Megan Neale, Co-Founder and COO at Limitless explores the relationship between GigCX and Customer Lifetime Value (CLV) and how it enables brands to re-think their approach to customer service.

This period of history will forever be defined by human disconnection. In its place, digital transformation initiatives have accelerated to keep up with the pace of change. Organisations have had to pivot, adopting their strategies in order to reach their Customer Lifetime Value (CLV) metrics which rely on empathy and support.

As a result, the relationship between gig customer experience (GigCX) and CLV has become intertwined, as companies strive to achieve that ‘human’ touch in a virtual world. To that end, customer loyalty can no longer be assumed as a given for brands, no matter how innovative or experimental the product on offer is. What really counts is the personal connection and relationship on offer. After all, determining customer lifetime value is all about estimating an entire future relationship with a customer – ‘relationship’ being the key word.

Experience first, product second

What many brands tend to forget is that AI – namely in the form of chatbots and other automated services – should be considered aids for the customer journey, as opposed to a replacement technology that only serves to alienate a customer.

Often with tens of other identical products on offer elsewhere, the customer experience is no longer just about the goods-monetary transaction but more about the value added experience. While AI chatbots aim to assist the customer journey, a fellow brand advocate, however, is more likely to resonate with other customers that experience a problem or query. In other terms, this is where the potential of GigCX can really be leveraged.

Customer Lifetime Value does not – and should not – concern special offers or loyalty discounts as it once did, but focus on customers getting value from the products or services and allowing them to feel heard by people who are empathetic with their responses. This can only be achieved when using human rather virtual agents. A customer making a specific query on a product function in relation to their own needs is unlikely to be successfully answered by an automated chatbot tool. Both context and understanding are essential for a genuine and useful exchange. Someone with a first-hand experience and reasoning skills will be able to give the most suitable response.

Influencing customer life cycles

An important part of supporting the customer experience is recognising the needs of the customer life cycle. Typically used to map every stage of the customer journey – from considering a product or service, to the purchasing stage and post-purchase offering – it was a model once thought as being able to predict the entire value of a customer relationship. As needs and customer demands become more complex, customer retention, loyalty and advocacy is harder to come by, and the customer lifecycle model – largely based on impersonal CRM data – can no longer map this out alone. It needs added context.

That said, GigCX tools can align closely with improved customer life cycle mapping. Used as one of the most accurate methods for achieving customer success, the personalised approach it offers enables better control of customer behaviour and outcome, navigating the exact customer experience and journey in line with their needs. What’s more, offering greater direct interaction with customers, brands are able to build a more detailed picture on their typical needs and expectations much better than any manual paper-based model could predict alone .

With GigCX, brands are able to react to customer needs in real time and give them what they really want to hear – not just a ‘best fit’ answer from an automated and impersonal AI tool or call centre agent who has been disconnected from the entire experience and query in question. With the buyer journey no longer linear, engaging with them on a closer and more personal level via gig agents will enable brands to better estimate a no longer predictable journey.

Customer success

To that end, customer success is no longer just about the end customer who is satisfied with their product. Rather, it is about the next step in that journey – converting them into loyal brand fanatics who identify and wholly believe in the product and brand in question. GigCX offers the opportunity to mature satisfied customers beyond the ‘repeat purchaser’ stage and turn them into proactive ‘gig’ advocates themselves.

The GigCX model has brought a new type of brand advocacy that operates beyond word of mouth between friends and family. It is more influential and genuine, enabling a representative to truly sit right alongside the product, a brand’s ethos and goals. Therefore, if a brand is successful in using the gig model to extend the potential offered by a satisfied customer, they’ll be on their way to achieving an entire network of passionate advocates .

Out with the old

Intertwining the principles of both GigCX and customer lifetime value offers a real opportunity for brands to re-think how they approach customer service and communications. Some of the world’s leading brands, such as Unilever & Microsoft, are taking this first leap and are already achieving impressive new results. Putting the real customer at the forefront of customer experience operations will offer a vital new take on services brands can deliver .

