Realizing the importance of lifetime value
Todays’ blog is about the lifetime value of a customer. I think I ran into the first instance where I was the customer using this discussion with a business owner recently. It is a great example of how someone in your organization can cost you thousands or even millions of dollars.
It seems that I love to use my son as an example, but here we go again. He recently started his first real regular job (age 16) at the local nursery around the corner from our house. The job itself wasn’t ever going to be fun. It was going to be hard work, lots of sweat, and back breaking type activities. He came home the first day, and was spent. In telling us about the job, he told my wife and me that his boss was just an idiot, swearing at him, telling him he was useless, and bullying him around. He even threatened to take away his pay for 30-minutes while he re-did a chore that wasn’t done to the boss’s satisfaction. The next 2-weeks of work were pure hell for my son, and I was almost ready to tell him to quit. There was no reason for anyone to work for people like this, or a company that allowed their employees to be treated this way. Luckily for my son he received a phone call from Tim Horton’s (love the coffee!) to start working as soon as possible. The first thing my son did was pick up the phone to call his boss and give him notice. In the 3-minutes that my son was on the phone with him this “idiot” dropped the F bomb 30 times and called him every name in the book. To shorten this story up a bit, when we (yes we) went to pick up his last check, I made sure that I went with him to make sure there was no problems. Well, there was a problem and it ended up getting ugly. Me, being the salesman that I am, tried to calm the punk down, and demanded to talk to the owner (which happened to be his father / explaining a lot). The guy wouldn’t stop screaming, swearing and threatening me, and even threatened to knock my head off.
The cost of poor leadership
All this being said, the father was much more reasonable, and we settled the payroll dispute. I then proceeded to discuss what had happened in the last 20-minutes. I informed him that I had shopped at his nursery every year for the past 21 years, spending anywhere from $500-1,000 each year. Further explaining, that unfortunately due to his son’s actions and attitude, I would probably never spend another dime at his facility, meaning for another 20+ years, it would cost him over $10-20,000. Pushing it out further, I told this business owner that our friends would hear about this and most would probably make the decision to go to the competitor. Just yesterday, an acquaintance of mine who handles all the purchasing for a few funeral homes in the area, informed me that he closed his account at the nursery and opened one up with the other nursery in the area. He had heard about this through other people (small town), knows my son and the type of kid he is, and decided this on his own. His annual buy was a LOT more than mine and the 5 or so of my friends who have already promised not to shop there. In addition, he removed this nursery’s name from all his literature, so when people ask for a recommendation (10x's per week), he no longer will be sending them in this direction. I haven’t figured it all out, but if a few of my friends and this funeral home stick to their promises, the father probably lost over $1 Million in revenue in the next 10+ years. I'm not sure about you, but to me that is real money!What we do makes a difference now and in the future. Don’t be that guy!
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Make sure your marketing efforts aren’t undermined by things like this or other areas. All customer interfaces are important, both internal & external. If you need help identifying these areas of concern, do not hesitate to call us at: Pinnacle Sales is an agency that offers support to clients in any part of the sales & marketing process. From planning to implementation, business development to training. Pinnacle Sales offer Service Above the Rest.