One of my favorite Peter Drucker quotes is "The purpose of a business is to create a customer, and to grow that customer."
No one will argue with that. But the problem is, many people - particularly commissioned sales people - allow the transaction to obfuscate the customer. That is, people inside the business can become overly-focused on the transaction - the sale of the day - and less so on the long-term relationship with the customer. As a result, customers are often not treated as you might a life-long partner, but rather, a shorter term relationship, or worse, a one-transaction stand.
Earlier this week, I was listening to a podcast while out on a bicycle ride (hey, it was safe - there was virtually no traffic on quiet quiet coastal byways!). Coincidentally, this "Blog Talk Radio" podcast by featured Chris Zane, the founder and CEO of Zane's Cycles which has achieved an average annual growth rate of 23% annual since 1980 when it opened.
There were plenty of lessons in the podcast, but one that really resonated was the way that Zane gets his employees to look at every customer in terms of their lifetime value to the business, instead of the the value of the single bicycle they buy on a given day.
According to Zane, the average customer will purchase $12,500 worth of bicycles over the course of their lifetime. Zane, through a series of customer-focused tactics, is committed to have each of those bicycles purchased from his store in Connecticut.
So, when employees are hired and trained, they are taught to treat every sale as if that sale is a $12,500 sale. Now, that would be a HUGE single sale for a bicycle shop, so when an employee sees a sale through that lifetime value lens, they're more apt to treat the customer like gold.
What is the lifetime value of your average customer?
Can your employees recite that figure coming out of a sound sleep?
Do they engage each customer from that perspective?
Zane's has achieved a 23% average annual growth rate every year, since they opened in 1980. Do the math - that's powerful stuff. And so is the Customer Lifetime Value Lens, if every one of your employees looks through it.