The Value of A Lifetime Client

I’ve been in the business world for almost 10 years, and I know most savvy business owners understand the importance of maintaining a good relationships with their customers. They know happy customer will keep repurchasing for many years. However, most cannot answer if you were asked them what’s the actual value of a lifetime customer is.Once they knew the answer , most businesses will not go cheap in customer acquisition and retention. Jay Abraham, the super marketing guru that charges USD50,000 for business consultation had this to say in his book, “Getting Everything You Can Out of All You’ve Got”:

“The current lifetime value of one of your clients is the total profit of an average client over the lifetime of his or her patronage – including all residual sales, less advertising, marketing, and incremental product or service-fulfillment expenses.

Let’s say that your typical new client brings you an average profit of $75 on the first sale. He or she repurchases three more times a year, with an average reorder amount of $300, and on each $300 reorder you make $150 gross profit.

Now, with the average patronage life lasting two years, every new client is worth $975. You could theoretically afford to spend up to $975 to bring in a new client and still break even.”

When you see $975 as the value of a lifetime customer, you will know your initial expenditure is indeed an investment .

Why Customer Service is Even More Important these days?

Everyone knows that customer service is important. However, most are clueless about how customer service can have a direct impact in their lives. If everyone knows customer service is important, why do most of us only pay lip service to it or adopt a lukewarm attitude towards providing an excellent customer service?

This is a true story that happened today.


I walked into a well-known electrical store with full intention to cart back 2 standing fans that very moment. The spacious outlet was quite empty with just a few lingering customers browsing around; I thought the purchase would be a breeze. I was deadly wrong.

I saw a suitable model but there were no sales consultants there. I looked at the customer service counter and noticed more than 10 sales consultants sitting or standing there, resting or chatting. I waved at them, and gesturing towards my ideal fan, the eager consumer that I was at that time. A few saw me but never bothered to stand up. Then, one with a tie, probably the supervisor, looked at me and then back to his staff, “Hey, someone go help that lady”.A woman in her mid-thirties reluctantly got up and came to me, “Yes, what you want?” There was no smile, no friendliness. I asked for the price and her answer was curt and short, “This one $99, no discount.” Without waiting for me to utter another word, she headed back to her team and start chatting away. Well, I walked out as my money is no good here.

This is so ironic when this store paid its advertising agency an obscene amount of money on TV commercials, full-colour press advertisements, promotional booklets to attract customers and when the customer actually walks in, she is ignored. The marketing communications maxim of “A.I.D.A.” states that your campaign needs Attract attention in order to arouse sufficient Interest to create a Desire to own and thereby induce Action. I was attracted by the sales ad, curious to find out more choices in store, definitely want 2 fans and took time to pop by. Their campaign is successful but it did not make them the sale. In fact, it wasted good money on advertising campaign. What went wrong? Absolutely, definitely, on site customer service!

Customer service is more than a smile, more than acknowledging a customer. These days, products are fast becoming commodities with few differentiations. What would make the distinction is the brand value and customer relationship management. A strong brand is a promise to the customer, it is a differentiating factor that distinguishes your products from other offerings in the market. More importantly, it also enables the company to build customer loyalty as the people will remember the brand and its quality. While CRM creates and sustains customer loyalty as well as promoting customer retention. The core value is in increasing customer value while reducing the cost of sales. And this store just increased it’s cost by ignoring customer!

Customer service concepts aside, I cannot understand how these sales consultants could ignore a customer. Customers are the ones that pay their boss who in turn pay for their salaries, overtime, bonus, commission, medical benefits, insurance, etc. Customers likes to do business with companies that treat them like kings. When a company offers great customer services, not only will customers return but would also spread words among friends and families. That’s one contributing factor to how a company is to build to last. When you are nice to others, others will be nice to you. What goes around will come around.

What does customer service depend upon? The company must have customer friendly policies set from the top and these executives must see that the policies are seriously being carried out both internally and externally. If the staff does not know the value of lifelong client is ignorant about how to retain customer loyalty or reluctant to provide that “extra mile”, the sincerity will not shine through the smiles and greetings. Don’t you detest those mechanical and almost robotic words with absolutely no warmth and meaning in them?