About the Author

Megan Neale is Co-founder and COO of Limitless, a Gig CX platform powered by AI that is empowering people to earn money for providing brilliant customer service for brands they love. Megan is widely regarded as a thought leader in digital innovation for customer care. Her passion for “customer & client first” combined with her constant drive for innovation led her to co-found Limitless in 2016.

Consider this scenario: It’s mid-morning and Jane and Jill both call customer service at a large branded skin care subscription service. Both women are on the same subscription plan, each paying $49.95 monthly for a delivery of anti-aging skin crème.

However, once their calls are received, Jane goes down one customer service path in an automated system with various options, prompts and personalized messaging. The system takes Jill down a different path with different choices and options.

Both women have called to cancel, but each receives a different enticement to keep the service. Jane is offered the option to have billing suspended and then restarted in three months, at a discounted rate of $39.95. Jill receives an entirely different offer; pay a lump sum for the whole year at a discounted price equal to $400, a 16.5% reduction in the annual cost Jane would incur.

The skin crème company runs such A/B tests thousands of times every day. The company will test more than 1,000 Janes and 1,000 Jills on these two different offers before choosing a winner. (Hint: It’s not what you think it would be).

Undertaking such A/B testing in an automated environment to optimize customer lifetime value (CLV) is a rapidly growing application of this testing technology. That’s important because CLV is the number that tells a company what each customer is really worth and it can even be used to look into the future value of each client.

Using A/B testing to optimize CLV requires four major components:

1) Use fast and personalized systems

Any company hoping to use A/B testing to successfully lift CLV needs an automated system that provides lightning fast recognition, that can consistently provide personalized, programmable messaging. Customers actually prefer an automated system *if* the messaging is targeted to them. The reality is that 95% of customer calls are to cancel billing, so accepting the reality of cancelations is the first step to improving CLV and customer satisfaction.

Companies should use personalized options to push clients into more profitable options than a straight cancellation. “Hello, Jane Smith, you have received monthly shipments of our skin crème since your initial order in June, are you calling to cancel shipment or to ask product usage questions?” Having computerized systems (and therefore the person you speak to) immediately know who you are and why you might be calling drops anxiety levels.

Offering personalized solutions increases loyalty and confidence in the competency of a brand. That’s especially important because 82 percent of consumers have stopped doing business entirely with a firm because of bad customer service.

2) Apply rigorous discipline

The system must randomly direct customers into different option paths, based on statistical probability assignments. You cannot alternate every other call to A or B, or send one hour, day or week toward A and the next to B. Real-time variation of paths is crucial to assure statistically valid results. Everyone getting an A option on a Monday in week one of a month, is not the same as everyone getting a B option on a Monday in week two of a month. The results can vary dramatically by time of day, weather etc.

The smaller the variance in the testing, the more precise the results will be. For example, using exactly same verbiage or web copy while just changing one factor such as the price offered will produce definitive, precise results.

3) Employ mathematical discipline

Warren Buffet’s and Bill Gates both love the book “How to Lie with Statistics” because it teaches the value of good statistics and the problems caused by attaching inference to poorly constructed models. Effective A/B tests require large, precise sample sets to test the differences between two samples and extrapolate a conclusion*. *Those conducting the test must resist the temptation to cheat by picking what looks like the winner when it doesn’t meet the test requirements.

4) Use comprehensive data

To accurately measure and predict CLV in an A/B testing environment, all points of data are needed. Calculating CLV starts with tracking all customer orders and the associated expenses of acquiring and keeping that client. Costs should not include fixed business costs but should include all variable costs—marketing and acquisition budgets, product and shipping costs, maintenance and transaction fees, refunds, chargebacks, and the cost of customer service inquires.

Variations in pricing plans often cause ripple effects throughout those calculations, so it’s important to conduct a deep dive into the data base (usually the CRM or the billing software) of the testing company to extract all relevant data and correctly calculate
results.

