Appreciating the lifetime value of your customers

Following the Lifetime Value of a Customer blog post, Dean Scott got in touch to share an example which demonstrates the importance of focussing on this important measure.

For many years Dean owned a successful newsagency in Subiaco, selling the business last year, and is now the Western Australian General Manager for the Australian Lottery and Newsagents Association. Thanks to Dean for allowing me to share his great example with you:

“Every business has at least one customer that is a ‘Pain In The Ass’ (PITA), but how well do you know them and what is their value to your business?

“As a retailer, one particular customer came in every Sunday to pick up his Lotto winnings and buy his Lotto for the coming week. He’d buy extra tickets for super draws and jackpots. However, he was a ‘PITA’ and I dreaded having to spend 20 minutes or more listening to his very strong opinions on everything. He would continue talking while I served other customers.

“One day I read an article on ‘The Lifetime Value of a Customer’. I multiplied the $94 per week he spent by 52 weeks in the years and then multiplied that by the 5 years he’d been coming in. This customer had already spent more than $25,000 in my store, including the extras for jackpots and super draws.

“My attitude towards this customer changed overnight. When he next came in, rather than allow him to preach to me all his opinions, I asked him questions, and this enabled me to get to know him so much better.

“I am sure he noticed the change in my attitude and with the development of our relationship I was able to ‘train’ him how to behave in my shop. It did not take long until I welcomed his visits and conversation.

“Eight years later, I sold my business knowing that this one customer spent over $70,000 (and many hours) in my shop over 13 years.

“Had I not changed my attitude I would have pushed this customer away from my business and lost thousands of dollars in revenue. Take time to get to know your customers, build relationships and reap the reward.”

The Lesson: There’s a wonderful lesson in Dean’s case study, isn’t there? Whatever industry or profession you are in, it’s a great one to share and discuss with your team.

Visual courtesy of Shutterstock

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Jurek Leon is a storyteller, speaker and trainer. Subscribe to Jurek's FREE monthly 'Terrific Tips' e-newsletter at http://www.terrifictrading.com/terrific-newsletter/. Alternatively, email info@terrifictrading.com.