More than a lost sale
During a store visit I got a chance to talk with a young woman I consider an excellent sales person. She delivered very engaging experiences and seemed focused on maximizing her customer opportunities.
Our conversation came around to difficult customers. She shared a story about a regular customer of hers who got upset with the store and marched out. The salesperson explained to me why her customer's demand was unreasonable, and how it had cost her a $125 sale.
What the salesperson didn't realize is that the incident cost her much more than one $125 sale. It cost her a customer, and a whole lot of future sales. Clearly, this otherwise excellent saleswoman didn't know the true value of a customer.
I walked her through the lifetime value of one of her store's customers. (I've included a formula for you to determine the same for your business.) Through some educated guesses and a virtual crystal ball, I determined that a typical customer of this store spends $225 a year. This was based on the store's average sale of $75, and the typical customer making roughly three purchases a year.
But this particular customer with the "unreasonable" demand was not a regular customer. She averaged roughly $125 a purchase and shopped in the store about six times a year. That means this customer's yearly value is $750.
You should have seen the look on this salesperson's face. I didn't have to say a word. She said, "You're right. I didn't just lose a $125 sale, I lost $750 in sales."
Of course I wanted to make a bigger point. I replied, "Technically you lost more than that. Being a regular customer she's probably shopped her for a long time. Over the next five years you probably lost over $4,000 in sales." I continued by asking, "So was the customer's unreasonable demand worth losing $4,000 in sales?"
You won't be surprised to learn that the salesperson was by now seeing the situation in a whole new light. That demand wasn't so unreasonable anymore. It also reminded me that every member of the team needs to know and understand the value of a customer.
This doesn't apply only to regular customers. If you miss delivering a great experience to a new customer who is shopping in your store for the first time, you might well miss the opportunity to win someone who will spend hundreds, if not thousands, of dollars over the next couple years.
We don't lose or miss sales. We lose and miss customers, and those customers are extremely valuable to us. Today's quote from Carl Sewell summed it up when he said, "Nothing is more important than the customer." We all need to make sure everyone on the team understands the value of each person to the business.
So let me ask, does your team know the true value of a customer?
Doug Fleener Doug Fleener, the former director of retail for Bose Corporation, is president and managing partner of Dynamic Experiences Group LLC, a proven retail and customer experience firm that works with progressive retailers and other customer-focused companies. www