What Is Your Customer Really Worth?

Lately I have had more than one discussion on the lifetime value of a customer.  While there a few businesses that are one shot programs like wrongful death attorney’s, most other businesses have a long term value and benefit if they can maintain a customer relationship.  Every owner I talked to wanted more customers, and agreed that the customers they have are the most profitable.  So when I wanted to add a customer relationship program to the mix, why do they hesitate?

It is a very interesting phenomenon and attitude among business owners.  All of them will track how many customers are added to their “list” but they rarely track how many leave.  Online marketing is an interesting field because the total list is always a moving target.  If we forget about the existing customers for even a minute, they fall off the list faster than we can hit the refresh key.

So why is it that an owner will spend a small fortune on online advertising and not a penny to engage the existing list and make sure they don’t go anywhere else?  I don’t know.  The Harvard Business School has a pretty cool calculator to estimate the lifetime value of a customer. 

When I owned the home theater businesses, the customers first purchase was generally small, a test of sorts.  The second purchase was the major purchase, sometimes it was the third.  Imagine if we turned away the little job at the beginning? After the major installation, it was a very small stream of income until they moved and built a bigger and better theater.  The mentality in the industry was to get the next big deal and move on, much like many custom home builders.  A friend of mine is on his third custom home in the same area.  All three built by different builders.  When I asked why he doesn’t use the same guy the answer was simply “He never called”. 

Some of the top performing real estate agents I know have it down to a science.  They not only keep in touch they ask for referrals, compounding the value of each customer.  The area I live in is pretty much handled by one of two agents.  Over 60% of the people in the area bought up or down in the same area they liked it so much.  A few even kept the first home as a rental.  These two agents are so tight with all of the homeowners in the area, there isn’t much of a consideration to go elsewhere.  Once in a while a different sign shows up and is eventually replaced by one of the two regular guys.

Are you keeping in touch with your customers?  I use a whole set of tools.  I use an Email manager to keep everyone up to date on the latest in the Online Marketing world.  I also use Send Out Cards to send real, and personal notes to thank my customers.  Sometimes I’ll send a gift card even if the referral doesn’t pan out just to say “Thank you for trying!”.  I also keep in touch with Facebook and use the techniques I learned from the FBx system.

When I first started my business life, I started selling cars.  All but one of the salesmen I knew just stood around the lot and hoped to “get a good up.”, meaning someone that buys a car and doesn’t grind too much on price.  Then I met Jerry.  Jerry sat in a nice office with a Rolodex and was consistently the highest grossing salesman on the lot.  His secret?  He kept in touch with his customers.  Sometimes he would get a little aggressive.  One time he had me drive a new Porsche to the house of a Doctor and ring the bell.  When he answered, I said “I know your car is a couple of years old, do you want to take a new one for a spin?”.  He of course did. 

While he was getting his house keys the neighbor came by and asked what was going on.  I told him that I was delivering Dr. M’s new car.  Not to be outdone, the neighbor met me at the dealer two hours later, and Jerry and I split the commission on two cars that day.

Don’t forget that the customers that got you where you are might be all you need to get to the next level.

Keep your aim point and grow your business.