Understanding the Lifetime Value of the Customer

understanding the lifetime value

You’ve heard it preached dozens of times – customer service is king. But how many businesses do you visit nowadays where they truly live and breathe a customer service ethos. It’s more than just a cookie cutter “have a nice day” response, it’s truly being invested in the customer so they genuinely know you are committed to a positive outcome for them.  

They say if you treat a customer poorly they’ll tell a dozen people, but if you treat a customer really well, they too will sing your praises to colleagues, family and friends and continue to do so for longer.

I had this experience recently purchasing my son’s first car. Now my son is really fussy. The car had to be a manual, had to be a sedan and only from his shortlist of preferred brands. Two months of searching, and trips 300+ kilometres away to inspect and test drive, and finally we ended up at South City Mazda at Mt Gravatt in Brisbane (note that I’m telling you their details already).

Now I’ve never had particularly pleasant purchasing experiences when it comes to buying cars. Usually after a couple of hours of haggling, paperwork and hearing all the excuses in the world why they can’t meet the price I’m willing to pay – they do so anyway because I’ve done my calculations and know what they’re likely to accept. I’m not trying to rip anyone off, I do hours of market research so I know precisely what the market value is before I walk into any dealership. It’s about getting a good product for a fair price. So why is it so hard, and why do I leave feeling bad about myself or worse, violated!

This latest experience restored my faith somewhat in used car dealers, which I know had little to do with the industry and everything to do with the manager of the used car division, Darwin Maco.

First off we were allowed to take the car for a test drive without the dealer. “Take it for a good long drive” he says. We did and being able to relax and really check the car out – we both knew “this was the one” and it gave us confidence to take discussions to the next level.

Negotiations were not at all contentious, in fact it felt more like two friends sitting around a table discussing a fair deal. Soon we’d agreed, he’d also agreed to replace the window tinting at no charge because as I pointed out the blurry stuff stuck to the windows was not exactly legal.

Every interaction we had with Darwin was just so pleasant, and the fact that he valued our needs made a big difference on two counts. Firstly, the car was good, but the personalities involved pushed me over the line – I wanted to buy from him. Secondly, price was less relevant because of his negotiation style – we both wanted what was fair, so were both invested in the right outcome for each other.

A few weeks later we had a warning light come up on the dashboard. Darwin booked the car in with his service team and reassured us that with a 12 month warranty whatever was wrong would be fixed. He arranged for a courtesy vehicle to be available for me for the day at no charge, and said I could keep the vehicle for as long as it took to finalise the repairs. As it turns out they were unable to fully diagnose the problem the same day so asked to keep the car a few days so they could get to the bottom of the issue and fix it, to save me the inconvenience of a return trip to Brisbane. The loan car was offered in exchange, and all is good.

There’s one thing that Darwin lives and breathes which unfortunately seems a rarity nowadays – and that is recognising the Lifetime Value of the Customer. Because he made the experience a positive one, and looked after us both during, and after the sale, we will not only recommend him to everyone we know, but will undoubtedly go back to him for future purchases.

Does your team culture embrace customer service? Do you offer cookie cutter “have a nice day” responses or are you truly invested in your customers’ needs and empowering your team to solve them?

Starting with the right team is the most important step – you can teach processes, but you just can’t teach attitude. Staff either have a genuine customer care attitude or they don’t. The ones who do will always be highly sought after, and should be embraced and promoted through your business. Attitudes are infectious, and positive and caring service is catching.

Look at the cost to your business – good service and care doesn’t cost anything extra, in fact it’s cathartic for those who practise it. They have deeper connections with your customers, and customers feel and appreciate this – it’s a great point of difference in an otherwise disconnected world.

On the flip side, the cost of not valuing the customer over their lifetime could be huge to your business.

Think about the car example – this particular car sale was $9650. I’ve promoted the positive experience on four business and personal social media sites, and have given Darwin’s details to at least four people so far. I’m in discussions with him now about upgrading my own car, and in two years time I’ll be shopping for another car for my youngest son. More than likely my eldest son Jackson will also return when he wants to upgrade. So one initial experience could result over my lifetime in $100k or more in sales and even more in referrals.

To Darwin, I thank you for making my son’s first car purchase such a pleasant and memorable one – whilst he doesn’t know how unique this was – I do, and am very grateful. For businesses out there who are not genuinely invested in their clients’ needs, it’s not too late to evolve – if you need help knowing where to start, give your PJT advisor a call today.

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About the author

Tanya has many years professional experience in marketing and advertising, working in Brisbane and on the Coast in a variety of industries. Tanya now specialises in IT Systems Development, Process Improvement, Digital Marketing and Social Media, working internally on PJT systems and assisting PJT clients.