Appreciating the Value of Your Customer
Dictionary.com defines value as
to consider with respect to worth, excellence, usefulness, or importance.
What if your customer were an asset?
What do you do with an asset? Maintain it so that you can get the most benefit from it for the longest period of time? If the asset were a building, you’d ensure that it retained its value, you’d repair it, you’d carry out preventative maintenance to stop expensive things going wrong.
How would you go about acquiring an asset? You’d search and evaluate each opportunity and judge it on its merits. Does it fit well with my needs? How much will it cost me to maintain? What’s the return on my investment? How high is the cost of acquisition?
Whilst considering acquisition or retention, you need to consider the cost. How much is that asset worth? If the annual spend for that customer is £1000 and there’s 20% gross profit in it, that sounds OK. But what if that customer was really demanding and you spent a whole day pitching the sale, and three days’ on customer service in the first year alone?Consider this sum:
Return on Investment (ROI) - Total Cost of Ownership (TCO) = Asset Value
Somewhere below the asset value is what you can justify spending on the acquisition, and this figure differs from business to business and from market to market.
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