Wednesday, April 3, 2013
Focus on the Lifetime Value of the Customer by James Malinchak
By Rubin Price
"Do not Look at the Initial Transaction. Focus on the Lifetime Value of the Customer." ~James Malinchak
For almost 40 years, Bob has owned a popular small garage. He started working there as a kid still in high school pumping gas for anyone who wanted it, and then learned how to repair and sell cars. The garage owner hired him as a mechanic and sales person once he left school. Bob was great at what he did, lived quietly and saved his money so that once the owner retired, Bob visited the bank and got a loan to purchase the garage from him.
Nowadays Bob is well known not just for his pleasing personality or his exceptional capability to fix cars. He can also be known as having one of the least expensive places around to purchase a pre-owned vehicle. People wonder how he can be this low cost and still have a large investment portfolio, send his children to private school, wife live in an affluent part of town. He purchases automobiles that nobody else wants at very low prices.
Then he fixes them up and sells them for little more than the expense of the repairs to the car. He does not purchase any car where the cost to fix it would create a selling price excessively over his average. Many of the local kids buy their first car from him, and he fills their first tank up as a congratulatulatory gift.
Bob realized early on that once someone bought a car the buyer was no longer in the market for a car. He also realized that for a number of years, these people probably won't be in the market. Nevertheless, the individual would need the annual state maintenance checks, oil changes, repairs, and gas that car ownership incurs. However, his main "products" are the consumables required to run a car. You could say that his unique selling proposition (USP) was the cheapest used cars in town, - because that is what he has, and that will draw in the buyers.
The result of this is that although it is true to say that Bob makes only his labor cost on every vehicle sold, it is also true that he has every one of his mechanics working extended hours to manage the amount of continuous daily car business that drives through his doors. The people are aware that Bob is not going to deceive them, and even when they trade that first car in for something better, they take the new car to Bob for maintenance and repair.
He gases their cars, keeps a record of every car that goes through his garage, and supplies their annual maintenance inspections. He knows exactly where to look for reoccurring problems when they bring in the car. Bob's original one-man garage now has five full-time mechanics, a youngster who pumps the gas, and a receptionist to deal with booking the vehicles in for annual inspection or repair. Most of his oldest clients have been with him since he started at the garage, and their kids are also clients now.
Consider your own products or services. How can you turn a one-time sale into a client that is with you for a lifetime, purchasing from you repeatedly? One way is to keep your name on his table! Always make sure that any dealings your company has with his goes through you. Whether it's an annual Christmas card or a sales brochure with new products - ensure you sign it personally.
Keep a card on just about every client you have. Every time you discover something new about them, write it there. Build up a short summary of what they like and don't like from the conversations you have. Note if they have children, gender and ages. Where do they holiday? What sport events do they enjoy? You aren't intending to have a social conversation with your client, but asking if Bobby is graduating this year, or Alicia has cut her first tooth makes the client recognize that you do pay attention to what he is saying. In a society where most people are busy talking about themselves, this ability to listen will get you remembered.
If your client purchases a piece of equipment, don't forget to send special prices on the consumables, or regular updates about any upgrades associated with the equipment. Make a note to ring the client every 6-8 weeks to make sure that the equipment is living up to the client's expectations and is still running well - if it is not, check out possible reasons and solutions, so you've got a satisfied customer.
What you really are seeking would be to build a bond with the client. This relationship will set you up, so that something he would need to purchase in the future that your company supplies, he purchases from you. The best part is he'll buy from you without checking out the competitors first.
"Profit in business comes from repeat customers, customers that boast about your product or service, and who bring friends with them."
--W. Edwards Deming
For almost 40 years, Bob has owned a popular small garage. He started working there as a kid still in high school pumping gas for anyone who wanted it, and then learned how to repair and sell cars. The garage owner hired him as a mechanic and sales person once he left school. Bob was great at what he did, lived quietly and saved his money so that once the owner retired, Bob visited the bank and got a loan to purchase the garage from him.
Nowadays Bob is well known not just for his pleasing personality or his exceptional capability to fix cars. He can also be known as having one of the least expensive places around to purchase a pre-owned vehicle. People wonder how he can be this low cost and still have a large investment portfolio, send his children to private school, wife live in an affluent part of town. He purchases automobiles that nobody else wants at very low prices.
Then he fixes them up and sells them for little more than the expense of the repairs to the car. He does not purchase any car where the cost to fix it would create a selling price excessively over his average. Many of the local kids buy their first car from him, and he fills their first tank up as a congratulatulatory gift.
Bob realized early on that once someone bought a car the buyer was no longer in the market for a car. He also realized that for a number of years, these people probably won't be in the market. Nevertheless, the individual would need the annual state maintenance checks, oil changes, repairs, and gas that car ownership incurs. However, his main "products" are the consumables required to run a car. You could say that his unique selling proposition (USP) was the cheapest used cars in town, - because that is what he has, and that will draw in the buyers.
The result of this is that although it is true to say that Bob makes only his labor cost on every vehicle sold, it is also true that he has every one of his mechanics working extended hours to manage the amount of continuous daily car business that drives through his doors. The people are aware that Bob is not going to deceive them, and even when they trade that first car in for something better, they take the new car to Bob for maintenance and repair.
He gases their cars, keeps a record of every car that goes through his garage, and supplies their annual maintenance inspections. He knows exactly where to look for reoccurring problems when they bring in the car. Bob's original one-man garage now has five full-time mechanics, a youngster who pumps the gas, and a receptionist to deal with booking the vehicles in for annual inspection or repair. Most of his oldest clients have been with him since he started at the garage, and their kids are also clients now.
Consider your own products or services. How can you turn a one-time sale into a client that is with you for a lifetime, purchasing from you repeatedly? One way is to keep your name on his table! Always make sure that any dealings your company has with his goes through you. Whether it's an annual Christmas card or a sales brochure with new products - ensure you sign it personally.
Keep a card on just about every client you have. Every time you discover something new about them, write it there. Build up a short summary of what they like and don't like from the conversations you have. Note if they have children, gender and ages. Where do they holiday? What sport events do they enjoy? You aren't intending to have a social conversation with your client, but asking if Bobby is graduating this year, or Alicia has cut her first tooth makes the client recognize that you do pay attention to what he is saying. In a society where most people are busy talking about themselves, this ability to listen will get you remembered.
If your client purchases a piece of equipment, don't forget to send special prices on the consumables, or regular updates about any upgrades associated with the equipment. Make a note to ring the client every 6-8 weeks to make sure that the equipment is living up to the client's expectations and is still running well - if it is not, check out possible reasons and solutions, so you've got a satisfied customer.
What you really are seeking would be to build a bond with the client. This relationship will set you up, so that something he would need to purchase in the future that your company supplies, he purchases from you. The best part is he'll buy from you without checking out the competitors first.
"Profit in business comes from repeat customers, customers that boast about your product or service, and who bring friends with them."
--W. Edwards Deming
About the Author:
James Malinchak, Highlighted on ABC's Hit TV Program Secret Millionaire, is known as by many people specialists as the World's #1 Big Money Speaker Coach and Trainer. For Free of charge Video Trainings regarding how to get money to speak and how to be a motivational speaker, take a look at www.BigMoneySpeaker.com.
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