How To Forge Iron Cage Customer Retention (2 of 2)

Welcome back to the Magnetic Marketing Podcast. You're joining us for part 2 of how to forge iron cage customer retention. Part 1 was last episode, so feel free to jump back and listen to that where we talk about the holes that most companies have inside of their customer retention plan. In this episode, we're going to talk about the 5 strategies that keep those holes sealed and build a metaphorical iron cage of retention around your customers, clients, and patience.

I don't think there's anybody that has had a bigger impact in the field of direct response than Dan Kennedy. The legend of Dan Kennedy should be ignored at your own peril.

They're not really lessons, they're kind of laws that you live by.

Dan opened my eyes to what small business marketing looks like.

Dan teaches strategic direct response that is timeless. His ripple effect touches people who don't even know his name.

The world as we know it was changed because Dan Kennedy became with marketing.

Welcome to the Magnetic Marketing Podcast with your host, Dan Kennedy.

Well, hello everyone. So I am joined today by Mr. Kennedy, and we have a topic. We're continuing with our talk somewhat about strategies for iron cage customer retention, increasing total customer value referrals. And this month we're going to be talking about 5 strategies to put an iron cage around customers. And I would say, Dan, I mean, I think you would agree with me, Dan, that these— although when we originally talked about doing this call, you know, some months ago, this call is even more relevant now given the current economic conditions. Would you agree with that?

Oh, sure. I mean, look, the cost of replacement in both financial terms and time, energy, degree of difficulty all of that, the cost of replacement now for customers has risen and is rising. And competition for them amongst those who are competing at all is also more intense. So it's absolutely more important.

So the first one on our list, Dan, is membership. Truth of the matter is I probably was a member of a gazillion things before I ever met you, Dan, but I never thought about membership strategically until I met you. I remember that one of the very first things I heard you say about membership was that one of the big advantages of membership is that people that are members of something behave much better So how does membership fit into this whole issue of putting an iron cage around customers?

Well, I think any time that you are— that an organization or a business is successful and effective at convincing people that their membership affiliation is real and is important and connects it with emotional trigger points, aspirational or status or whatever, anytime that they are successful at it, it does all sorts of good economic things. People are are less inclined to go spend money elsewhere when it could be spent through the thing that they are a member of. And so while I think the term customer loyalty is outdated and antiquated and really pretty much doesn't exist, member loyalty is still quite real. And it tends to increase frequency of spending, amount of spending, reduce price resistance and price comparison, referral activity in many cases, member get a member kind of activity is much higher than would be ordinary customer referrals. And so there's all sorts of very real economic benefits to it when people are, you know, really convinced that the thing is real and that it is significant to them. And so the member card in the wallet, the member sticker or decal added to the windshield of the car. Has real importance and it translates into, as you said, all sorts of better behavior. And from the marketer standpoint, the better behavior starts with they're more likely to open mail or pay attention to email or faxes that they receive from the thing that they are a member of. Than they are from any other thing. And we know from a marketing standpoint, if you don't get readership, you don't have a chance to sell. When you do get readership, you do have a chance to sell. And so their better behavior starts there. And we've seen memberships sort of move in many cases through our pushing of it. From very traditional places—associations, organizations, clubs, that sort of thing—to a vast variety of businesses, certainly not limited to the information marketing industry—restaurants, retail stores, on and on. Not that that's new. You know, for many years, the Playboy Clubs were dominant in their market areas and with levels of membership—silver, gold, platinum. American Express, of course, has made it a point of differentiation for them for years. So, you know, it's not that this thing is anything new or anything that you or I invented, but a lot of people just arbitrarily think that their business and membership don't go together when in reality they can and they should.