More importantly, don’t you just hate it when you went all the way there and had to go back empty-handed?

CRM Is the Cheapest Form of Marketing

Customer Relations Management (CRM) is an essential component of marketing but many people - even marketers - see it as a separate and non-related entity.

A while back, I shared in my post Why Customer Service is Even More Important these days an unpleasant experience at a well known electronics store. I was a willing customer determined to make 2 electric fan purchases, and no one bothered. There is no use spending good money in marketing, advertising and promotion in the background and to have people in the front line destroy all the goodwill created.

It is frustrating to find that so many companies chose to ignore this. In fact, customer service is the cheapest way to build long term trust and credibility and create repeat businesses among current clients. Customer relations management is indeed a marketing discipline, and should not be seen as an expense or an operational cost. I know I have been quoting Peter Drucker very often but there’s so much truth in:

“Marketing and innovation are the two chief functions of business. You get paid for creating a customer, which is marketing. And you get paid for creating a new dimension of performance, which is innovation. Everything else is a cost center.”

Much of the marketing investment of any marketing campaign are made in:
creating the message
pushing these messages to the targeted markets and
turning prospects into new customers

After a prospect becomes a client, awareness marketing makes much less of an impact on his decision to buy again. The reason being that the client is influenced by other factors. Did the product meet his satisfaction level? Did he find it tedious to drive 1.5 hours just to buy the product? Was he upset at being put on hold for 15 minutes? Did he find the online order form a breeze to use? Loyalty marketing becomes very important for repeat (aka loyal) customers. Yet only a small budget is allocated for loyalty marketing.

Marketers usually spent as much as 80% of marketing dollars on awareness marketing to create visibility and new customer acquisition. If a new customer has a problem with the product and has to spend 45 minutes getting someone to talk to him, do you really think that a creative, or even sexy, campaign can convince him to buy again? A consumer usually will be a one-time sucker only. Who wants to be a fool twice?

Many large multinational companies have outsourced their call centres to foreign lands in view of lower manpower cost. Complaints from their customers - mostly on the difficulty in understanding a different ascent - convinced some of the companies to move their call centres back home. It’s not worth spending good money on marketing and have it washed away with poor customer service. Damage Control and Crisis Management will suck up more time and resources to undo the “bad things” and get back into the customers’ good book again.

There are 2 ways to improve customer service:

Place CRM under the command of the marketing head. He can build CRM into his marketing efforts. Marketing and Customer Service can thus leverage on each other.

Educate and enlighten those who are in Customer Service to see themselves as Brand Embassador and regard them dutifully as so. If you keep referring them as “support”, they will not see themselves as an important component of marketing. We need more than one pillar to create a sturdy bridge.

We all like our marketing efforts to be good, fast and cheap. Start by having a strong customer relations management and you soon realize that it is one of the cheapest forms of marketing.

Ten Smartest Ways to Live Beneath Your Means

I managed to retire at age 51, and the way I did it was to live beneath my means.

You can adopt this strategy too, by simply spending less than you earn. You may think that's impossible for you, but if you make it a challenge instead of a chore, you'll soon be creating ways to cut corners in everything you do. And believe me, it all adds up.

There are no secrets to this strategy. It's just common sense. Here are my 10 favorite ways to live beneath your means:

