Jay Baer on Optimizing for the ‘Tenth Experience’ in Banking and Beyond

In a recent LinkedIn post, Jay Baer delves into the crucial distinction between acquiring new customers and retaining existing ones, using a fascinating analogy between tequila and banking. Baer highlights how true customer loyalty is built not on the initial interaction, but on the consistent, positive experiences that solidify a relationship over time.

Baer begins by recounting a podcast discussion where the conversation turned to the future of customer experience, particularly in the banking and credit union sectors. He emphasizes a key point raised by Jonathan Shroyer: as artificial intelligence tools become ubiquitous, the competitive edge will shift from the technology itself to the creative application of these tools. As Baer notes, the differentiator becomes “how creatively you use it to make each customer feel like the only one.” This suggests that personalization and a deep understanding of individual customer needs will be paramount in a future dominated by AI.

The Power of the ‘Tenth Experience’

However, Baer points to a profound observation from Tikka Nagi that truly resonated with him. Nagi’s assertion, which Baer found particularly impactful, is that “Both are trust businesses disguised as product businesses. The best ones optimize for the tenth experience, not the first.” This statement reframes the entire customer retention conversation.

“Both are trust businesses disguised as product businesses. The best ones optimize for the tenth experience, not the first.”

Baer elaborates on this idea, drawing parallels between seemingly disparate industries like tequila and banking. Both, he argues, sell products that can evoke a degree of nervousness in consumers. The initial purchase might be driven by curiosity, but it’s the subsequent interactions – the ‘tenth experience’ – that determine whether a customer becomes loyal. This framework, as Baer explains, has been a central theme in his recent thinking.

Rethinking Customer Acquisition vs. Retention

According to Baer, every product category possesses a ‘tenth experience’ metric that serves as a true predictor of long-term loyalty. He observes that many companies are heavily incentivized to focus on customer acquisition because these numbers often impact short-term financial reporting. This focus on immediate gains, however, can come at the expense of building the deeper, more enduring relationships that truly sustain a business.

“The businesses that last optimize for the relationship that’s solidified two years later.”

Baer challenges businesses to consider their own ‘tenth experience’ metrics. He suggests that optimizing for these long-term relationship indicators, rather than solely focusing on the initial acquisition phase, is the strategy employed by the most enduring and successful companies. This approach requires a shift in perspective, prioritizing the consistent delivery of exceptional value and trust that transforms a one-time buyer into a lifelong advocate.

“I’ve been thinking about this framework all week. Every product category has a ‘tenth experience’ metric that actually predicts loyalty.”

Ultimately, Jay Baer’s insights underscore the critical importance of long-term customer relationship management. By focusing on the cumulative impact of positive experiences, businesses can move beyond transactional interactions to build genuine loyalty and achieve sustainable growth.