Content Marketing

Client lifetime value: Why businesses get it wrong

people shaking hands

I had a chat recently with a supermarket franchise owner about marketing.

This is a well-known franchise with branches across New Zealand. They have an inhouse marketing team and they spend a lot of money on print ads, flyers, pullouts, digital ads and so on.

Now, I organised the meeting because I wanted to pitch a strategy which didn’t cross any of their existing marketing efforts. There were no double ups, no conflicting material. It was designed to be 100% self-sufficient and separate from anything they were doing at the time.

It was a new way for the supermarket to leverage their weekly, fortnightly and monthly offers to ultimately increase inbound foot traffic to the store and boost sales.

Not only would it increase sales, it would create a separate entity that would be entirely owned by the supermarket which would grow and a become a valuable resource for this generation of shoppers and the next and the next.

They loved the idea. Loved the concept, the approach, the community value.

Cost and money was never mentioned.

So I left the idea with them for a week and then made the call.

It went like this.

Hi (shop owner), so now that you’ve had time to think about the strategy what do you think?

(Shop owner) We’re going to pass.

Me: Oh, why’s that, do you think it wouldn’t work or is there something else you’re concerned about?

(Shop owner) No, no, we’re just going to stick with Facebook.

Me: Facebook? (Slightly stunned)

(Shop owner) Yes we’re just going to put our stuff on there.

Me: But you see the value in what I’m proposing and how it will ultimately draw people to your store time and again.

(Shop owner) Yes, but we just don’t want to do it.

Me: Right. But we haven’t even talked about what it would cost.

The conversation continued for maybe another minute with me pushing for a solid reason as to why not but one wasn’t given.

So my only takeaway from the conversation was that he simply couldn’t be bothered.

Relating to another article I wrote about the pain point in a business, he was the pain point.

He wasn’t interested in looking at the bigger picture. It appeared all they he was interested in was this week’s sales. And next week’s offers.

I get that, I really do.

But why wouldn’t they consider the lifetime value, and work on an approach that would be more likely to secure long-term loyalty for their current and future shoppers without simply pushing weekly deals for short-term profit?

This applies to so many businesses I’ve worked with that never consider the lifetime value of clients.

Car sales, real estate, travel agencies to name just a few.

If a client has the potential to come back time and time again, even if that only means eight times in their lifetime (That statistically is how many times a person buys and sells a house in New Zealand), why wouldn’t a business owner do everything in their power to ensure that that client brings their lifetime value to them.

Short-term gain is not a profitable business model.

Feel free to leave me a comment or share the article if you have any thoughts on this.