The Lifetime Value of a Customer
It’s not true that the customer is always right. Some customers are more difficult to work with than they’re worth. They create so much trouble for your employees, are slow payers, and so on that they should be fired. Unfortunately many businesses end up falling into the habit of treating even those customers who don’t cause problems in a routine way that comes across as taking them for granted. This is something you need to work to overcome. Every customer wants to be treated as if they are special.
Aside from your terrible customers, there are good reasons why your customers may be worth more to you than you realize. Let’s say someone buys a hamburger meal for five dollars. That’s a small transaction, not worth much. But if they buy a meal every week, that’s $260 a year. And if they bring a friend occasionally or take food home, it could be much more per year.
When you add up a customer’s expected purchases over the time they stay with you, the total figure can be bigger than you realize. For instance ,the author of “Customers for Life” (and the owner of Sewell Cadillac ) calculated that the average customer was worth hundreds of thousands of dollars to him over a lifetime of cars, and that was many years ago.
So when you think about how much effort you’re willing to put in to thrill customers, think of their possible lifetime value in reference to both direct business and referrals.