Lifetime Value

Much has been said (maybe too much) about the importance of ‘customer service’ in the retail environment. It has now become more than a cliché – in fact some retailers actively zone out when those two words are mentioned.

I have blogged elsewhere on retail$mart about the importance of managing the customer experience. There are literally 100s of organisations (Ganador is no exception) who offer Customer Service Training (CST). [I wonder if any of these companies make money from CST? We certainly don’t and we decline the opportunity to offer CST more than we actually accept it. CST only works if it is part of an integrated effort to change systems, structure, culture etc – but more about that some other time.]

Quick Quiz #1:

How much your average customer worth to your business?

Don’t skip over the question; consider it for a moment and put a $ value to your customer.

$500? $5,000? $50,000? $500,000?

Superior customer service increases the Lifetime Value of every customer. The debate about whether the customer is ‘always right’ is simply irrelevant. The whole point about customer service is that, because you appreciate the LTV of your customer, you are willing to make short term ‘sacrifices’ in the effort to retain a customer.

Customer Service is the essence of retailing; check out this story and this one (Scroll down to Retail Experiences1 – which is the shoe-shopping story) to see what I mean.

Quick Quiz #2:

How would you rate your level of Customer Service – say in percentage terms? 70% 80% 100%?

Now ask yourself how your average customer would rate your service – and be honest.

Is there a gap? If there is, that should be the #1 resolution for the New Year.

Customer Service is not an add-on initiative; it is not a ‘strategy’ or a project. It is what retailers do. Period! It is not about smiles, it is not about tolerating rude customers or solving customer complaints. It is something altogether different, and that is the challenge that a retailer faces: to create and deliver profitable customer experiences. It is not even about buying or merchandising or pricing. It is about how buying or merchandising or pricing COULD create a positive customer experience...

(And senior managers forget that they may have gone through a few 'customer service improvement projects' and are throughly sick of it and they 'know' it does not work; but forget that the frontline people are in all likelihood quite different from the frontline people of 1,2 or 3 years ago. Just because you are tired of it, does not mean it is irrelevant.)