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Email Marketing by the Numbers: How to Use the World’s Greatest Marketing Tool to Take Any Organization to the Next Level by Ali Sales, Chris Baggott

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LTV Lesson Five

Before we talk about retention, we need to consider its goal: to make more money and grow the company.

This is where it is so critical to know your customer margins. Often, it is the least profitable customers who perceive the least amount of value from your offering. As a result, you invest a disproportionate amount of time in trying to convince them to stay. Doing so increases your costs customers and decreases your margins. Additionally, it’s likely to dilute your focus on the most valuable customers. Companies often resort to special offers to convince this group to stay, which are then offered to the good customers so no one is “left out.” This adds no value to the relationship, while hurting profitability.

If you focus on individual customer value, you can’t help but want to leverage more relationship marketing. I once heard this analogy using a stolen printer: A business owner comes to the office one morning and finds his $200 printer missing. So he conducts an investigation. He changes the locks and generally there is a lot of angst about the stolen printer. With this attention, he never loses another printer again.

Meanwhile, customers worth a whole lot more than the printer are disappearing from his organization (and yours) every day. That is why the focus of marketing has to be based on building better relationships. View your constituents as if they are assets (like a printer) and you will naturally want to focus more on that relationship.

Case Study ...

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