1. Whenever possible, buy store brands. Nearly half the cost for name brands goes to advertising. Usually their quality isn't any better than store brands, which frequently carry a money back guarantee. This is true not only with food, but also cleaning supplies and paper products. Even if the savings are small on an individual item, using this strategy every time you shop makes a big difference. Remember, this is a long-term plan.
2. Avoid prepared foods.We're all pressed for time, but buying prepared foods can be expensive. You pay extra for the convenience and get a meal full of chemicals and preservatives too. Instead, put your main course in a Crock Pot before you leave for work, or put frozen meat in the refrigerator to thaw before you go to bed. Once you learn to plan ahead, you'll be surprised how much you'll save.
3. Shop at "you-bag-it" supermarkets. Stores like Aldi and Save-a-Lot can cut your grocery bill substantially. When you're not subsidizing a store's deli section, flower shop, or bakery, you'll find the rest of the food cheaper. No-frills supermarkets cut overhead by having fewer employees, smaller buildings to heat and cool, and primarily store brands. You'll quickly notice the savings.
4. Brown bag your lunch. I did this for years and it saved me thousands. Brown bagging has three benefits: You'll avoid greasy, high-calorie fast food; you'll save money; and you'll be more satisfied on your job, since lunch with coworkers often turns into gripe sessions.
5. Don't buy clothes or shoes with designer labels. Who do you want to make rich, some fashion designer, or you? That trendy label will cost you at least 50% extra. Instead of impressing your friends, impress yourself by adding that savings to your bank account.
6. Use coupons, but be smart about it. When a name brand product still costs more than a store brand, even after the deduction for a coupon, it's no bargain. Most coupons are for new products companies want you to try, so be selective. You can get coupons online at sites like Coupons.com or Couponcabin.com, or search under "coupons."
7. Buy used books instead of new. I visit two used book sales a year put on by local charities and get an armload of reading for less than $15. I choose used books on Amazon.com. I got my copy of The Purpose Driven Life on Amazon, paying the standard $3.99 shipping and handling, but only 39 cents for a used copy. Even better? Check out books for free at your local public library. Most libraries have DVDs and CDs, too.
8. Keep your car as long as you can. A shiny new car may impress your family and friends, but it simply costs too much. My current car is nine years old and runs like a dream because I have it serviced regularly. Today's cars, with electronic ignition, fuel injectors and superb rust protection, can last well past 150,000 miles if taken care of.
9. Severely restrict your credit card spending. Credit cards make money unreal. They take the thought process and discipline out of your buying. Before you know it, you're deep in debt and getting further behind because you can't make even the minimum monthly payment. When you pay in cash and watch those bills disappear from your wallet, you become much more careful. You relearn the value of money. You question every purchase, and that's when you become smart.
10. Reward yourself for your efforts. Your goal is to be frugal, not a miser. Small rewards--within your budget--are a wise way to keep fun in your life. Living beneath your means takes self-control, but the emotional and financial benefits are tremendous. An occasional treat energizes you to keep up the good work.

Much of living beneath your means requires seeing through the false promises of prestige and fulfillment found in advertising. You're too smart to fall for that. And, it takes discipline to resist peer pressure, but whenever you're doing something worthwhile, you have to stand up for your convictions. Living beneath your means is a proven way to avoid debt and the stress that goes with it. If I can do it, you can too.

Forbes Announces Best Cities For Jobs

Job seekers in 2007 should be turning their eyes to the South and the West, according to a new study by Forbes magazine.

In its annual Best Cities for Jobs list, nine of Forbes’ top 10 cities either lie below the Mason-Dixon line, or west beyond the Rocky Mountains. None of the major U.S. cities like New York, Los Angeles or Chicago made the top 10. New York, considered the financial capital of the world, came in at No. 63, up from its No. 99 ranking in 2005.

To compile the rankings, Forbes used five data points. They were unemployment rate, job growth, income growth, median household income and cost of living for 2006 because only partial data is so far available for 2007. The data was applied to the largest 100 metropolitan areas, as defined by the U.S. Census Bureau, and data was also obtained from Moody's Economy.com.

