(Time to read this Blog is about 4.5 minutes)
Before we get to the main topic, here are a few things to get you thinking or smiling:
- My Biz Quote of the week:
“Choosing the comfort, simplicity and adrenaline rush of working ‘IN’ the business, rather than embracing the challenge and complexity of working ‘ON’ the business, is one of the most common and costly mistakes an owner or manager can make.”
- Quick Biz Tip:
The importance of recognizing your Team! According to a recent Gallup study, employees who feel recognized are 4 times more likely to be engaged. They are more connected, loyal and dedicated to their organizations. In fact, the study found that highly engaged teams saw an…
- 81% decrease in absenteeism.
- 18% decrease in turnover in high-turnover organizations.
- 43% decrease in turnover in low-turnover organizations.
- 10% increase in customer loyalty/engagement.
- 18% increase in productivity.
- 66% increase in wellbeing.
- 23% increase in profitability.
So, what will you do to better recognize, celebrate and ‘thank’ your Team…and when will you start?
- The labour cost of vehicle assembly. Labour is less than 5% of the total cost of assembling a vehicle…even lower for EVs.
- The most popular country to emigrate to for work. According to Google Search Data, Canada is by far the most popular country to emigrate to for work. The USA used to be #1, but is now #6. Click Here for the list.
- Restaurants losing money. In spite of recent restaurant price increases to nose-bleed levels (I’m sure you’ve noticed), The Canadian Restaurant Association reports that 51% of Canadian restaurants are losing money. Pre-Covid, that number was about 11%.
- Have my Business Tools been helpful to you? Over the years, thousands of clients and fans have downloaded my complete set of ‘Business Assessment & Management Implementation Tools’.
These are the same Biz Tools that I use with our Biz Coaching Clients to help them get real about where their business is now, where it needs to be in 3 to 5 years…and how to get from ‘here’ to ‘there’.
If you’ve used my Biz Tools in your business, I’d love to hear from you about how they’ve been helpful. One respondent will win a one-hour biz coaching call with me. firstname.lastname@example.org
If you’ve not purchased and used my complete set of Biz Tools, you can do so by Clicking Here.
Now, to this week’s important topic:
Calculate the lifetime value of a loyal customer:
Creating extraordinary customer value and experiences is a lot more work than being mediocre. Is it worth the effort? Well, first off, in today’s competitive world where every industry and every market is over-served and under-differentiated, mediocrity is no longer an option.
To get you focused and excited about doing the work required to be extraordinary, calculate the lifetime value of a loyal customer. The number will amaze you!
For example, by focusing on the long-term value of each customer, an equipment financing company obtained hundreds of new clients by agreeing to buy out their existing contracts with competitors in order to create a stress-free, tidy transition.
Some years ago, when the Buxton leathergoods company in Springfield, Mass. got into the men’s belt business, they discovered that most retailers weren’t interested in buying their belts because they already had a huge inventory. After calculating the lifetime value of a major men’s wear account, Buxton came up with a dramatic marketing initiative. When a retailer told the Buxton salesperson that he already had more belts than he needed, the salesperson would say, “In that case, I’ll buy all your belts.” They would ask the astonished retailer for a few cartons; they’d fill them up with the entire inventory of belts, write a check for the total amount and then, looking at the empty belt racks, would say, “It looks to me like you really need some belts!” They disposed of all the belts they bought from retailers at flea markets and absorbed the loss.
Back in the day, our Alive & Well ladies fashion store became famous for our selection of free beverages, our Pirate Ship Play Area for kids, the electric reclining massage chairs, free diapers, wipes and cream in the customer washrooms and our amazing signs that said, ‘Please take as many items in the Change Room as you
wish!’ We had instant, mini Birthday Celebrations for any customer shopping on her birthday. On a large sign, just inside our front door, Zelda the Pet Goose, our store mascot, leaping out of a three dimensional birthday cake, invited customers to “Please let us know if you’re having a birthday today!”.
Each customer shopping on her birthday received five “Birthday Bucks” worth $5 off her purchase that day, a beautiful silk rose, a personal size bottle of champagne and the staff all rushed over to sing “Happy Birthday” at the top of their lungs. Total cost, about $10. How could we afford it? We simply understood that this lady could be worth $344,000 some day. So, the real question was, how could we afford not to do it?
Half the people in her own family probably forgot her birthday, and we had a party for her. That’s definitely a WOW that will uplift her and touch her heart!
Usually, in the middle of these mini-Birthday Parties several other women would run up to ask, “What’s all the excitement? What’s happening?” and, typically, the ‘Birthday girl’ would say, “Oh, it’s my birthday today and I got this and this and this.” And, often some of these other women would say, “Gee, it’s my birthday in a couple of weeks. If I come in, will I get that stuff too…but you won’t sing to me, will you?”
Women do that, don’t they? “Oh, please don’t make any fuss. Please don’t sing to me.” Do they really mean it? Absolutely not! So, she’d come in two weeks later, announce that it’s her birthday, we’d give her the ‘Birthday Bucks’, the rose, the champagne, we’d sing our guts out…and she loved it!
We had a simple human understanding that what every person on this planet is really saying is, “Somebody please sing to me! Somebody please honour me. Somebody please notice that I’m special!” Are your customers worth ‘singing’ to? Calculate their lifetime value and open yourself to new ways to serve them, acknowledge them and honour them!
As fashion retailers we did this and came up with a lifetime value number of $344,000 per customer…if we did our job right. Then, we just pictured every customer walking in our front door with $344,000 written across their forehead. Imagine how glad we were to see them. Imagine how well we treated them, served them, and thanked them.
How did we come up with such a huge number? Here’s the math:
- We estimated that our average customer spent $800 per year with us, and stayed with us for 10 years. = $8,000 in sales per customer.
- We knew that most of our customers loved us so much that they told dozens of friends about us, and we guessed that at least six of those friends also became loyal customers, spending $800 a year…also for 10 years. If all of this was true, those eight new customers would bring us sales of $48,000.
- Finally, we made the leap of faith that each of those six new customers would also bring us another six customers who, believe it or not, would create a total of $288,000 (36 new customers X $800 each) in sales over a 10 year period.
- If you add the original $8,000 in sales to the $48,000 and the $288,000, you get a total of $344,000, traceable back to one delighted customer.
Yes, I know there are lots of estimates and assumptions here…but as we talked with customers, listened to how they found out about us, and tracked their purchases, the numbers seemed to be pretty legit. And the enormity of the number sure kept us focused on being amazing and expressing gratitude to every customer, every day.
So, whether you sell B-to-B or B-to-C, what is the lifetime value of a customer in your business? How will you communicate this to everyone on your Team to stress the importance of WOWing every customer…every day? What policies or processes need improving or changing to build ‘amazing’ into everything you do? How will you acknowledge and reward your Team for delivering WOW? How must your culture change to make delivering WOW part of who you are?
If you’d like help with this, I’ll be delighted to chat. donald@donaldcooper,com.
That’s it for this week…
Donald Cooper speaks and coaches internationally on management, marketing, and profitability. He can be reached by email at email@example.com in Toronto, Canada.