You know, to just amplify your point about the fact that this is not— you should not only be thinking about this if you're in the information marketing business, and clearly if you're in the information marketing business, this should be a part of that business. But obviously a lot of our members are not in the information marketing business, although Dan, you and I constantly tell everybody that everybody should be in the information marketing business, whether they're using it as an add-on business to their existing business or they're just using it as a tool to position themselves as someone who is an authority within that industry. Actually, at the phenomenon event we have coming up next week, I'm going to be talking about that in great depth. So any of you that will be there, you'll be hearing more about that. But, you know, when I think back at my own menswear retail stores and I think about what were the kind of triggers that were the big things that I learned that made that business grew to be one of the top 10 most successful menswear stores in the United States, which back then that was a big distinction. Today there are probably only 12 menswear stores left in the United States. Top 10 is not as great a distinction, but back then there were 10,000 of them. So when I think of the big triggers, obviously one of them was when I first met you and I started and I went on my journey to learn how to do effective direct response marketing. There were several others, but the latest one I learned, which I always regretted that I didn't learn it earlier or implement it earlier, I should say, was putting a membership into my menswear stores. In the last year before I sold out my store to actually my landlord, which was a story in and of itself, I implemented membership in my menswear business. And had basically only had two levels. One level was an individual membership. The other one was a family membership. Most people were individuals and they were paying me $247 a year to be a member of my menswear store for basically for the main right they got. And there was a long list of benefits, but the main right that they got was the ability to buy menswear. I mean, if you think of most menswear stores that are out there, you know, you can just walk into any of them and you can buy whatever you want. And people could do that, but it was very painful for them to do that and not be a member. It's the way we set it up. And we, you know, in the first 6 months of this, we registered almost 700 people into this program where they paid us $700 a month. And forgetting the fact that you multiply 700 times $247, Forget that math. What was really interesting about it was, which I did not realize until I saw it, was that their buying behavior significantly increased. So they came in more frequently and they also purchased more because they were members. And, you know, a lot of that was married to the fact that we were sending all members and members only a monthly newsletter. Newsletter there were things in there that were bringing them back every month, which again goes back to what Dan, you and I talk about a lot is everybody should be having a newsletter. Again, I was late in the trigger in that in my menswear business. But think in terms of whatever business that you are in. How can I put membership into that business? I mean, I guess, Dan, although this example I'm about to give kind of falls over to our 5th item on the list as well. But I guess if you look at Diana Kutu in the pizza business, she really kind of also has a membership that she's established in that business as well. Although it's kind of, as I said, it kind of marries into the 5th point we'll get to. But I mean, she's done it in pizza. I did it in menswear and many, many businesses. It's easily, it's more easily to even apply it to than in some businesses that you think are difficult to apply to. So everybody should be thinking in terms of how can I add membership to my business because it substantially does what we were talking about today, which is put more of an iron cage around your customers. And I'll tell you the one last sort of funny story to prove that is I used to always say before my father passed away, I used to always say that— I would want to have any organization that I was involved with, I would want my father to be a member of. The reason why is because my father, I can think of two situations in his life. One was he was a member of a country club that was going down the tubes quickly. The other one was he was a member of his house of worship that was also going down the tubes., and both of them were on life support. But until the day that they shut their doors, my father would never say anything bad about those places. And, you know, he was a member of it and he bought into it and he took ownership of it. So, you know, as the country club could no longer even afford to buy hot dogs to put on the grill, he was still talking about how great the thing was. So, you know, when people become members of something They have ownership in it and now they take great, great pride in it. So the next thing that's on our list, which also I first heard from you, Dan, and I witnessed it in Glaser— actually at the time in Kennedy Inner Circle when I was a member of Kennedy Inner Circle, which is the next evolution from membership is levels of membership. So I'm going to turn this back over to you, Dan, and sort of explain now what that now— how that now puts an iron cage around people.