By combining these methods and metrics into a single application, companies are learning that they can methodically and scientifically lift the overall value of customers through A/B testing, driving additional profits within their cost center and overall business and freeing up additional resources for higher advertising spending.

In the case of Jane and Jill, the $400 one-time purchase was the winner, as is almost always the case when customers who *really* don’t want monthly bills are offered the option of a single transaction. In the end, effective A/B testing is an art form that uses the customer’s momentum to cancel and finds the right way to divert some of that energy into one-time purchases that boost profits.

About the Author

Blair McNea is co-founder and chief executive of  RevGuard.

According to MarketingCharts, Forbes and Sitecore conducted a study of 312 senior executives in North American companies and learned that not only did they not know the financial value of their customers, more than half had no plans to find out.

Basically, they don’t understand the significance of this important number – or they don’t care.

There is so much wrong with this. If these leaders don’t know their customers’ value, how can they expect their employees to understand it? Employees need to know the lifetime value of the customer in order to make proper customer-focused decisions.

To understand this better, let’s look at a simple example. Everyone goes to the grocery store to buy food and other staples, and studies show that the average customer spends $80-200 at the grocery store each week.

Let’s just say an average customer will spend $100 a week. Even if you eliminate a couple of weeks per year, assuming that the customer is away or on vacation, that still leaves 50 weeks, which multiplied by $100 is $5,000 each year. But we’re looking at an even bigger picture – the lifetime value.

Another statistic figures into this, which is that the average family moves about every seven years. So, assuming that with each move they shop at a new grocery store, one family is worth about $35,000 over the course of seven years.

How does it help to know all this? Imagine that a customer complains about a carton of spoiled milk. Knowing that their true worth is $35,000, would you hesitate in refunding their money for the milk? Of course not!

Here are some steps to understanding and applying a customer’s lifetime value:

1. Calculate: Determine the lifetime value of the customer. A simplified formula would be as follows: How much the average customer spends per transaction x The number of transactions per year x How many years they do business with you.

2. Communicate: Share this information with employees so they can make better decisions.

3. Demonstrate: Give specific examples of the kinds of decisions they can make such as refunds, exchanges, upgrades and more.

4. Recognize: Show your approval and appreciation when employees make good decisions.

5. Teach: Conversely, if an employee makes a bad decision, kindly instruct the employee about the right course of action and coach him or her about how to handle the situation the next time.

6. Share: Tell the story. Share good and bad examples of decision-making based on the lifetime value of the customer. Look at it as part of your employees’ ongoing training.

In short, knowing the value of a customer makes sense. If you manage interactions with your customers while keeping their lifetime value in mind, you will make the most of each and every interaction.

About the Author

Shep Hyken is the Chief Amazement Officer of Shepard Presentations. As a professional speaker and best-selling author, Shep helps companies develop loyal relationships with their customers and employees.

Since that’s not the world we live in, customers need to experience prompt and dedicated attention at every major customer touch point. Otherwise, you risk turning healthy customer retention rates into customer turnover turmoil, and ultimately reducing the lifetime value of your customer base. For anyone who doesn’t like the sound of that (and we certainly don’t), it’s important that you are effectively measuring the customer service performance metrics that roll up into the customer value equation.

Can Any One Contact Center KPI Boost Customer Lifespan?

Let’s start by dispelling one misconception. There is no one contact center KPI that can totally predict a given customer lifespan. In certain companies, some customer service metrics are more relevant than others, but none come without their own limitations.

Plus, every contact center has its own panorama of values and service objectives that make a one-size-fits-all approach to measuring customer service performance a little questionable. Here are a few incisive ways to sift through the data for a glimpse at what makes customer loyalty last.

Customer Satisfaction Score (CSAT) – How would you rate your overall satisfaction (1 being very dissatisfied and 5 being very satisfied) with the service you received?

On the surface, it seems like this question for measuring customer service performance is all about the immediacy. Yet how do you translate that gut response into an action plan for prolonging the lifetime of your customer?

