Chris Zane opens his insightful book, Reinventing the Wheel, as follows:
How much is one customer worth to your business? For me, it’s $12,500. That means that my average customer will spend $12,500 on my products and services over his or her lifetime, $5,000 of which is profit.
I have owned five Audi automobiles, with a total value of perhaps $250,000. Is that enough loyalty to motivate an Audi dealer to treat me fairly and responsibly? Apparently not.
Since rants don’t make interesting blog posts, I’ll spare you the details. But my treatment at the hands of an Audi dealer in Fairfield, Connecticut was bad enough that today I not only sold my Audi, but also my other car, that I bought and had serviced at their sister dealership. Yep, traded in two cars to other dealers, to ensure I would never again give this company another dollar.
What got me was that up and down the line, no one in the dealership was ever willing to take responsibility for the mistakes they made. I made errors of judgment, too, and was willing to share the blame. But not the dealer.
I learned how bad customer service perpetuates itself: you divide your company into tiny cost centers. Not only do you separate sales from service, but you also divorce sales management from sales, and service management from service. In this manner, you get every employee to say with a straight face and utter conviction, “But it’s not fair for my profit center to absorb the costs of someone else’s mistakes.”
In this manner, you can win lots of battles, even as you lose the war. Not one of the employees I dealt with understands Chris Zane’s point, which is that only if you look at the lifetime value of a customer can you realize how important it is to treat him or her right. And, yes, this will cost your company some money.