Well, it really is sort of— it's really pretty simple, and actually once you've been affected by it, then it's sort of obvious, and that is that either a choice of a higher level of membership or actually what has even greater impact is ascension from one level to the next. What it represents is the kind of thing you just described about with your father. It represents increased emotional commitment and a taking of greater ownership. In the thing that folks belong to. And so as they move from one level to the next, they are less and less likely— and by multiple rather than incremental— they are less and less likely to ever exit. And all of the improved behavior that comes with membership is now intensified. So if somebody's paying— let's use your example— $247 a year to be a member of the buying club at the store, that's one thing. If they ascend now to paying, let's say, $2,470, again, we can ignore the $2,470 $2,000. That's really not the issue. But before, they were less likely to go buy clothes anywhere else. Now, they're going to have to be 5,000 miles away and having spilled something on the only suit they have with them that they can't get out of and they have to have a suit before they're going to buy clothes anywhere else. And obviously, if they gave you $2,000 $470, you could send them newsletters chiseled in gold doubloons rather than printed on paper and otherwise give them so much added value and take so much better care of them that the relationship is so strong they're never spending a penny in your category anywhere else and they're never going to leave you. From a value of customer standpoint, having levels of membership that people can ascend from one to the other is extremely important. It's also a great way of injecting status and prestige into the whole process, especially when you have opportunities to make membership level differential visible either by seating or badge color or lists in the newsletter or whatever. I just about, I guess a week ago now, I think maybe a week ago Friday, Seinfeld was at the Playhouse Square in Cleveland, for one night and I and a buddy went up. Carl and I are members of, I don't think we're at the top level, but the second from the top level of the 5 levels of the donor circle membership for the Playhouse Square Foundation. The principal benefit you get is, generally speaking, you get really good seats. In this case, my two seats were in the front row that literally butts against the stage and in the middle. Unfortunately for us, but actually fortunately for the people getting donors to ascend, we had a blizzard and we had limousine late, so we got there about 15-20 minutes after Seinfeld started. You now have to be led past almost 1,000 people by the guy with the red coat and the flashlight and now across the front row immediately in front of Seinfeld, which you're disrupting the whole So, to the point that Jerry looks down and says, traffic? And so, not really pleasing for us, but I can assure you it caused umpteen questions that they might not have noticed it otherwise of how did those guys get those seats? And why are we 8 rows back, 9 rows back? And when I took my affluent group there for tour and discussion with the woman that's in charge of donor development, she said that her greatest upgrade tool is people seeing other people 3 rows ahead of where they are. She said, of course, it causes the obvious problem of ultimately you have 800 people who all want to be in the front row. But that just being on one side of the tape versus the other affects people. And is there any difference between the first row and the third row? Not really, but there's status difference. There's a dramatic status difference. And so having membership levels allows you to in various ways creates status differential, which in many businesses— your pizza example when you talked about Diana's Pizza— you know, a commoditized business, ultimately you can't change the commodity. I mean, repair work on watches is repair work on watches and a suit is a suit. So the commodity is what it is.. So how do you bring other sorts of change into that business that is motivating to certain customers? The creation of status through membership levels is one of the ways that you can do it in virtually any business.

What's interesting is that— so your example that you used, Dan, was the fact that, you know, people saw the people that had the premium seating and they all wanted to have that seating and they wanted to find out how to get it. And what I have sort of found out with this whole issue of membership levels is that, you know, first of all, I'm not a believer that you should start off with multiple levels just to begin with if you're going to membership. Or if you do, I think too many levels is very dangerous. So 2 would be the maximum to begin with. Because you need to sort of have some critical mass before you can start to ascend and have people to ascend to fill up this next level. But in addition to that, a lot of times your members themselves will tell you what they want for the next level, which is another reason why you shouldn't just start slapping them together. So like in this particular case, the lady who had given the tour, she had mentioned to you that the fact that people all— the biggest thing is they want to know how people got those seats. Well, she might not have known that initially, that she heard, she listened to that, and then she figured out, gee, we could charge more for those seats. In my particular case, going back to my menswear store, although I never put a second level of membership in other than sort of the family level, but had I still been there operating that, I know what the second level would have been now because again, They told me what they wanted. What it was was that many of the members that were in my membership of my menswear store, they wanted to be able to get access to the other members. What we used to do in our newsletter is every month we would feature one of our members in the newsletter every month, do a little profile about them. I usually tried to pick somebody who was sort of like an entrepreneur/business person. So one month I chose a partner in a large accounting firm. The other month it was a guy who was an insurance broker. The next month it was a guy that owned a restaurant and on and on and on. Then our members started telling me, the appropriate members started telling me, "Gee, how do I become a featured guy in your newsletter?" At that point it clicked and I said to myself, "Gee, that's my next level of membership." I could create almost a networking group when appropriate instead of charging $247 a year. I could charge $247 a month and that included a dinner that we would all go out to dinner together and everybody would get to meet each other, network with each other and try to help each other in their businesses.

I've had chiropractors do that, implement that exactly. That's exactly the exact point.

