As a customer, I find salespeople too often focus on the short-term goal of the immediate sale. They fail to take the time to develop the relationship and they consequently miss a golden opportunity to gain a customer for life.
It takes approximately 10 times the effort and cost to gain a new customer compared to keeping your existing customers satisfied. It can be an expensive exercise in time, energy and money if your business is chasing new customers whilst it alienates its existing customer base.
The biggest sin in business
The biggest sin in business is to lose a good customer to your competitor. Was it because you took your eye off the ball; whilst focusing on new business you forgot about the “valued” customer waiting patiently in the background.
The key to business success is to ensure your existing customers are fully satisfied. Happy customers become repeat customers and ultimately customers for life. These customers are easy to service, buy more and promote your business to others.
Each of our customers need to be seen and treated as highly “valued”, unique individuals. Do not look at the sales transaction as a one-off opportunity; but rather the start of a wonderful relationship that could be highly beneficial for both parties; this is what winning customers for life is all about.
The lifetime value of a customer
The lifetime value of a customer is the total revenue they will bring to your business across their entire relationship with you. The below diagram shows that a simple one-off transaction of $100 from a customer who purchased the product / service ten times per year over a ten year period could ultimately spend $10,000.
Too often these customers are treated like they are only worth $100, not the real worth to your business of $10,000+. What if they also recommended your business to ten other customers?
What is your average transaction per client / per year? If they dealt with you for ten years, what revenue or “Lifetime Value” would that represent to you?
| Revenue per Transaction | Transactions per Year | Revenue per Year | # Years as Customer | Lifetime Value |
|
$100 |
10 |
$1,000 |
10 |
$10,000 |
What is it costing you / your business by not developing profitable, long-term relationships with your customers?
Driving Force Australia understands we need customers to keep in business and that means:
- Being able to build new customer relationships more efficiently
- Making current customer relationships more effective (for them and for us)
- Resolving any difficult customer relationships
- Winning customers for life.
Start developing profitable long-term relationships now!
Our Winning Customers for Life program is designed to do all of this. Driving Force Australia has experience in helping many businesses develop customer relationship skills; which ultimately increases their customer satisfaction, their job satisfaction and profitability.
Contact us to discuss developing a program that will suit your organisation, your staff and your customers. This program is not just for sales people; it is for everyone who interacts with customers.
Hi Ashley,
I had a great example today of a businessman who recognised my life-time value and as a result won a customer for life.
I was walking past one of our local / more expensive fresh produce shops, when I noticed a lovely bunch of oriental lillies in the discount bucket; so I asked if that was right.
He could have said “no”, a customer has put it in the wrong bucket, but he thanked me for asking and said he would honour the price.
I am sure on that particular transaction he made little profit, if any. But the way he dealt with this situation, has won my loyalty and I won’t mind paying that bit extra in the future. Imagine how much future profit he will make, if I brought all my fruit, vegies and flowers there for the rest of my life!!
Regards, Erica
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