The long term value of a customer

Or, how much is your customer worth over the long haul.

The past few weeks have been more than a bit trying around here. In addition to getting ready to publish my book Beyond the Niche: Essential Tools You Need to Create Marketing Messages that Deliver Results, I’ve also had the added stressor of sending my oldest away to college.

Last night, after spending the weekend at home, as my daughter headed back to college, she experienced car trouble….AGAIN! Her 1999 Chevy Prism is suffering from spending the first six years of its existence in the harsh climate of Northern Indiana and Southern Michigan. This time the bracket that holds the exhaust let loose thanks to a well timed jarring while traveling through construction on the Florida Turnpike. The whole incident brought to mind the topic for the day: the long term value of a customer.

The story of our search for an auto mechanic contains a valuable lesson for everyone in business, but especially those who are making intangible major sales, or are in a service profession.

See, when we moved 1300 miles to our new home, we found ourselves having to find everything new. From dentists, to hair stylists to a reliable auto mechanic, our first 18 months down here were spent in trial and error. Our search for an auto mechanic was unfortunately our first search after moving. Despite knowing better, we began by taking the car to the nearest Chrysler dealership. My husband had heard good stories about their body shop, so we gave them a shot. Maybe car dealership service departments down here weren’t the houses of ill-repute they were back home.
I don’t know if it was the fact that the car was brought in by a woman or if they just treated everyone who walked in as if they had S-T-U-P-I-D tattooed on their forehead, but when the mechanic called me and told me that the car needed $1200 worth of repairs, I was shocked. Did he think I just fell off the turnip truck? I issued my standard reply to car people who try to screw me: “Forget it. I’ll have my father take it to the sale. He’s a wholesaler.” Without exception, this sends the would-be thief into a stammering fit, while he tries to back pedal because he sees that not only do I recognize that he’s trying to gouge me but now he’s going to lose the chance to do ANY business with me. Obviously the Chrysler dealer figured out a way to get theirs in this situation. They charged me $85 for their “diagnosis”. Yes, I was charge $85 for refusing to allow them to screw me and I have to admit, I was amazed.
The reason I was amazed was simply my point of view. See, from where I operate, what I saw was a potential customer, the owner of a 7 year old Chrysler van. In my way of thinking, I’ve got a chance at landing a long term customer. If I treat her right today, maybe she’ll be back tomorrow to trade that bucket of bolts in on a shiny new model. That wasn’t the view the dealership chose to take. These idiots were more interested in squeezing $1200 out of me for unnecessary repairs in that moment than in establishing a relationship with me that would mean not only future repairs for the service department but also a possible customer for another van in the near future.

As I left the dealership I passed a repair shop that was off the beaten path.The name of the shop was “Dave Fixes Cars.” I decided to give Dave a shot. Dave replaced the offending belt and only the belt for a reasonable price. I was so thrilled; I wrote him a check for double the amount. A few weeks later when my daughter’s Prism started acting up, guess who we called? That’s right Dave.

Oh and three months later, after and a few more trips back to Dave, when I decided that it was time for a new van, guess where I went to buy my new van? That’s right, anyplace BUT the Chrysler dealer! No amount of advertising that the dealership does will EVER repair their relationship with me or my family. Not only that, but my husband made sure to spread the word where he works as well. Now that’s the kind of “word of mouth” advertising that I don’t want for my business and you shouldn’t want for yours.

Today, when my husband and I dropped my daughter’s car off for its THIRD visit to Dave this month, I told Dave that we’re considering naming the car, “Dave’s Financial Security.” He laughed. Over the past 18 months, we’ve written enough checks to Dave that he’s made more than the original repair estimate from the Chrysler dealer. (We’re a three, soon to be four car family.) Not only that, but when the Prism needed body work, I asked Dave for advice on where to take the car for body work. He was happy to refer me to a friend who now has earned my undying gratitude for his reasonable and sensible attitude towards his business.

Both Dave and Billy (the body man) both realize that a long term customer is a beautiful thing. Not only do they return time and time again, but they also refer their friends. I can’t begin to count the number of people my husband and I have referred to both Dave and Billy. Oh, and when I need ANYTHING done, whether it’s related to my car or my home, I’ll be asking Dave or Billy who THEY recommend!

As for the Chrysler dealer, well I have noticed that very few Chrysler products are sporting their sticker on the back of their car. The Chrysler dealer should be grateful that on average 1500 people are moving to our city every month because I cant see how he could stay in business any other way.

I’m amazed because I would think it would be common sense. Gaining a new customer is expensive which means the most effective way to run a business is to try to KEEP your current customers and use your marketing and advertising to get more customers who will also remain loyal to your business. If you’re using your marketing and advertising dollars to try to replace your current customers … well, maybe you should quit advertising and find out why you’re losing customers. Just my .02 worth.