Investing in customers….
If you are an emerging business, your first set of customers are your holy grail… they are the ones that will determine the pace at which you grow. In fact, they are the ones that may even determine the direction your business might end up taking, for they are the ones that validate your services, your products and your ideas…. They will also make up the best set of promoters for your business.
Building strong relationships with your customers is critical to your success, and building relationships comes at a cost!
The hard costs are often easy to see on the P&L report. But it is not always easy to determine, how the magnitude of benefit that any single customer brings to your business stacks up against your costs… especially when you factor in the soft costs as well as the opportunity costs that you are giving up or gaining!
This analysis can be complex. Here are ways you can attempt approaching it scientifically.
Start with asking yourself these two questions:
- what is the role that this relationship is likely to play over the lifetime of the contract? And,
- what is the lifetime value of this contract?
It is important to quantify the cost of keeping this relationship over a span that is slightly less than the projected life span of the contract and determine how your cost of building and keeping this relationship measures up. Your costs are likely to be top heavy and they are likely to taper down to a lower linear amount over time.
The benefit however, may be a lot higher than can be measured in terms of simple economics… especially over time. You will see this as an upward curve on your value over time graph.
Furthermore, the way you build the relationship and the way your customer becomes your promoter plays into the philosophy of how you build your organization’s service model. It speaks of how your company treats its customers and thereby determines the perception you create of yourself in the market place.
A sensible businessman wants to keep every contract. Your organization will see healthy growth if you focus on good profits. And the only way to drive good profits is by increasing the number of promoters that you can create. And your best promoters will be those that you care to invest in!
Invest sensibly in your customers. This is the one investment that you will not regret over time!