It starts by adopting the right mentality. 80% of customer service organizations use the CSAT score, and those who see results remain aware of certain realities:

Any customer service performance data is bound to be altered in some ways by the non-response bias – most people with lukewarm responses won’t take the time to rate their satisfaction. Remember to factor that in to keep your stats honest.

Peak, unwavering satisfaction doesn’t happen in one go. Every customer interaction needs to feel consistent and unique, as if your customer service is tailored to the specific customer and conveys that you want them back next time. Otherwise, research shows that there’s not much keeping them tethered to your business.

Net Promoter Score (NPS) – How likely is your customer to recommend your company to a friend or colleague? It’s the simple question that gets to the heart of where you stand with customers. For NPS metrics, Promoters (10-9), Passives (8-7), and Detractors (6-0) divide how you’ll be measuring customer service performance, but they alone won’t give you the keys to the castle.

It’s critical to know the tangible value of your promoters to the overall lifetime customer value.

Promoters are your moneymakers. Though it’s an obvious conclusion, the revenue differences between promoters and detractors is worth a glance.

One company studied the difference between detractors who were converted up and those who stayed dissatisfied, finding the average sales growth to be notable. Those converted to promoters increased their average purchases by 25% while those who remained detractors dropped in purchases by 36%. Even detractors who became passives saw a 16% increase in purchases.

Moreover, when you have a higher Promoter score it should be more than just a pat on the back. 80% of your positive referrals come from your Promoters. That means the positive experiences that encourage referrals need to be a customary part of your customer service model. Once again, this points to why you can’t let an exceptional experience be a one-time thing.

Customer Effort Score (CES)

The CES measurement is essentially asking your customer to rate how hard it was for them personally to have their request handled. Generally this is measured by asking the customer to answer the question: How much effort did you personally have to put forth to handle your request? The customer can provide a score from 1 (very low effort) to 5 (very high effort.) Looking at customer effort from a holistic, end-to-end experience requires collaboration from many functional areas – on both the client and the contact center side.

At first glance, the concept of measuring customer effort seems weighted toward the negative. But the value in CES measurement comes from narrowing your focus from the full spectrum of service interactions to just the negative, high effort ones because that’s what your customers remember.

Terrible experiences are what affect customer loyalty the most. Even social psychologists tend to agree. Bad impressions tend to outweigh and outlast good impressions in our memories. One bad experience can tarnish all the good ones that came prior.

Because of that, the greatest value of the CES for your customer service solution comes from identifying barriers to a quick and painless customer interaction. That means, ensuring that none of the following problems diminish your first-contact resolution:

• IVR phone systems that run customers through a maze of extensions.
• Email communication that is sluggish or repetitive.
• Multiple interactions to resolve a single, repeated problem.
• Shifting between multiple channels of communication to resolve a problem.

Do you think you have excellent first-contact resolution? You may be wrong. Almost a quarter (22%) of all downstream issues are related to the issue that encouraged your client to reach out in the first place.

By gathering extensive data about related issues in your customer effort survey, you can expand the information and offerings your contact center reps provide in the initial interaction, decreasing the level of overall effort your clients need to exert.

The Extensive Effort Behind Lifetime Customer Value

What happens after you go through the process of taking all these measurements? You do it again and again. Effective metrics are constantly updated. Good customer service is never interrupted (not even for a minute). It can be a strain on your workforce, but having a customer service arm without measurement tools makes it little more than a cost center.

With all of the features of modern multichannel customer service – telephone, email, live chat, social media support, SMS texting, and more – it can be tough to keep up strong customer retention on your own. That’s why you bring on a contact center that strives to be an authentic extension of your business and your brand.

About the Author

Amy Bennet writes for blue ocean, a company that specializes in helping organizations build brand loyal customers with quality care that is indistinguishable from what you would expect from your own employees.

I recently had an experience that clearly demonstrated the crucial need for better training at all levels, from entry-level employees to management.

