Maximizing Customer Lifetime Value

I’ve been reading Carl Sewell’s Customers for Life, which focuses on the value of a customer over the course of a lifetime. Sewell runs a chain of car dealerships in the southwest. His philosophy is that you can either sell a customer a Lexus for $40,000, or you can go out of your way to completely satisfy that customer, ensuring that he’ll keep coming back to you in the future. Sewell has calculated that the average customer for life is worth over $500,000, more than 10 times the value of any single, one-time customer (in some industries, customer lifetime value can be closer to 1000 times a single purchase price).

Beyond Satisfaction

How does Sewell create customers for life? Here are a few of the key points:

Always Say Yes - If it’s remotely possible for you to fulfill a customer’s request, say yes. Sewell has a repair truck that he sends to help customers with flat tires or keys locked in the car for free. His rule? If it’s something a friend would do to help another, do it for free. If you say no, the customer will look for someone else who will say yes.

Extend Your Hours - If you’re only open during the week from 9-5, half your clientelle won’t be able to take advantage of your services because they’re working too. Let your clients know that you’re willing to make the extra effort to work with them on THEIR schedule, not just yours. Customers respond particularly well to businesses who are willing to give out their own home or cell phone numbers.

Standardize Your Business - Determine the best way of providing your product or service, then make sure to deliver that way EVERY TIME. This minimizes flaws, oversights, and customer complaints. If something does go wrong, apologize profusely and make things right immediately at no additional charge. Make a big deal out of it. Let them know they’re important to you.

Charge Less Than Expected - This doesn’t mean you have to be the cheapest provider out there. All it means is that if your initial quote for a service is $200, bill them $180 at the end. This can be accomplished by adding a 10% cushion into the initial quote, so that in the end, you can always beat that price, even if only by $1. Just be sure you never, ever charge more than your initial estimate.

Keep them Coming Back

Think about it. If you keep providing value beyond what you’ve promised at prices lower than you’ve stated, why would your customers go anywhere else? Every time they have need of the services you offer, they’ll come back to you. What’s that worth?

Over the weekend, a long-time client called and said he was having computer problems, and absolutely needed them resolved by Monday morning. While I have largely gotten out of the hardware tech support business, my client was in a jam so I said yes. I met them to pick up the computer and after swapping out a few parts, decided I wouldn’t be able to revive it. So I called my client and, with his permission, did some shopping around and drove 40 minutes out to a store that had a great deal on new PCs.

After I bought the new computer, I installed all the software my client might need, then pulled the hard drive out of his old computer in order to rescue all of his data. By 8:00PM on Sunday, the computer was fully operational and ready for pickup.

This may have cost me half of a weekend, but what was gained?

• Without having to do a thing, my client had a new computer with all necessary software and data installed just like it was on his previous computer.
• By shopping around, I was able to save my client several hundred dollars over comparable PCs at major retailers.
• My client was able to meet his critical Monday deadline.
• I virtually guaranteed that this client would continue to come back to me in the future.

I don’t know about you, but I’ll gladly trade the occasional Sunday for what might very well become tens of thousands of dollars worth of work down the line.

How do you take care of your customers? What do you do to keep them from going elsewhere?

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