Business practices. And again, this is not anything that I was smart enough to anticipate. It was something that was sort of led to me by the people that were already members. So again, as you figure out what is your next level up of membership, again, in many cases you want to leave your ears open, your eyes wide open. Say to yourself, gee, what are they asking for? And that's the thing that I will now create. And listen, if you want to see how important and valuable this is, and everybody on this call who has ever been to one of our InfoSummits or Super Conferences, so now I'm going to sort of reveal something about Glaser Kennedy, but we're kind of open about the fact that we're kind of open about our business. So if you think about the info summit or the super conference, so our diamond level membership probably represents somewhere in the neighborhood of in the 10% range of our total membership. However, if you go to the info summit or the super conference and look at who is attending the— then it was called Gold Plus dessert reception or going into the Gold Plus lounge,— and now it's called Diamond, you know, networking or Diamond Lounge. You'll see it's about 50% of the people at these events are that level. The point is that, you know, as people ascend up, they become better, better customers, which is exactly what Dan's point was in attending any of our national events. It's just proof of the pudding. Okay, well, the next one on our list is one that's kind of like near and dear to me, which is called Frequency Rewards. And certainly I have a fair amount of experience with this with a program that I'm involved with called Loyalty Rewards, which I'm involved with Rory Phat. But Dan, again, I'm going to ask you to get started with this and talk about how Frequency Rewards works to put an iron cage around your customer?

Well, first of all, the way it doesn't work is the abortion that the airline industry wound up making out of it. But to a great degree, they popularized it to start with. And it's again on the surface a pretty simple concept.— people have seen it at the retail and the dry cleaner and that kind of level, restaurant level for decades implemented pre-technology with punch cards. And you still see that where every third sub sandwich is free or every fifth dry cleaning thing is free, where I ship my boxes right now they're still using a punch card system and every 5th shipment is free. So, you know, it's been around forever and a day and on the very simplistic level it is you want to attempt to encourage them to come back more often by not going anywhere else. And that really is sort of the iron cage aspect of the whole thing. How appealing can you make the reward for not going anywhere else so that I'll bypass convenience? Because most people people in every category spread their patronage around and in many cases strictly because of convenience. And so what you're trying to do is get them to bypass convenience in favor of coming back to you. I, this week, yeah, this week, maybe last week, I don't know, but the story behind it is irrelevant. I needed a pair of slacks, so I run over to the mall to get a pair of slacks, and I park at random and go in, and I actually was on my way to Nordstrom's. Um, but I happened to walk right past a Brooks Brothers store, and so it's purely on the basis that it was closer to the car than was Nordstrom's, because like an idiot I managed to park at the opposite end of the mall from where I wanted to go. Um, I zipped into Brooks Brothers because I would have been perfectly happy to get my slacks there, get the hell out of there, and be back in my car. So Turns out I wound up at Nordstrom's anyway because, and you'll find this amusing, the Brooks Brothers answer to how long does it take to get the bottoms hemmed is 2 weeks, which was about 14 days longer than I was planning on. So I wound up at Nordstrom's anyway, but had I been a member of some kind of club that at Nordstrom's and getting frequency rewards for doing business with Nordstrom's, I probably would have walked past Brooks Brothers anyway and they never would have got a shot at me. It really gets into how good are the rewards and how real is the program and what sense do you have of you getting towards the next level. Book clubs, which is a dying business now in part thanks to Amazon or in large part thanks to Amazon, but for many years book clubs were big business in this country. There was a specialty book club for everything— military books, science fiction books, mystery books, cookbooks, you name it. They all operated on a point system where you saw your points accumulating and how many points away you were from your next free selection on a month-by-month-by-month basis. Online now, of course, you could show the points literally day-by-day, minute-by-minute, visit-by-visit. So these things again are pretty powerful. They can be implemented whether using something that's already in the can like our Royalty Rewards or from scratch. They can be implemented in just about any business.. And so there's really no good reason not to do it, either independently or tied to membership or with point differential based on levels of membership. But the objective in most businesses is to get the consumer to split their business up less and give you a greater percentage of their purchasing in that category. By bypassing convenience at different times and situations in order to go out of their way to patronize you?

