Wednesday, November 19, 2014

Keeping Your Customers for a Lifetime and the Effects on Your Bottom Line

I recently read an article by Shep Hyken entitled, "The Lifetime Value of Your Customers." Shep shared that four out of ten senior executives in larger companies don't know the lifetime value of their customers. What does this mean? If leadership doesn't know, Shep explains, then employees won't know either. Yet when employees know and have clarity about the lifetime value of a customer, he continues to write, they can make better customer-focused decisions.

I have had some clients for over 25 years. Is that worth far more than a one off? Certainly! I started thinking of how the true value could be explained and why it mattered so much. Let's say that I go to a great restaurant and I spend $50 for a dinner. And, I like it so much that I go there once a month. That's worth $200. Over a year that's $2,400. And (presuming it doesn't go out of business) in 10 years it is $24,000.

Taking this into account for our industry, we do a great job for a client for ...oh, let's say $50,000 ... and it's an annual. Over 10 years if you retain that client, and assuming there will be some inflation, it could be worth $750,000.

Well worth taking the time to  make that one client very, very happy and earn their loyalty. And worth passing onto your employees the merit of going over and above at all times. It's job security, isn't it?

Many years ago I was contacted by a hotel that had a client who needed a guitarist. (Stop reading if you've heard this story.) And the hotel needed me to drive from the high desert (where I lived) to Laguna Beach to play the client tapes of guitarists. Yes, you guessed it ... before emailing or YouTube. The trip one way was about two hours with no traffic. I did that. They hired me, and on the day of the job I drove back down to Laguna again to make sure they were happy with the guitarist. They were.

Fast forward three months. The client returned and needed a dance band. More "tapes" (remember those?) and ultimately a job which I again drove down for. By the way, they didn't like the band as it was very "California" and they were New Yorkers. But that didn't matter. They liked the service and personal attention they got.

Fast forward again, and they were returning and wanted a major headliner. I once again drove to meet them. The program grew too big for the hotel, so we needed a venue which turned out to be a tent which needed catering, decor, rentals, permitting, staging, audio-visual AND the headliner. For two weeks of programs featuring a major headliner.

I retained the business for years, traveling with this client and doing events, meetings, headliners, etc. All from not being daunted by going out of my way to book a guitarist.  

To add another story (I can keep 'em coming, folks!) let's go back almost 26 years to my first meeting with Bob Abbott of Mueller Company. I'll start at the end. I am doing their annual incentive program, not just parties, but travel, hotel, registration, tours, gifts ... I am their full-service incentive company. And have been for the past 10 years. Anyway, let's go back 16 years when Bob Called me based upon a referral and asked if I could show  him venues around Los Angeles for a small event for his company's best customers. We drove around for two days because Bob likes to see everything, and I mean everything. After Day One I realized that we had really hit it off so I took him to Tony & Tina's Wedding (gee Bob, one of my staff is getting married, and I have to make an appearance); we went shopping for a wedding gift, etc. Obviously part way into the evening, he figured out this was a fully-staged show, and we had a great time. EE did his event that year, and every year thereafter as part of AWWA. And each year was a party, always more and more challenging to me to be inventive and out of the box. Fortunately, with Bob, there is no box. We grew from these more intimate events to eventually larger hospitality events and then finally to the full-scale deluxe incentive. All from "Can you show me a few places in Los Angeles?" Now we travel the world with Mueller. At the very onset, it was a huge investment of time. Was it worth it? Judge for yourself.

What's the lifetime value of a customer? What is good service worth? Is any job really too small if it has potential? I don't think so, do you?

Andrea Michaels is the founder and president of Extraordinary Events, a multiple award-winning international meeting and event planning and production firm based in Los Angeles. To learn more about EE, visit Contact Andrea via