This situation occurred at a local tire store, one that is part of a national chain—of which will go unnamed—but claims in their name to be pros with tires. The store manager made the decision that $20 in his cost on labor, and his need to be right was more important to him than a loyal 10-year customer.

Let’s Review the Benefit of 10 Years of Customer Loyalty:

New tires (sets of four) on 3 cars—approximately 8 sets at an average of $300 per set equals a minimum of $2,400 in retail sales. Satisfied customer recommendations to friends and business acquaintances—in this particular case the bare minimum is referral benefit is a fleet of 18 cars and trucks that moved their account to this particular store five years ago based on my recommendation.

This referral has resulted in approximately 9 sets of car and truck tires purchased yearly by the company. At an average of $400 (truck & SUV tires are more expensive), the yearly sale to this company is $3,600. The bare bones minimum value this store received from one customer’s loyalty and referrals for 10-years is $20,400.

Let’s Review What the Store Will Most Assuredly Lose in the Coming Decade from the Manager’s Seemingly Inconsequential $20 Decision:

Within the next 2 months, the store will lose the sales on sets of tires for both a minivan and an SUV equalling a minimum of $700.

Over the coming decade the store will also lose, not accounting for inflation, at the very least the same $2,400 from my 3 cars, and most likely more.

After telling the above-mentioned fleet manager that I had recommended to this store five years prior, the one that claims to be pros with tires, this store will most likely also lose my friend’s fleet account. The fleet account loss over the next 10 years will be at least $36,000.

Lost sales in the community of Thousand Oaks, CA where I live. While for a decade I had recommended these pros with tires to a number of friends, now I will, as would most people in this situation, make it a point to tell anyone that will listen how poorly I was treated by the store manager. How many dollars do you think will be lost? National Brand Damage:

I’m sure you would agree that it is not a good idea to treat any customer poorly, but to treat a heavily published author and busy professional speaker poorly is purely lunatic, as I will now use this story about the brand that claims to be pros with tires at many of my seminars across the country.

Will people discontinue using this company that claims to be pros with tires just because I tell the story? I don’t think so. But, what will happen is that the next time they do business with this chain and a problem occurs, as is bound to happen, they will remember my story. Now that chain, and the particular store, has an additional strike against it—perhaps their last?

All of the above lost, and potentially lost business, because a chain store manager let’s his ego and 20 bucks get in the way of making good customer satisfaction decisions. This is a common mistake that many managers and owners make, and not exclusive to retail.

Learning from the situation..

1. My teenage son took his car in to get the tires rotated and balanced—a free service from the pros with tires, for the life of one’s tires.

2. Driving away from the store, my son noticed the car now pulled to one side.

3. He returned to the store where they are pros with tires and asked them to fix the problem.

4. They said they aligned the front end and charged him for the service without his approval (something that is illegal in the state of California). He did not argue the issue as it was the end of the evening and other customers were also trying to get out of the store too.

5. Driving away again, he noticed the car still pulled.

6. The next day I went to the store and spoke with the manager, we’ll call him Dan because that’s his name. In private, I explained to Dan my displeasure in the situation and asked him to remedy the problem. He said he would.

7. Upon returning to pick up my son’s car, Dan personally guaranteed that the car now drove straight. And scribbled on a scrap of paper how he claimed one of the front tires wore unevenly because of the car being out of alignment.

8. When I asked for Dan to refund the charge to my son since my son did not knowingly authorize work to be done that would incur a charge, he got in a huff and started to process a credit.

9. While processing the credit, Dan asked what I did for a living. I told him that I help businesses to be profitable. He snidely asked if I would do work for free. I told him that up to that point, his customer service had been acceptable and cautioned him not to go further. He then told me that he did not want me to ever return to his store.

10. Leaving the store, I noticed that the tires were rotated back to the position they were in when my son originally brought the car in for the rotation. The manager lied to me about remedying the problem. All this resulting in the car back to how it was when my son first came in and the store firing a 10-year customer.

