Taking the time to calculate the lifetime value of a single customer can be a powerful motivator to treat your customers right: Once a company realizes how enormous the value of a single customer can be over her lifetime, it provides a great encouragement to stop nickel and diming your customers, to stop arguing over responsibility for a FedEx upgrade, and so forth.
But there has been understandable concern among businesses about brand fickleness in today’s–and tomorrow’s– generations of customers. The ability of customers to switch providers at the click of a mouse, as well as the surfeit of acceptable providers in many consumer and B2B categories, is troubling and has created a competitive landscape in which our existing lifetime customer value calculations may no longer valid.
However, this required recalculation isn’t exactly bad news. The occasional straying of customers today due to the ease of switching masks a more important positive change in today’s landscape: the extent to which social media and Internet reviews have amplified the reach of every customer’s word-of-mouth.
Never before have customers enjoyed such powerful platforms to share and broadcast their opinions of products and services. This is true today of every generation—millennials, Gen X’ers, Boomers, and even some Silent Generation customers share on Facebook and post reviews on TripAdvisor and Amazon. (Millennials, thanks to their lifetime of technology use and their growing buying power, are likely to make especially active spokes-customers. Boston Consulting Group, with grand understatement, says that “the vast majority” of millennials report socially sharing and promoting their brand preferences.)
Customers today are talking about your business when they’re considering making a purchase, awaiting assistance, trying something on, paying for it and when they get home. If, for example, you own a restaurant, the value of a single guest today goes further than the amount of the check.
The added value comes from a process that the great Patrick O’Connell, chef and proprietor of the double five-diamond Inn At Little Washington, calls competitive dining: “comparing and rating dishes, photographing everything they eat, and tweeting and emailing the details of all their dining adventures.”
By doing so, they’ve greatly increased what I call their Lifetime Customer Network Value. And this makes them at least as valued as any customers in the past–even if they have wandering eyes and wallets to an extent not expected of previous generations of customers.
It’s easy to underestimate the commercial power that today’s customers have, particularly when the network value of the youngest of these customers doesn’t immediately translate into sales. Be careful not to sell their potential short and let that assumption drive you headlong into a self-fulfilling prophecy.
Remember that younger customers are experimenting right now as they begin to form preferences they may keep for a lifetime. A little love lavished on these customers now will likely be repaid in spades in the future.