There have been times in my business where I’ve held strong to a belief or a previous arrangement and disregarded the lifetime value of a client.
And there have been other times where I have absorbed the sunk cost of doing what is right for the client because, quite frankly, it was a no brainer.
It costs money to attract a buyer to your business.
Think long-term about lifetime value
While you might not think in terms of cost of acquisition, every investment of time, money and energy to attract buyers to your business comes with a cost.
And that cost is the cost of acquisition.It costs money to attract a buyer to your #business. Every #investment of time, money and energy that you make in attracting #buyers to your business comes with a cost. Read more: Click To Tweet
In marketing, your goal should always be to measure the cost of acquiring your business against the lifetime value of your client.
I have many clients who are in the multiple six-figure ranges in terms of lifetime value. And, I have some that are less than $100.
Obviously, it’s smart to keep the clients who are valuable to your business and to invest more in attracting those clients – rather than the ones who spend less than $100.
How one short-sighted decision can lose you thousands in sales:
Recently we moved to Calgary. Prior to moving, we purchased a number of items from Structube for our Nova Scotia home. When we moved, we left our furniture in Nova Scotia and bought all new furniture for our new home as it made more sense than shipping everything.
We purchased a Kinsey couch from Structube for the 3rd time, and due to COVID supply chain issues, we had to wait almost 2 months to receive our couch.
When it was delivered, unlike our other furniture deliveries when we bought from West Elm, the couch was left on our doorstep for us to unpack and assemble ourselves.
When we unpackaged the couch, we found that there were 2 very visible small black marks on the leather that felt like burn marks. You could feel the indentation in the leather, and I was immediately concerned that this couch might not wear well for very long.
We immediately contacted Structube to find out what could be done.
They offered us a $200 credit on the couch or an exchange – with the caveat that we would need to return the couch immediately and wait 3 months for a new one.
I asked for a $500 discount, which felt reasonable to me, even though $500 was significantly less than 30% off the price we paid. I explained to the Structube representative that we were still waiting for other furniture to arrive and that we still have an entire level in our home to furnish.
I also mentioned that, if they were not able to make this work, we’d cancel all our orders and shop elsewhere.
Structube stood firm in their offer and watched likely tens of thousands of dollars in sales disappear.
In some cases, clients are unreasonable in their ask. As a business owner, you cannot please everyone all of the time. But, if your client has ever presented a problem or asked for a discount, refund or exchange – and when they do – you may want to consider their lifetime value. Especially when deciding how you want to handle the situation.
Structube lost a customer they could have kept for life, because of one short-sighted decision.
Don’t do the same thing in your business.If your #client has ever presented with a problem or asked for a discount, refund or exchange - and when they do - you may want to consider the lifetime #value of that client. Click To Tweet
How are you taking your clients’ and customers’ lifetime value into consideration when making decisions? Tell me below.