To answer Dan’s question—I would absolutely do something for free for a 10-year loyal customer if I even had a hint that my organization or I might have even partly been responsible for a situation that made a customer unhappy. Waiting to speak to Dan that evening, I overheard a customer congratulate Dan on his promotion, I assumed to a district manager position.

Just think what’s going to happen to the stores that he oversees if he takes this antagonistic attitude with customers that are rightfully, or even unrightfully, dissatisfied with the service delivered by the pros with tires. Receiving a promotion is not a justifiable reason to let your ego control your customer satisfaction decisions.

What Can Be Learned from Dan’s Foibles?

Do what your marketing material, advertising material and sales invoices clearly state that you will do. If your business card has the picture of a doctor checking out a tire and your advertising brags that you inspect all tires when rotated, be consistent in your actions with both your branding position. This will most assuredly mean that you have to better train your employees, even the entry-level ones.

Too frequently entry-level employees execute complementary services that are offered in marketing materials but are executed poorly or incompetently. If the employees of this store did their job consistent with their company’s national branding position, and there was in fact uneven tire wear, they would have told my son about the problem rather than letting him drive away believing they damaged his car.

If a customer believes you caused a problem, either fix it or if you believe it was not your fault, take the time to educate and show them on the actual product what you believe to be true. Don’t take advantage of teenagers lacking the life experience of mature adults, even if it is legal to do so. Besides losing me as a customer, the pros with tires, also lost my teenage son. How many tires might he have bought from this national chain in his lifetime? I can assure you that he will never buy a tire from the pros with tires.

Do the job right the first time. In this situation they charged my son for a service they did not competently perform. Had they have correctly aligned the front the first time; my son most likely would have accepted the unauthorized charge.

If they in fact executed the service properly, with the rear tire in front and a competent mechanic doing the alignment, the car would have driven straight. When a customer comes into your store and asks to speak privately they do this for two reasons. First, as not to embarrass you in front other customers. And second, because they are very seriously dissatisfied yet want to continue the relationship—hoping that you care enough about them as a customer to take care of the problem.

If you truly believe you are not at fault in a situation, take the time to demonstrate on the product why you believe the problem was customer caused and still offer to cover the cost. If you explain your position convincingly, more times than not, your customer will accept accountability and not ask you to completely cover the cost.

Why in the world would you want to get in a huff with a customer? One thing that Sears and Nordstrom have in common is that they have extremely liberal return policies. They know the value of keeping a customer for life. They know that the buck or two they lose here and there is nothing compared to the lifetime dollar value of a single customer.

Before you fire a customer, determine how much business that customer has done with you and could potentially do with you. If it economically unintelligent to do business with a customer, by all means fire them. But why would you give up income because your ego might have been bruised a little? In my situation, Dan’s company has a computer system sophisticated enough to look up customers by last name, but unfortunately, Dan was simply too lazy to check the facts and fired a 10-year loyal customer based on his ego needs.

Don’t lie to your customers as Dan lied to me. He told me he had fixed the car when he had not. His store must have been unable to properly align the car as he stated it needed to be, or why would he have put the tires back to how they were positioned when my son brought the car into the pros with tires in the first place?

It’s the little things, the seemingly inconsequential decisions, that when extrapolated out into the marketplace that can cost a local store, a national chain, or any business both huge lost sales dollars and agonizing damage to the brand.

While I’m sure you are not guilty of the above situation, it bears repeating: When are 20 bucks and a store manager’s ego more important than a decade of loyalty from a customer? Never!

Learning from the situation..

1. My teenage son took his car in to get the tires rotated and balanced—a free service from the pros with tires, for the life of one’s tires.

2. Driving away from the store, my son noticed the car now pulled to one side.

3. He returned to the store where they are pros with tires and asked them to fix the problem.

4. They said they aligned the front end and charged him for the service without his approval (something that is illegal in the state of California). He did not argue the issue as it was the end of the evening and other customers were also trying to get out of the store too.

5. Driving away again, he noticed the car still pulled.

6. The next day I went to the store and spoke with the manager, we’ll call him Dan because that’s his name. In private, I explained to Dan my displeasure in the situation and asked him to remedy the problem. He said he would.

