If you live in, follow, and hunt with the pack, you may feel safe and safer than you really are, but you will also be controlled, regulated, sometimes bullied, and often go hungry. Packs starve together. Packs sometimes are mass-hunted and killed as a group. Packs go extinct as one. If you carefully examine business history as well as contemporary business, you’ll find that nearly all the really big winners have defied and distanced themselves from their peer packs.

I was 16 years old when I got the phone call that would set my life on a trajectory I never could have imagined. It was my ex-girlfriend calling to tell me she was pregnant. For a few seconds, I was confused. Why was she calling me? That’s when she said it: “The baby is yours.”

My response was what you would expect from a 16-year-old guy. “Are you sure it’s mine?” I asked. She was sure. Suddenly, I was one of two parents to this unborn baby, and we had a number of decisions to make. As a teenage dad, I had to make a couple for myself as well: Would I stick around? Would I (or even should I) try to be a part of this baby’s life?

At 16 years old, I suddenly had to decide the kind of man I wanted to be. I had a few friends, most of them older, who also had to make the decision of what to do with an unexpected baby. Unfortunately, without exception, they all bailed on their responsibilities in one way or another. I decided to head in a different direction; I decided to be a dad. That single decision was my first real experience in breaking away from the pack and heading down my own path.

It has since been my experience that, in life, and in business as well, breaking away from the pack is most often exactly the right thing to do. So, the fact that the overwhelming majority of business owners invest comparatively little or nothing in customer retention and invest almost every dollar they can into customer acquisition speaks loudly about the right thing to do.

My first year of income was $36,000. Not horrible for a young guy, but a far cry from the six figures I was making with AT&T. Many of my peers and family members thought I was crazy (my mom still thinks I’m crazy for not getting a safe and secure job), but sticking with the safe and secure job at AT&T was not what I wanted for my future. My pack circled me and did all it could to discourage my leaving! Although entrepreneurship is more in vogue today than it was in 2001, it is still considered risky and odd. The focus of polite society is still on jobs and careers, not taking on the outsized responsibility and risk of starting a business. While the media does make heroes out of Silicon Valley business creators, the lesson seems lost. And people starting hot dog stands are rarely glamorized. The news media coverage of the recent years’ reputed drought of proper jobs for college graduates, the debt burden with which they exit campus, the big number of them living in their parents’ basements, and the news coverage of high unemployment and stagnant wages stays stubbornly, narrowly focused on jobs—as if that was the only answer that exists. This is not so. In fact, if you learn; really, really learn “marketing” and how to apply it, your choice of opportunities in your choice of fields, professions, or industries opens up and you don’t need to wait for anybody else to confer your hoped-for wages on you. That puts you in opposition to the thinking and behavior of the pack.

These days, I spend a lot of my time as a facilitator and supporter of people traveling their own chosen paths, building businesses of their own choosing.

One of my more recent departures from the movement of the pack was when I founded my current company, The Newsletter Pro. While most of my friends were starting internet-based marketing companies or SEO (search engine optimization) companies, I was going into the “old-fashioned” print newsletter business. Yes, printing. On paper from trees. With ink. Producing newsletters for businesses, sent to their customers. By mail. With stamps. Not email. Not ezines. Not social media. Print newsletters.

Naturally, there were naysayers who told me my business model would never work, but again I disregarded the pack. I ignored the numerous articles predicting the demise of the post office (a constitutionally guaranteed service). I ignored the articles on predicting Facebook world domination and went on creating my business, which in four short years went from an idea to mailing millions of print newsletters annually, and it is still growing month in and month out today. At The Newsletter Pro, we have clients in professional practices and various businesses, some mailing thousands, some mailing tens of thousands of the newsletters we prepare for them every month. Combined, we are a little “underground resistance movement” against digital depersonalization. Most importantly, we get stellar results.

While I have found success in the print newsletter business, I understand that others still find it to be an odd choice of niches. I agree—it is a bit odd—but there is a method to my madness.

Since 2002, I have always been hyperfocused on customer retention. So much so that when I bought my second business, a dry cleaning pickup and delivery franchise, I chose it because of its apparent exceptional opportunity for customer retention. I had figured out that if I could simply keep every customer I signed up—forever—my business would grow faster, be more secure, and be more profitable. Keeping customers is success. Losing customers is failure. Seems simple, but for many business owners, it’s a revelation!

