Why the butchers always used to fight over my mom. An enlightened view of customer relationships.
It was actually a little embarrassing. Whenever I went to the grocery store with my mother, she was treated like a minor celebrity.
I grew up in Saratoga, California, an upscale suburb of San Jose in the heart of Silicon Valley. In our neighborhood was a grocery store named Gene’s Quito Market. They are known for their service, extensive meat department, and exceptional produce.
My mother could — at any time — ask one of the produce clerks to go into the back to hand pick the best fruits and vegetables for her. They would volunteer to stop everything to squeeze fresh orange juice on the spot. And yes, the moment she came in to view of the meat counter, one of the butchers would call out, “Hey! Barbara’s here! I’m taking care of her!”
She wasn’t a movie star. We were not exceptionally wealthy. She didn’t hold a seat on the city council. But at Gene’s Quito Market she had clout; she was much more important than any of those things.
Mom was a regular, repeat customer. She would shop at Gene’s three to four times a week. And she did so for 41 years.
Even before the concept of “Lifetime Value of a Customer” became a cornerstone of marketing strategy, the staff at Gene’s Quito Market knew that if you took care of Barbara, she represented a lot more future business.
(By my rough calculations, she spent about $485,000 at Gene’s over the years.)
Once you stop viewing a customer as a short-term sale, and embrace them as a long-term customer, the world changes.
It’s the difference between a mom buying grapefruit and a person who represents $485,000 in sales.
How do you view your customers, clients, or patients?
How much are they worth if you service them well and have them return as a customer?
How much more are they worth if you make them a customer for life?
Here’s how to quickly estimate the lifetime value of a customer. Determine the average value of a transaction. Next, determine the number of times that customer would make a purchase throughout their life as a customer and multiply the two together.
Here’s an example: An oil change service center knows that the average oil change will generate $35 in sales. A “good” regular customer will get their oil changed 4 times a year. That means that over ten years that “good” customer is worth about $1,400 in oil changes.
Ask yourself: would you treat a $1,400 customer differently that a $35 customer?
Direct response advertisers track their customer purchase patterns and response rates as closely as a kid watches a birthday cake. They’ve learned that while today’s purchase is important, the total the customer buys over a period of time is what’s really important.
That’s why some businesses know that it makes great business sense to “buy” a customer with an outrageous deal.
Remember those ads you saw growing up to get 10 records or cassette tapes for only $1? That deal signed you up for a club that got you buying music every month. While it seems crazy to give away an armful of best selling record or cassettes, it worked because the company gained new customers who bought over and over again.
This formula has been working ever since the first Book-of-the-Month Club started almost 100 years ago.
So, take a moment and figure out the long-term value of your customers. Next, start working on strategies to help keep them as happy customers who come back again and again.
It may be as simple as having the butchers fight over who get to serve one of their regulars.
To your business success,
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Richard Wilson is the Founder/Chief Marketing Strategist for Sentium Strategic Communications which helps companies craft the right message for extraordinary results. Over the past 31 years, his clients have ranged from start-ups to major technology companies.
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