1. Salt Lake City, which topped the list, moved up from No. 6 last year and No. 12 in 2005. Traditionally, Salt Lake City’s economy has been driven by mining and steel, but its conversion to a center for tech-based industries has propelled it to the top of the list. The city has the second lowest rate of unemployment, the fourth-highest job rate growth and the fourth-highest income rate growth.
2. Raleigh, N.C. Raleigh fell from its previous No. 1 ranking, which it held for 2005 and 2006. It has a stable housing market, and Duke, the University of North Carolina and North Carolina State University attract educated workers and tech firms. It is 17th in unemployment, fifth in job growth, and 12th in cost of living.
3. Phoenix is ranked No. 1 on the list for job growth and fifth for income growth. But according to Forbes, its No. 1 job growth ranking is due in a large part to a housing development, and given the recent housing bust it should fall on next year’s list.
4. Jacksonville, Fla. made a gigantic leap on the list, rising from a No. 42 ranking last year. It is ninth in lowest unemployment, 20th in job growth and 22nd in income growth. It sports the second largest port on the East Coast, making it the leading transportation and distribution hub in the state.
5. Orlando, Fla. Like Phoenix, Forbes expects Orlando to fall in future lists due to the downturn in the housing market. It was ranked 15th last year, is 10th in job growth and has the fifth lowest unemployment.
6. Tulsa, Okla moved up from No. 35, mostly due to a large increase in the income growth rate, at which it ranks seventh. Tulsa has diversified business base, which includes aerospace, construction, high technology, transportation, telecommunications, manufacturing, healthcare, education, and energy.
7. Austin, Texas is another city that moved up significantly after being ranked 23rd on last year’s list. It has become a center for high-tech companies and has attracted workers due to its lower housing costs than Silicon Valley. Thousands of graduates every year from the University of Texas at Austin keep the tech industry with a steady flow of educated workers
8. Albuquerque, N.M. moved up from No. 24 on last year’s list. It is the first time it has ranked in the top ten in income growth, coming in at No. 10. Like other cities that have moved up on the list, Albuquerque is a center for high-tech companies and government projects that have fueled its growth.
9. Wichita, Kan., the lone representative from the Midwest on the top ten, ranked No. 57 on last year’s list. Known as the Air Capital of the World, it is home to McConnell Air Force Base and six aircraft manufacturing companies.
10. Oklahoma City, Okla. Another rapid mover, Oklahoma City ranked 67th on last years list. It ranks sixth in income growth, 15th in cost of living and 25th in unemployment. Oklahoma City has been a traditional base for energy companies like Chesapeake Energy and Devon Energy, but its economic growth has partly been fueled by diversification into fields like information technology and health services.

[via - KNBC]

Inside the mind of a crazy (rich) inventor

(FSB Magazine) Indianapolis -- You probably don't know the name Scott Jones, but chances are his life has touched yours. Checked your voicemail lately? You've got Jones to thank. Pop a CD in your computer, and iTunes brings up the track names. That feature comes from another of Jones's companies, Gracenote. When Indiana last year adopted daylight savings time, it was Jones who pushed hardest for the change. The roller coaster at the Indianapolis Zoo? Jones. Dinosaur skeletons at the Children's Museum of Indianapolis? Made possible in part by the Scott A. Jones Foundation.

Most folks in the Indianapolis suburb of Carmel (pronounced like the candy) know their wealthy, energetic neighbor as "the guy who invented voicemail." In the early '90s Jones made about $50 million on his company, which created the predominate form of voicemail, and he "retired" at age 31. But he found he wasn't the kind of entrepreneur who could just fly off into the sunset in his helicopter. Over the past two decades this driven inventor has been generating ideas for new products and companies - some were successful, others hit the scrap heap - at a pace that would make Thomas Edison's head spin.

Jones's latest company, ChaCha (chacha.com), is developing a potential rival to Google - a search engine assisted by human experts who will help you find your answer. And here's what Jones claims to have on deck: self-propelled robotic lawn mowers, a method to sequence your entire DNA in one minute, a way to make humans fly.

From anyone else these might seem the ravings of a madman. But Jones backs up his ideas with a fortune he estimates to be worth $150 million, a brain that lets him keep pace with the geekiest of scientists, and a knack for managing startups. His ambition is to change the way people live, and he figures that any one of his half a dozen or so new startups could do just that.

We were intrigued by his latest ideas, but even more so by how he conjures them, culls them, and inspires a team to nurture them. Just what, we wondered, goes on inside the head of this quintessential American inventor?

[via - CNN.Money]

Daylight Savings Time Arrives Next Weekend

“Fall Back” Time Changed by Energy Bill

Daylight savings time is tardy this year, arriving one week later than usual, on Sunday Nov. 4. The extension is the result of the Energy Policy Act of 2005, to lengthen the daylight-saving time period, starting in 2007.

Among other provisions, the bill attempts to combat growing energy problems by changing the start and end dates of daylight savings time. Delaying the announced time of sunrise and sunset increases the use of artificial light in the morning and reduces it in the evening. It is presumed that more people need evening light than morning light, and energy is conserved if the evening reduction outweighs the morning increase. Despite this theory, however, many question whether daylight saving results in a net energy savings.

Believer or not, next weekend you’ll get that extra hour of sleep.