Lifetime Value

As is usual, Seth Godin is right on the money here.

Please read his post about lifetime value of customers:

Embracing lifetime value

I urge you to consider the lifetime value of your clients.  This is especially true if you are in the services business.  If your service fails to meet their expectations, or (more likely) you fail to meet their expectations, people can and will dump you.

What’s more, these people become a massive problem for you because someone who has been burned is much more likely to talk about their experience with your service.

You can’t survive as a sub-standard service for very long these days.  The means by which people can share their poor experience with others are many.  Friends, family, colleagues — all these people that could have potentially become referred clients are now lost to you.

Put yourself in the position of a customer.  More often than not we are all spoiled for choice.  Why then, would they choose something that doesn’t live up to their expectations?  The answer is, they don’t.  And if they are, you’re seriously at risk of losing that business once someone comes along and does what you’re doing properly.

Create and deliver value to your clients.  If you want to be better than the rest, you need to discover ways to consistently deliver MORE value to as many people as you viably can (without your service degrading as a consequence of scaling).

Lifetime value is a very important consideration.  Especially when you consider not only the revenue you will generate from people in a lifetime, but also recognise that you will need to continue to deliver value to this person – over a lifetime.

If your service is static, then I’m afraid your bank balance will stay that way too.  Its a reflection of how well you’re servicing your clients.

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