Lifetime Customers - A Strategy

Breakdown:

Companies are always concerned with numbers. Numbers represent sales, tax numbers, bottom lines, employee turnover rates, and every other cog in the machine that makes a business churn. However, it is all too often that company leaders are so focused on “hitting the numbers” that something is lost in translation when it comes to creating lifetime customers. It is impossible to judge the value of each customer over the course of a lifetime based on the first transaction they make with your business. This is why every customer should be treated with the same candor and grace. Despite this, statistics show that the average lifetime for customer relationships is only just over three years.

If you plan for your business to be around forever, three years seems like an awfully short expectation for the completion of most customer relationships. In many cases, members of the sales force and the managers who lead them are only hyper-focused on customers who are making a large purchase. Customers who make one large purchase, while valuable, may or may not return. Meanwhile, there could be a customer making a three dollar purchase today, who might become a lifetime customer tomorrow if treated correctly, thus creating more value for the company in the long run than anyone else making a single large purchase. Failing to place equal value on each person who we engage in business can ultimately affect all those numbers we are so overly focused on more than we know.

Opportunity!

While I agree with the sentiment of my colleague who wrote the ‘breakdown’ portion of this blog posting, I disagree from a strategy point of view. Here’s where I agree, “All customers should be treated with respect and the sales and customer service teams should strive to build a strong and lasting relationship with each client. We agree here. At the same time, not all clients are equal. That is, some have way more of an economic impact on the business and therefore need more attention. In the automotive repair industry for instance, a middle aged new customer with 4 cars and a family is worth more to me than a single 25 year old with one vehicle.

I can remember standing in one of my own shops about 15 years ago and a guy walks in and asks for an oil change, so I start a conversation with him. (Note: the guy is dressed in a uniform like he was a factory worker) After a few minutes of ‘chit chat, small talk’ I discover that he’s the HR manager for a company with 300 employees about ½ mile from the store. Now there’s an opportunity!

You want to build good relationships that last a lifetime with ‘everyone’ … agreed! But not all prospects or customers have the same economic potential. If you have an ‘approach’ for developing a client, it will pay off in the long run.

In our communication model, building relationship by asking important questions is the first part of the dance and so you need to be prepared and make the time to get to know the customer. They may work for a company which could become a nice fleet account. They could be a home owner with four cars in the family. Or they could be a one car ‘price shopping bottom feeder’! I hate to characterize a customer like that, but we run into them. All they want is a cheap price and that’s it!. Fortunately in my experience, there are not too many of that variety. At the end of the day, you want to be friends with them all, but not all are the same financially.