7. Upon returning to pick up my son’s car, Dan personally guaranteed that the car now drove straight. And scribbled on a scrap of paper how he claimed one of the front tires wore unevenly because of the car being out of alignment.

8. When I asked for Dan to refund the charge to my son since my son did not knowingly authorize work to be done that would incur a charge, he got in a huff and started to process a credit.

9. While processing the credit, Dan asked what I did for a living. I told him that I help businesses to be profitable. He snidely asked if I would do work for free. I told him that up to that point, his customer service had been acceptable and cautioned him not to go further. He then told me that he did not want me to ever return to his store.

10. Leaving the store, I noticed that the tires were rotated back to the position they were in when my son originally brought the car in for the rotation. The manager lied to me about remedying the problem. All this resulting in the car back to how it was when my son first came in and the store firing a 10-year customer.

To answer Dan’s question—I would absolutely do something for free for a 10-year loyal customer if I even had a hint that my organization or I might have even partly been responsible for a situation that made a customer unhappy. Waiting to speak to Dan that evening, I overheard a customer congratulate Dan on his promotion, I assumed to a district manager position.

Just think what’s going to happen to the stores that he oversees if he takes this antagonistic attitude with customers that are rightfully, or even unrightfully, dissatisfied with the service delivered by the pros with tires. Receiving a promotion is not a justifiable reason to let your ego control your customer satisfaction decisions.

What Can Be Learned from Dan’s Foibles?

Do what your marketing material, advertising material and sales invoices clearly state that you will do. If your business card has the picture of a doctor checking out a tire and your advertising brags that you inspect all tires when rotated, be consistent in your actions with both your branding position. This will most assuredly mean that you have to better train your employees, even the entry-level ones.

Too frequently entry-level employees execute complementary services that are offered in marketing materials but are executed poorly or incompetently. If the employees of this store did their job consistent with their company’s national branding position, and there was in fact uneven tire wear, they would have told my son about the problem rather than letting him drive away believing they damaged his car.

If a customer believes you caused a problem, either fix it or if you believe it was not your fault, take the time to educate and show them on the actual product what you believe to be true. Don’t take advantage of teenagers lacking the life experience of mature adults, even if it is legal to do so. Besides losing me as a customer, the pros with tires, also lost my teenage son. How many tires might he have bought from this national chain in his lifetime? I can assure you that he will never buy a tire from the pros with tires.

Do the job right the first time. In this situation they charged my son for a service they did not competently perform. Had they have correctly aligned the front the first time; my son most likely would have accepted the unauthorized charge.

If they in fact executed the service properly, with the rear tire in front and a competent mechanic doing the alignment, the car would have driven straight. When a customer comes into your store and asks to speak privately they do this for two reasons. First, as not to embarrass you in front other customers. And second, because they are very seriously dissatisfied yet want to continue the relationship—hoping that you care enough about them as a customer to take care of the problem.

If you truly believe you are not at fault in a situation, take the time to demonstrate on the product why you believe the problem was customer caused and still offer to cover the cost. If you explain your position convincingly, more times than not, your customer will accept accountability and not ask you to completely cover the cost.

Why in the world would you want to get in a huff with a customer? One thing that Sears and Nordstrom have in common is that they have extremely liberal return policies. They know the value of keeping a customer for life. They know that the buck or two they lose here and there is nothing compared to the lifetime dollar value of a single customer.

Before you fire a customer, determine how much business that customer has done with you and could potentially do with you. If it economically unintelligent to do business with a customer, by all means fire them. But why would you give up income because your ego might have been bruised a little? In my situation, Dan’s company has a computer system sophisticated enough to look up customers by last name, but unfortunately, Dan was simply too lazy to check the facts and fired a 10-year loyal customer based on his ego needs.

