers who pay to start! The reason is that customers who start with a free trial engage less than those who pay from the start. These low-effort customers get poor results and churn.

⓸ Use Steep Discounts to Close

Discounts lead to higher churn because they create more low-effort customers. Our research shows that customers who receive deep discounts (25% or more) churn at more than double the rate because it brings in less committed customers, devalues your offering and your expertise, and leads to poor results.

⓹ Oversell

Selling customers more products or services than they need to get their results sets them up for inevitable frustration later. Oversold customers understandably churn at a much higher rate than those with a solution that is right-sized to match their needs.

⓺ Undersell

To close a deal, it can be tempting to reduce the proposed solution to fit within the prospect's budget limitations. But customers who do not have everything they need to get good results will fail. Sell customers their right "total solution" or be prepared for inevitable churn.

⓻ Give Away Expertise for Free

Your customers need your expertise even more than they need your product. Giving away onboarding and using your Customer Success team as free professional services makes customers undervalue it. The result is that they don't take it seriously, don't make key behavior changes, and fail. Voila! More churn.

⓼ Comp Sales Reps Just for Closing

You get what you pay for. Incentivizing sales reps to close deals without regard to whether the new customer is set up to succeed drives churn. In SaaS, the initial sale is financially irrelevant. Growth is dominated by how long customers stay and how much they buy, so that's also how we should comp.



You don't win by beating the competition. You win be achieving customer bonding.


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