Well, listen, I can tell you that, first of all, prior to WorldTree Awards in my menswear store— so WorldTree Awards is one of these programs where you get a card with a magnetic strip on the back and every time there's a purchase the cashier swipes your card and you earn points. Prior to that, I did exactly what you were describing, Dan. I had punch cards that I was giving out to our clients at our menswear store and we would get people to punch for every $50 they would spend. And when they filled up the card, they got a free $50 worth of merchandise. And regardless of how I was doing it back then, that was kind of antiquated or today or today with World Rewards, which is very automated, what's important is the results. So, you know, with World Rewards, the cool thing is that we know exactly the results because we can see how many people are swiping the cards. And like in menswear, we noticed that people would actually come back to the store 3 times more often, and they would spend 1.5 times as much at the store who were members of the program. Rory, in his restaurant world, because again, people are, you know, eat 27— it's 21 times a week they're eating. So there's a chance to bring people back more often. They're seeing people that will actually come to a restaurant 4 times as often and spend twice as much who are members of a loyalty program. And you should not think this is only retail or this is just restaurants. It's just about any business. Needs to figure out how you can put in some kind of rewards program where people are accumulating their activities basically in order to earn more rewards to bring them back more often. And it clearly, as you point out, is a very, very smart way to put an iron cage around your customer. The last thing I'll say is this, and I'll give credit where credit is due, although I don't think he invented it, but I think that he was the first person I saw that did it. Was Dr. Tom Orent. He has a program on his website for when dentists visit his website, they earn points. And they earn points really— I mean, they start earning points the minute they come to the site. They don't even have to do anything other than just come to the site. They start earning points, and those points count towards additional loyalties. Any of our members, our diamond members, will notice that when you come to the diamond member site, there is being points now collected and we're— that's a new addition that we're getting ready to roll out although we've started already to collect the points on the site. And you'll find out very shortly that as we roll that out, that's one of our surprises for a little bit later, not too much later this year, about how you can earn points in order to earn No BS Bucks. So it's exactly, you know, this thing can be done online. It doesn't have to be thought just as a retail business or a restaurant.—

that's Pavlovian and it gets to the idea of rewarding activities other than purchasing. And any time you can draw a correlation, right, then why not reward the activity as well as the purchasing and give people more opportunities, more ways to feel rewarded or to be moving towards a reward. I'll tell you a little piece of ancient history. In my very early multilevel days, we had the uniquitabulous Tuesday night weekly blow breath on them meeting. It wasn't called that, by the way, but that's what it was. And it was literally that because they would come in all deflated and you would reinflate them just like reinflating a ball and then send them back out. And by the next Tuesday you needed to reinflate them. But it wasn't very long before I figured out that of course the business is about consumption, not just about productivity. The ones who came to the meeting bought more than the ones who didn't come to the meeting. So then you could actually do some math and you could figure out what it was worth to have them at the meeting. And so I began paying them for consistent meeting attendance and so every fourth meeting, You got $25. And I took my little group's meeting attendance from very inconsistent and below 20% to 80% and consistent by handing out rewards every 4 weeks. Now again, extremely primitive by today's standards, but still evidence of the point that you can manipulate and control behavior this way. And if in fact you can correlate activity to a monetary value, then you can reward the activity rather than waiting to reward the actual transaction.

The next on our list of 5 is loss of something important. And this, you know, listen, this one of all of them could really be the most powerful of all if it exists. And, you know, Dan, I don't know if you want to talk about him or not, but I know you have a client that's in the real estate world that, you know, has become a master of this.

And, but why don't you explain what this is all about? Well, I mean, look, the bill that, the bill that gets paid unless no bills are going to you get paid is the utility bill because, you know, nobody likes sitting in the dark and without heat in the winter. And so the reason they get their bills paid is because they can turn off the power. And so this is really about— in the information marketing business, we've taken to calling at the pain of disconnect. And if you've ever had your power turned off because you were unable to pay the bill, as I have had, there is real pain to disconnect. There's even more pain if you happen to have, say, a spouse. It's one thing sitting in the dark by yourself. It's entirely another thing sitting in the dark with someone else who didn't plan on sitting in the dark. And so pain and disconnect, you know, is— it's not easy to achieve, but it has to do with getting people to be using, not just consuming things that you provide to them. And in the real estate field, Craig Proctor, and in property casualty insurance, Michael Janss, have both done a very good job. So by getting his members to actually use his system and to get it out there, so website addresses are all over the place, phone numbers are all over the place, materials are preloaded and maintained in this system for them, they're getting— they're doing quotes and calculations and they're using it for their scheduling. On and on and on. Having that summarily and suddenly unplugged is not quite as unpleasant as having your lights and your heat turned off, but it's significantly disruptive. And so it helps retention obviously. It's one more reason not to leave. Beyond that, the frequent Usage, you know, has benefits for both user and marketer because the user is more likely to get benefit out of something obviously that they use and that they use a lot. And so if you can get them into a pattern of usage, they'll get more benefit. And from your standpoint, everything else you want to do with them is enhanced by the fact that they are regularly using something you are giving them. Giving to them. And so, you know, how you replicate this business to business to business. I can tell you, for example, a couple of years ago— well, now longer— a handful of years ago I did a lot of work for Weight Watchers. And Weight Watchers at the time was just beginning to utilize the internet in any way, shape, or form. Today, a large part of their deliverables are all online-based, but more important, they've figured out a way to get very frequent usage. There are on any one given day between 4 o'clock in the afternoon 7 o'clock in the evening, they have 300,000 people going through their websites to get recipes to prepare dinner with. And the system includes archives and favorites that you can have tabbed and can go back and pull up and so forth. And then there's email reminders sent to you when So there's a whole little system you connect to and that you use on an ongoing basis. And somebody's going to, if they become sort of dependent on that, then they are reluctant to have it taken away. Failing that sort of pain of disconnect, the next best loss of something important is probably back into the status category where it's important not so much on a practical level as it is on a how people think of you in a particular community of people where it's important. And so if everybody in your community pretty much belongs to the country club, you're not going to let your membership lapse unless it's dire circumstances because now everybody knows because you're not visible anymore. And so that's important to you not for practical reasons but for emotional, psychological, self-esteem, aspirational reasons. And so if you can't create it on a practical level, the next best thing is to try and create it on a status/emotional level.