Don’t lie to your customers as Dan lied to me. He told me he had fixed the car when he had not. His store must have been unable to properly align the car as he stated it needed to be, or why would he have put the tires back to how they were positioned when my son brought the car into the pros with tires in the first place?

It’s the little things, the seemingly inconsequential decisions, that when extrapolated out into the marketplace that can cost a local store, a national chain, or any business both huge lost sales dollars and agonizing damage to the brand.

While I’m sure you are not guilty of the above situation, it bears repeating: When are 20 bucks and a store manager’s ego more important than a decade of loyalty from a customer? Never!

About the Author

Ed Rigsbee, CSP is the author of PartnerShift, Developing Strategic Alliances and The Art of Partnering. Rigsbee has over 1,000 published articles to his credit and is a regular keynote presenter at corporate and trade association conferences across North America.

What is the current worth of one of your customers or prospects?

It’s the total profit of an average customer over the lifetime that they do business with you.

That includes all subsequent sales minus advertising/marketing and your fulfillment expenses.

Let’s say the average customer brings you $75 per sale. They re-purchase 3 more times in a year. Their average order amount is $300. On each $300 reorder, you make $150 gross profit The average life lasts 2 years. Every new customer is worth $975.

You reach the 975 by adding the $75 initial profit to the 3 other purchases each year of $300. Only $150 is profit, so $150 times 3 equals $450. If they do that for 2 straight years, that’s $900 plus the original $75.

If this is our average customer and they’re worth $975 in profit and it only costs you $30 through your advertising/ marketing expenses to get them, every time you spend $30 you receive $975 back .

You would be foolish not to increase your advertising/ marketing and promotional budget to produce as many of these $30 cost customers so you would spend $30 over and over and over again to get $975 back

Theoretically, you could spend $975 to get that customer because you know they will come back and spend $975 and you will break-even. Of course, we don’t want to do this. Remember, this is an average customer. Some will buy more and some will buy less This is an average number.

Now you “know you can spend up to $975. You could just as easily be spending 100% of your $75 profit just to get that first sale because that’s just the first sale’s profit, and you’ll still end up with $975 over the next 2 years.

If you offered to give that $75 service for free and it doubles your customers, it “would double your profits over the next 2 years.

One in 100 business owners think about this You want to spend everything you can justify to bring in a customer as long as that customer costs you less than they earn you.

If you can’t afford to spend more than the entire profit from the first sale, remember you’ll be making money just in a few months from them. Start out spending what your cash flow can justify.

After a quarter or several months after their re-order profits come in, then you can step up your ad budget.

About the Author

Abe Cherian is the founder of Multiple Stream Media, a company that helps online businesses find new leads and more customers without spending a fortune.

Many organizations, when faced with a difficult customer situation may succumb to the tendency to “just let this one go,” allowing the customer to leave rather than make an exception to a rigid policy to accommodate the particular situation.

But this kind of short-sighted approach can have long-term implications on the sustainable viability of the company. For example, a single bad experience with an airline, compounded by their unwillingness to correct the situation, could very easily convince me to avoid travelling with that airline in the future.

Of course, this would be a bad move on the airline’s part, since I am a frequent flyer. A very frequent flyer. At the time of this writing, I am about 15,000 miles shy of two million total miles in the American Airlines’ Advantage program.

Do the math with me based on the following very conservative assumptions:

• My average ticket costs $500
• I fly twice a month
• I work ten months out of the year
• I will travel at this level for 20 years

This makes my lifetime value to an airline $500 x 2 x 10 x 20, or $200,000! And, as I said, this is a very conservative estimate. Over a twenty-year period, I’ll almost certainly spend at least twice that amount, and probably more.

The point is that when you are determining the value of the customer – whether in a difficult situation or simply for planning purposes – you must look not only at the value of the current transaction, but also at the long-term cumulative value of that relationship.

Keep this in mind as you look at your customer service policies, or in the future you might find your business grounded!

About the Author

Ron Kaufman is an internationally acclaimed educator for quality service. He is author of the bestselling series “UP Your Service!” and founder of “UP Your Service College”.