Sometimes I look at companies and wonder why they don’t put more importance on their customers’ life value. In the last 25 years, customer service has greatly declined. Today, it’s all about monetizing your product. I know revenue is important, but it shouldn’t be the anchor to your business.
When a company gains a customer’s business, the person is put on a mailing list in hopes of gaining more business in the future. That’s typical marketing. Now let’s take that one step further. Why is it important and what is the lifetime value of keeping a customer’s business?
Let me give you my own example of horrible customer service. I’ve been doing business with a bank for years. I had a problem and literally had to call a dozen times in a two week period. In those phone calls, I also got disconnected! Hopefully the reps didn’t hang up on purpose, but I really don’t know. After I took the initiative to make these phone calls, it got resolved from my persistence. How loyal do you think I will be to them? I have already started doing business with one of their competitors and that company has done a great job and given me several bonuses for becoming a new client with them. Will the bank with the issue realize their loss at keeping me a lifelong customer? Probably not.
Let’s look at the dollar value of a customer. To a business, if I spend $50/ month, in a year I am worth $600. $6000 every decade. Without doing any advertising, the value of keeping my business is maximized from our relationship. There are several possible results if the relationship is strengthened:
1. New customers from a customer’s recommendation
2. Greater monetary value from lifelong customers
3. Lower cost of customer acquisition spent in marketing
So how do you maintain customers’ lifetime loyalty to a business? The answer is simple. Clients need to see your integrity and credibility. How it that attainable? Listen to your clients and show them they are important by your actions. This is the business purpose for social media!
Social media’s business objective is to build credibility and relationships.
Many businesses haven’t figured out the objective for social media. (Websites such as Facebook or Twitter.) When a customer complains, calls, writes, or emails, TAKE NOTICE. I remember in the ’80′s the phrase, “the customer is always right!” That may not be 100% accurate, but it sure is close. In today’s economy, society has decided it’s about revenue and nothing else matters.
Let’s go back to my example that I mentioned above. How could this bank have come out ahead?
1. They could have called me back when we got disconnected.
2. They could have resolved the issue in 24 hours.
3. They could have given me a “gift” to apologize for the issue.
Any type of positive interaction would have turned the relationship around. But nothing happened. And now I am blogging about it! If I wanted, I could use names to hurt their brand and reputation. Internet marketing is known for the negative feedback that gets posted and appears in search engine results. That is where search engine optimization will help. But I will leave that for another post!
When a business fails to understand the importance of the lifetime value of a customer, it breaks down its effectiveness in marketing and advertising. When a business doesn’t use social media to build customer relationships, it misses the mark and will never compound revenue from dedicated clients.
Will your business or organization fall apart because you failed to understand the value of your lifelong customers? Your business foundation is not about monetizing your product but about maximizing your client’s relationship and loyalty.