One of the reasons I purchased this franchise was because the franchisor said it had great customer retention rates and the logic made sense. The franchise owners would drive by their customers’ houses on a weekly basis and check for a bright green bag on the front porch. If the bag was there, on average, that person had $25 worth of dry cleaning in it, which equaled out to $50 per month because the average person put out their bag twice. There was no extra charge for the pickup or delivery of the clothes. No wonder they had such great retention! Who would drive their clothes to a dry cleaner when they could have them picked up and delivered for free? Surprise. As logical as that seemed to me, every customer failed to agree with me!

I assumed as long as we didn’t lose or ruin anyone’s stuff, our retention would be off the charts, and I was mostly correct. My goal for this business was to get to $25,000 per month in gross sales. The math was simple: If I had a customer average of $50 and wanted to get to $25,000 in gross sales, all I had to do was sign up 500 customers, assuming once I signed up a new customer, I didn’t lose any of them. In the end, I had to sign up 750 customers to get to 500 using customers. Some 250 people either tried us a few times and never used us again, or left for a variety of other reasons.

Our primary method for signing up new customers was to go door to door in high-end neighborhoods. Hard work. It took me 12 months of door-to-door sales to hit my goal of 500 using customers. Had I retained 125 more customers, I could have shaved more than two months off of my door-knocking efforts or increased sales by an additional 25 percent or $6,250 per month had I decided to knock on doors for two additional months. Today, I am much more sophisticated in how I build businesses for myself and for clients, and much more focused on creating retention, rather than presuming it is earned just by good service.

I tell myself and my clients: You can’t keep 100%. But we should find any significant losses unacceptable. We should be hyperattentive to attrition versus retention. Here’s why.

Back in 2002, I looked at customer retention and used the above simple math to calculate what losing customers was costing me in both dollars and extra time spent growing. Although my math was correct, I was only looking at a small piece of the puzzle. Because I was only using basic calculations, I wasn’t seeing all the money I was leaving on the table when losing previously loyal customers. These numbers became clear, however, once I started using more advanced calculations, which we will walk through in my next chapter. I will also share a case study where we go in-depth on the real cost of a lost customer. You will see, clearly, how financially fatal that retention failure can be!

Dan Kennedy talks a lot about knowing, doing, and using “Money Math.” There are many different aspects, many of which he explores in his book, No B.S. Ruthless Management of People and Profits, Second Edition. He would tell you that of all the Money Math that you need to understand and manage, none of it is as closely linked to how much or how little wealth is created for you by and in your businesses than preservation of customers over long periods of time—except in very high transaction, once or twice in a lifetime purchase businesses, in which case, retention of customers’ goodwill and interest in order to get referrals again and again over time is important.

Because of Money Math, I made yet another move away from the pack in business. I do not just think of myself as an entrepreneur. I also think of myself as an investor. By the time we’re through here, you will too!

The number to know is: What does it cost you to get a new customer?

This is the cost of all your public advertising, marketing, promotion, promotional discounts on first transactions, plus some allocated percentage of your entire overhead—the same percentage as new customers contribute to revenue—added together, then divided by the number of new customers occurring, by month and by year. If, for example, you have three stores of some kind, and you spend $15,000.00 a month on advertising on radio, TV, print, online, plus 20 hours of yours or an employee’s “doing” social media (20 × $50.00 hour = $1,000.00), and your rent, light, phone, payroll, taxes and other overhead is $60,000.00 a month and you find that 30% of your revenue comes from new customers who never return equals $20,000.00 . . . . your total tab for getting new customers works out to $36,000.00 for the month. If you got 300 new customers, the cost is $120.00 each.

In “big thumb math,” then, the lost customer costs you $240.00, because you invested $120.00 to get him and it’ll cost $120.00 to replace him.

Getting a grip on these numbers is very important. This is how you make informed decisions about your marketing investments.

Most business owners are underinvesting in marketing, by the way, thus stunting and restricting their growth and leaving themselves vulnerable to competition—which can be cured by my advice in Chapter 16. If this hypothetical business is par, the $120.00 being spent should be $240.00, thus the lost customer cost is really $480.00. But it’s even worse. Lost customers can’t refer, and beyond an early customer life surge, every customer should at least bring in one a year. So, in the year you lose one, you lose another $240.00 to $480.00, bumping the total to $480.00 or $960.00. This is called: attrition cost.

The reason a lot of businesses’ profits fail to increase is that these costs of attrition are outweighing the profits gained from restocking with new customers.

If this business invested $60.00 a year per customer just “making nice with” their existent customers for purposes of retention, it could avoid spending $240.00 to replace a lot of wandered-off ones. But, actually, they’d also recoup the money by increased patronage from the retained and happier, more...