You know, as you said that, it made me think, as you know, I work with this automobile dealer. And for the last 7 or 8 years, he has earned the status called the President's Award. And I've always been amused by it because it cost him a fortune to earn that award because, you know, it's all about customer service comments. So he spends a huge amount of money for his personnel to follow up with the customer afterwards, not to necessarily deliver them great customer service, just to tell them how to fill out the form. Deliver great customer service. And so he's spending a fortune to get this, which it really doesn't buy him a lot other than the status of saying for the last 8 years I've earned the prestigious President's Award. And it's exactly what you say. It's the pain to lose the status. I'll give you 3 other examples to our members. So hopefully with examples you can try to figure out which one you can identify with. But, you know, one of them was when I was in the menswear business, I was a member of a buying office. And the buying office, you would have, you know, 2 or— I forget now— maybe 4 times a year they would have like sort of like their meetings and things along that line. But as a member of the buying office, I got a discount by being a member with vendors. And the discount was multiples. I mean multiples of what my fee was to belong to the buying office. I would earn back these significant checks every year because of these discounts. So there was no way I was quitting that buying office just because the investment to be part of the buying office was, you know, I would never have to go to one of the meetings and I would get multiples back. So I wasn't quitting that. Another one is obviously Royalty Rewards. Which, you know, now I'm on the information marketing side of this, but in that particular case, think about this. You have restaurant owners, auto repair shops, men's wear retailers, or retailers of any kind are promising their members, their customers, excuse me, customers, patients, patrons, whatever, that as you earn these points, you'll receive these rewards. Well, it's hard for them to quit Royalty Rewards now, these business owners, because once you promise things to your customers, how can you take it away from them? So there's a huge— I mean, the retention on Royalty Rewards is humongous because basically the only people that leave are the people that go out of business are the ones that are leaving. So you never lose them. And then the last one I'll tell you. Which sort of links to the example of the buying office is we've been working with the Roberts Globe for some time now with the Information Marketing Association in order to provide a very, very special service to members of the Information Marketing Association to get a special credit card discount with a preferred provider that you can't get this rate anywhere else. And it's significantly lower than any rate that anybody can get anywhere else. That's a pain to disconnect. So if you— somebody were to leave the Information Marketing Association, they would leave this better— they would lose this better rate, which in most cases will be a multiple of whatever the Information Marketing Association dues are. So again, these are very, very powerful of our 5 strategies, and this one, when done properly, and as Dan pointed out, it's not always easy to do, but when you can figure it out, It might be the most powerful of the 5. The last one on our list, and then we'll open up for Q&A, Dan, is something that is very near and dear to me, is continuity. And I was in the— I mean, Dan, you have openly admitted that you never thought it would be as powerful as it was as it turned out to be in the information marketing world. I was in that Platinum meeting years ago when Reed Hoisington first presented it to the group and you, at that time, you were skeptical of it. I think you were more skeptical because of the source than anything else. But it has become, certainly in the information marketing world, it has become One of the biggest discoveries ever to come to that world. I don't know— very, very few people today that are not using it in information marketing or trying to use it in information marketing. And once again, just like everything else on our list, it doesn't have to be thought of as just being for information marketing. Again, going back to our Diana Kutu example. She is really in the continuity business. She's in the pizza business. She's got 3 levels of membership and every month she's charging people a monthly fee depending on what level they are in order to get gift certificates to come in and get pizza. So the first of every month she's whacking their credit cards anywhere from I think $30 to— you would know better than me, Dan, but I think it's between $30 and $100 a month if I'm not mistaken. Yeah, I think that's right. And the first day of every month is a very, very nice day there. So, Dan, talk about the implications of continuity in terms of putting an iron cage around your customers.

