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Appreciating the lifetime value of your customers

Appreciating the lifetime value of your customers

 

I have mentioned many times the importance of the lifetime value of your customers or clients.  In general a customer will stick around with you for around 6-7 years if you treat them right.  If you are in a profession it’s probably 9-11 years.  Nothing demonstrates this concept more than this abridged article I saw in a recent issue of Australian retail expert Jurek Leon’s Terrific Tips.  One of Jurek’s long time readers got in touch to share this story:

 

For many years Dean owned a successful news agency in Perth, Australia.  This is his story.

 

“Every business has at least one customer who is a pain but how well do you know them and what is their value to your business?

 

As a retailer, one particular customer came in every Sunday to pick up his Lotto winnings and buy his Lotto for the coming week. He’d buy extra tickets for super draws and jackpots. However, he was a real pain and I dreaded having to spend 20 minutes or more listening to his very strong opinions on everything. He would continue talking while I served other customers.

 

One day I read an article on ‘The Lifetime Value of a Customer’. I multiplied the $94 per week he spent by 52 weeks in the years and then multiplied that by the 5 years he’d been coming in. This customer had already spent more than $25,000 in my store, including the extras for jackpots and super draws.

My attitude towards this customer changed overnight. When he next came in, rather than allow him to preach to me all his opinions, I asked him questions, and this enabled me to get to know him so much better. 

 

I am sure he noticed the change in my attitude and with the development of our relationship I was able to ‘train’ him how to behave in my shop. It did not take long until I welcomed his visits and conversation.  Eight years later, I sold my business knowing that this one customer spent over $70,000 (and many hours) in my shop over 13 years.

 

Had I not changed my attitude I would have pushed him away from my business and lost thousands of dollars in revenue.  So take time to get to know your customers, build relationships and reap the reward.”

 

There’s a wonderful lesson in Dean’s case study, isn’t there? Whatever industry or profession you are in, it’s a great one to share and discuss with your team.

 

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