It is not a difficult concept to understand. Basically it charts the profit from a retained customer over X years against the cost of acquiring a new one each year. Repeat business is much more profitable than new business.

 Harvard Business School Publishing has a model which shows the principle very simply.

 Clearly retaining customers should be at the heart of every business yet so many companies chase new ones at the expense of keeping existing ones happy. 

(For example, in the past financial institutions have been guilty of offering a lower mortgage rate or a higher savings rate to new customers only, leaving their loyal customers worse off.)

 Although this is changing it is clear that in some organisations the concept of CLV is not one embraced by everyone.

 In a recent ‘battle’ with Vodafone, when advised of the CLV of being a business contract customer for over 20 years, the Customer Services Adviser said ‘That’s nothing to do with me!”

 Retaining customers through excellent service should be every employee’s business – regardless of the department or division in which they work.

 Thought leader Seth Godin’s best-selling book ‘Purple Cow’ talked about creating remarkable products. He then turned his attention to poor customer service and cites ‘cell phone bills’ as one of the topics on which he gets much mail. What a surprise!

http://sethgodin.typepad.com/seths_blog/2007/02/starting_over_w.html

In the age of wide choice and educated customers companies should be trying harder than ever to keep customers and profits!

Are you listening Vodafone?

While Churchill’s nodding dog has been on tour and has even ’starred’ in Christmas pantomime last year and at Pontin’s this summer, a whole film of ‘oh yes’  would probably be too much!

Where agency VCCP have been so clever with the Meerkat marketing is that they have created a complete ‘back story’ for Aleksandr and his family so harnessing our sympathy  for the struggles of his ancestors and further engaging with us.

In the ‘Battle of Fearlessness’ advert (part two of the triology) there are great lines such as ‘its only a fur wound’ which make everyone laugh.

Like Wallace & Gromit , a film ‘(The Adventures of Aleksandr Orlov’? ) would be popular with all ages regardless of background.

Could Aleksandr be that rare being – a brand concept that started as an advert but becomes an entity independent of Comparethe market.com?

Now that would be subliminal advertising! Simples!

He was later quoted as saying ” We took early action in 2008 to deal with the increasingly tough trading environment and have set our business ready to manage continuing difficult market conditions in 2009. We have already taken decisive action, and stand ready to take further steps if necessary.” (Source www.diyweek.net)

However, on the radio he added that high staff turnover was a feature of their business and appeared to view it favourably as a way of managing staff costs.

It made me think. Usually businesses want to keep their staff since recuiting and training new employees is costly in both temporal and financial resources.

Making working conditions as appealing as possible in order to retain staff has always been a ‘given’ in management terms.

So could the current market conditions be leading to a new model in which companies welcome staff departures as a way of controlling costs?

This may look appealing to the accountants but has big ramifications for Customer Relationship Management!

It is no co-incidence that John Lewis is performing well in difficult market conditions. Their staff actually know something about the products they are selling – unlike the average salesperson in Wickes or B&Q.

Staff knowledge as a Key Performance or Profit Indicator? Why not!

I know in which store I prefer to buy my everyday DIY products!

Travis Perkins underperforms but Tile Giant sales up