by: Jennifer Rice

Great post on Business Evolutionist about Managing the Total Customer Lifetime:

Every customer relationship has a "life" - if I can use that as an analogy... the first exposure or purchase might be thought of as "birth"... but how do you determine "death"? A customer leaving might be beyond your control, regardless of how great the experience is. For instance, consider this quote by Al Ries:

"When a guy gets promoted, he doesn't get a more expensive Chevy, He buys a BMW."

At first, I took that quote at face value. It makes sense. But, just because the person buys a BMW instead of a more expensive Chevy, does that mean that he is no longer a customer of Chevy? Might that guy buy a Chevy for his kid when they're old enough? Perhaps he tells others how much he loved his Chevy?

In other words, where does the customer relationship end? Is the relationship defined by one transaction or multiple transactions? Should the relationship be defined by transactions at all?

Excellent question. Most companies think in terms of transactions, not relationships. They don't consider the initial purchase to be the start of a relationship; it's simply a sale. If it's a subscription-based model like telecom services, the objective is to stop customers from leaving... not to create a strong relationship. I think of good companies like magnets: they automatically attract and keep customers because that's how they're designed. Non-magnetic companies pick up customers and drop them because there's no bond, no stickiness that maintains the connection. When a customer deals with a magnetic company but moves on because of life changes -- like in the example above -- s/he's still quite likely to refer that company to others. It's all a question of what the company is "being" versus "doing."

Original Post: http://brand.blogs.com/mantra/2004/02/ending_the_rela.html

Leave a Comment