Well, there's continuity, of course, and there's forced continuity. And the Reed situation was actually forced continuity, and my skepticism was, source, but also I foresaw problems that it turns out did not exist. Continuity, of course, has been a staple of the Book of the Month Club since God knows when. And a client I've done a lot of work for off and on over the years, Guffey Renka, who people think of sometimes as being in the infomercial business, but that really ended a long time ago. I mean, they acquire customers through infomercials as well as other sources, but their entire business is all about continuity, and they are increasingly loath to do anything that does not feed ongoing continuity. And they really are in the forced continuity business. You can't buy proactive or Susan Louie Gucci or Victoria's Principal or any of the brands, you really can't make an initial purchase without agreeing to continuity at the same time. And I think last year, well, they were over $1.5 billion in revenue and the overwhelming majority of it is back-end continuity, not front-end. What continuity does, especially when it's tied to some of the other strategies we've talked about, is again, it sort of locks the customer into a certain level of behavior. In the pizza case, because they are paying, they are more likely to now use the coupons they paid for and to in fact then purchase far beyond the base amount that they paid for as well. I actually years ago belonged— there was a restaurant in Phoenix, fairly high-end restaurant that did exactly the same thing and I was a member and every month got my coupons and pretty much all always tried to use them and almost always spent more than the amount of the monthly continuity payment that had been made. It's also a way to stabilize revenue in businesses where revenue is not very stable or all the way to the point of not only not stable but, you know, completely unpredictable where if you ask the guy how he's going to do this month, he has no idea. His answer is, I hope somebody comes in. And that to me is worrisome under the best of times, but triple worrisome now. So getting people into a continuity program, I think, is for most businesses, it ought to be a tool in their toolbox. It ought to be a priority. I think they ought to find a way to do it. They'll, you know, they'll like the financial results after the fact. And repeat transactional business that occurs periodically, every 6 months, every year, every couple of years, were I in one of those kind of businesses, I'd be looking at continuity as the equivalent of equalizer pay.

And be trying to move people into continuity as well. The only thing that I would add to that is that you don't have to think in terms of continuity as being monthly. That's right. Yeah, so it could be yearly continuity, which would not be my first choice, but it could be yearly. Clearly it could be quarterly, which I have suggested. I know several people that I work with in my InfoMastermind groups that are doing quarterly continuity right now that are very successful with it, and it works better than monthly. There's Dan, there's somebody in the Platinum Group that I think he's doing it weekly if I'm not mistaken, has weekly continuity in his business, so again, don't think think it has to be pigeonholed into becoming a monthly continuity. Monthly is historically the most common frequency that you see, but it's not the only way to do it. And I think a lot depends— when you look at it, it depends on the business and what would work best for that business. Okay, so we— I think we've gotten through our list here of the 5. Just to reiterate to everybody, our list, which I just have now lost our list, but the first one is memberships. I'm going to do this one by memory. The second one is membership levels. The third one is a rewards program. The fourth one is loss of something that is important to them.

The fifth one is continuity. Thank you for listening to the Magnetic Marketing Podcast with Dan Kennedy. If you If you love hearing in on these lost Dan Kennedy talks and speeches and calls, then please let someone else know about this podcast. That's how you can help it to grow. And the more it grows, the more free Dan Kennedy we can bring to you. Also, Dan would love to give you the most incredible free gift ever designed to help you make maximum money in minimum time. And this free gift comes with almost $20,000 in pure money-making information for free just for saying maybe. You can get this gift from Dan right now at NoBSLetter.com. Not only do you get the $20,000 gift, you also get a subscription to 2 marketing newsletters that will be hand-delivered by the mailman to your mailbox each and every month, one from Dan Kennedy and one from me, Russell Brunson. To get this gift and your subscription, go to NoBSLetter.com right now.