Many business owners (and their staff) just don't seem to understand the difference between the value of a transaction occurring right now and the lifetime value of that customer, and will insist on maximising the profit in that single transaction rather than the total revenue that customer will generate over the number of years they will remain a customer.
Research from the Harvard Business Review shows that the longer a customer stays with you, the more that customer is worth - they buy more, take less of your time, are less price-sensitive and refer you to others and best of all, they have no acquisition or start-up cost. In some industries, reducing customer defections by as little as 5% can double profits over time.
Have you ever worked out the lifetime value of your typical customer? It's easy - just multiply your average $ sale by the number of times a customer buys from you in a year and then by the number of years they keep buying from you. When you do (and add on the value of additional customers typically referred by the each customer) you will never look at a customer again in the same way! A customer is a very valuable asset and you should have a strategy to preserve the value of those assets in the same way you would keep a house in good repair.
At the Accountancy + Business Advice Centre we first determine your current commitment to customer care by using a 30 question questionnaire and then work with you to discover your customer's key frustrations. We then design a fully customised customer care strategy for your business, typically incorporating key aspects such as performance standards, focused staff training and customer advisory boards to ensure your business begins to display the characteristics observed in the most successful customer driven companies.