What's a customer worth to you?

Seth Godin had a great blog post today about "Embracing Lifetime Value".

(If you don't already follow this marketing guru, you should. Go do it now.
Really, I'll wait... Done? Good.)

Here's his post so you can read it first hand:

If you walk into a company-owned cell phone store to sign up for a contract, what are you worth?

Given the huge gross margins at AT&T and Verizon and the standard two-year contract, I think it's easy to figure on more than $2000 in lifetime value.

If you ran a business where a customer represented an additional $2,000 in profit, how would you staff? How long would you make someone wait? If staff costs $25 an hour, how long would that extra person take to pay off?

Few businesses understand (really understand) just how much a customer is worth. Add to this the additional profit you get from a delighted customer spreading the word--it can easily double or triple the lifetime value.

So, a chiropractor might see a new patient being worth $2,500, easily. And yet... how much is she spending on courting, catering to and seducing that new customer? My guess is that $50 feels like a lot to the doc. Instead of comparing what you invest to the benefit you receive from the first bill, the first visit, the first transaction, it's important to not only recognize but embrace the true lifetime value of one more customer.

Write it down. Post it on the wall. What would happen if you spent 100% of that amount on each of your next ten new customers? That's more money than you have to spend right now, I know that, but what would happen? Imagine how fast you would grow, how quickly the word would spread.

Here's how you'll know when you've really embraced this--a good customer at your podiatry practice (or supermarket or tax firm) walks out the door in a huff and you turn to your partner and say, "There goes $74,000."

The truth is every customer matters more than we realize sometimes. That one that just called complaining about your service technician being late, or the other one who thought your bank was ok, but doesn't really have a reason to stay, or the potential new customer that you didn't reach out to because you didn't want to risk any hard earned money on advertising - they represent your future.

Do you know the lifetime value of your current customers? Do you know what your cost per acquisition is? Do you know why customers leave or choose one of your competitors? Do you have a retention strategy?

These are big questions that are sometimes hard to answer. We get it. But they're important nonetheless and can open up windows of opportunity.

Let us help you answer them and get your business on the right track to embrace your lifetime value investments - your customers. Give us a call or drop us a line today.
717-764-8288 or dpridgen@diousa.com