About 17 years ago, I was meeting with a client. As we talked, he answered several questions from customers and very quickly sorted out problems that staffers brought to him on the fly. I complimented him on how he moved through his day as he asked me a barrage of media questions and I told him that I was especially impressed with the way he fielded questions and complaints from customers.
“Don, it is simple,” he said. “I have a Customer-Equity Mindset.” With that, I began to laugh and he did, too. “That is a pretty fancy term”, I said. “What is it exactly?” He answered--“Customer Equity is the present value of anticipated lifetime revenues that current and prospective customers generate, minus, of course, the costs to retain and acquire those customers.” Reduced to uncontrollable laughter but intrigued, I asked where he heard that. With a big smile he told me that it was from a HARVARD BUSINESS REVIEW article that he had read a year ago. He remains the only fast food maven that I have ever met who not only read but memorized segments of the HARVARD BUSINESS REVIEW. The conversation that we had regarding it has stuck with me vividly all these years.
What my client explained was that by adopting a Customer Equity Mindset his whole approach to business changed and his success soared. His interpretation went like this: “Customers are the source of my firm’s revenues. Also, they drive my expenses and investments in plant and equipment. So, every time I increase Customer Equity I increase the value of my company.”
How to do it? Simple stuff but always worth repeating: Keep your customers especially the good ones longer. Grow revenue from present customers, and work to acquire new customers who can ad value, improve customer retention procedures and LISTEN to everyone especially the complainers. If you do that you can improve products, services and goodwill.
He actually did training about a Customer-Equity Mindset. His 17 year olds behind the counter were drilled on the nuts and bolts of it. He told me that if one could make it permeate throughout the organization, sales had to go up and you would hang on to existing customers. He loved new customers but always made sure he did not lose many especially when a new competitor threatened. What he was fostering is what others have called “Loyalty Based Management.” There was great trust built with employees and with his customer base.
In the rush to get to this quarter’s or years profits, many ad agencies and broadcasters seem to neglect this issue. And the siren’s call of new business, while vital to any enterprise, should not overshadow your existing base.
My client was not a dreamer. He took a concept and made it his corporate mantra. Do you really have a Customer-Equity Mindset?
If you would like to contact Don Cole directly, you may reach him at email@example.com