Friday, February 03, 2006

Think Long-Term When Marketing

One of the best lessons I ever got in life-time value of a customer was when I worked customer service for a retail store while I was in college.

One day a kid came in to return a walkman. It was 15 days past the return date, and I told him that he couldn’t do it. But as he was about to leave, the manager came out.

“It’s all right. We will return this for you.”

The kid looked at me like I was a jerk and thanked the manager. I had the honor of ringing up his refund.

Later, I went to the manager because he was constantly letting customers return things past the return date and I wanted to know why he did it this time. I mean, he was just a kid, right?


…I got a big-time lesson in lifetime value of a customer.

He told me: “Look, he might have been a kid, but one day he’s going to grow up. He’ll be a teenager and buy stereo equipment. He’ll get out on his own and want to buy a TV, refrigerator, and all sorts of other stuff (that we happen to carry). The question is: who will he buy it from. That kid will remember the kind service he got from us and how we gave him back his money even though we didn't have to. We might lose $50 now, but we'll get a customer for life."

I didn't quite "get it" at the time, but I preach the same message now. Think long-term. And always think about the life-time value of your customers.

Keep the life-time value of your customers in mind when coming up with a marketing campaign. It will go a long way in helping you decide on how much you can spend to acquire a new customer.

Have a great weekend,

Carlon Haas

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