How Increasing Interaction Helps Retain Customers
Marie Forleo has built a multimillion-dollar operation as a small-business consultant and entrepreneurship expert through her Rich Happy & Hot brand of online tutorials and programs. Geared toward women, her New York City-based firm helps clients establish financial and lifestyle autonomy by starting their own companies.
But Forleo ran into trouble with her flagship product, B-School, an eight-week course in marketing and online entrepreneurship. The program costs $2,000 and consists of weekly content modules that show students how to build profitable businesses, expand their online presence and construct personal brands. While the course earned rave reviews, a disturbing 17 percent of students second-guessed themselves (and the program) after they signed up -- and asked for refunds.
"I wasn't happy," Forleo says. "Though 20 percent is about normal in the industry, nothing about what we do should be normal." Customers weren't complaining about any specific component of the course, leaving Forleo to act on a hunch: "I felt there was a lot more happening under the surface, but I didn't feel like we were addressing it."
Forleo created a series of auto-response e-mails that mapped her customers' psychology during each stage of the course. Her efforts were informed by customer comments and good old guesswork. For instance, she saw that participants started the course excited, then became nervous about the amount of material that would be covered. As customers dove in, some felt overwhelmed. Later, many fell behind on their work or didn't see the success they expected.
Using OfficeAutopilot e-mail marketing software, Forleo wrote an e-mail to address each emotional high and low that customers might feel during a class segment. Each time the next class module was released, hundreds of B-Schoolers received a reassuring e-mail from Forleo that provided encouragement and reported big entrepreneurial wins from the B-School alumni community.
The refund rate for the B-School course dropped dramatically--from 17 percent in 2010 to less than 3.5 percent in 2011--adding $199,800 to the bottom line. Says Forleo, "The feedback we received said things like, 'Please tell Marie thank you so much for writing that note about feeling overwhelmed. That's exactly what I was going through. Now I realize this is normal; I'm going to stay with it.'"
A Second Opinion
"What I love is that Marie got into the head of her customer," says Scott Martineau, co-founder and vice president of demand generation for Infusionsoft, which sells web-based sales and marketing software for small businesses. While Martineau gives Forleo's auto-respond results a rave review, he believes small businesses need to go even further by tailoring automatic messages to individual groups of customers throughout a product's life cycle. "That is what consumers want and expect: a very personalized experience," he says. "They don't want to be talked to as if they're not being listened to."