How Long-Term Customers Benefit Your Company

If today’s revolutionary business leaders were to outline a declaration of their dictums for business success, would they claim that all customers are created equal? I doubt it. Just like parents, business leaders can’t help but notice that each customer is unique. And although they might not admit it, most business leaders acknowledge that long-term customers are treated differently than new customers. Why? Because long-term customers bring certain unique benefits to any organization.

First, long-term customers represent a stable form of dependable revenue, even if their individual purchases are small. Most companies get two-thirds of their sales from current customers, in fact. For instance, according to A Complaint is a Gift, by Janelle Barlow and Claus Moller, “Domino’s Pizza calculates that over just a 10-year period, regular customers are worth about $5,000 [each].”

Still, it can be difficult to see how much base profit long-term customers provide in the long run. To think beyond each individual sale, consider the following formula: Multiply the customer’s average purchase by the number of purchases they make per year, and then multiply for five, ten, or twenty years. For instance, if you run a dry-cleaning business, a customer might only pay $25 per week. However, if we translate that to a yearly expenditure, we see that this customer purchases $1,200 of cleaning per year. In five years, that one customer would bring in $6,000 of business.

And that’s just direct business. If a customer sticks around for years on end, they are almost certainly recommending your business to their friends and families, effectively doing your recruiting work for you. In other words, long-term customers can help lower your marketing and sales budget. Furthermore, those who come to your company on a referral are more likely to be engaged customers. As PeopleMetrics’ 2009 Most Engaged Customers report stated, “Customers who choose to use an organization after receiving a recommendation are more engaged and more forgiving than those that come to you blind.”

For the full article see: Employee Engagement Professionals