With the loss of one customer goes a
lifetime of profitability with that individual! Do you know what your
customers are worth?
To determine the average lifetime
value of your customers, estimate how much they will spend with you per year
and then multiply it by the number of years they could potentially use your
products or services. For example, if an average customer spends $100 per
month, twelve months per year, for approximately 10 years—their average
lifetime value will be $12,000.
But don’t stop there! Calculate how
much your customers could potentially increase their spending each year
because they’re thrilled with your great customer service.
And then, you need to estimate the
value of all of the new customers that your loyal customers will refer to your
company.
Increasing customer retention by as
little as five percent can translate into as much as a one hundred percent
increase in profitability. No wonder it’s so important for all of your
employees to understand the lifetime value of your customers. Then they can
focus on building relationships with the very people who keep your company,
and their employer, in business.
What does it cost to
replace a customer?
Richard F. Gerson, the author of
Beyond Customer Service: Keeping Customers For Life, says, “Businesses
that provide superior customer service can charge more, realize greater
profits, increase their market share and have customers willingly pay more for
their products simply because of good service. In fact, you can gain an
average of six percent a year in market share simply by providing good
service: satisfying and keeping your customers.”
If the cost to attract new customers
is five to six times more than to keep old ones, then customer loyalty and the
lifetime value of a customer can be worth up to ten times as much as the price
of a single purchase.
Poor service is expensive but good
customer service is invaluable. Customer retention directly affects the bottom
line and it can only be accomplished through a focused customer loyalty
program.
So what do we do now?
> Your HR personnel create powerful
impressions on recruits and new employees. They need to focus on building
loyalty with these individuals during every step of the application and
interview process.
> Measure customer service as the
most important aspect of an employee’s job performance. Employees at all
levels of the organization need to know that their customer service skills
will be evaluated and great service will be rewarded. If employee evaluations
place more emphasis on productivity then customer service, the quality of
service will diminish.
Customers who spread good news about your
company, products and services are the best sales reps you can have. Do all
you can to create loyal customers!
Measure-X
888.644.5499
www.measure-x.com
The Customer Service and Sales Experts for the utility
industry!
