 Gray Poehler writing our "Ask SCORE Column" for the Naples Daily news attended Virginia Commonwealth University (formerly Richmond Professional Institute), majoring in business. I was a career insurance agent, specializing in property and casualty insurance and hold the Certified Insurance Counselor (CIC) designation.
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LOYALTY MANAGEMENT-HOW MUCH ARE YOUR CUSTOMERS WORTH? |
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Written by Frank Friend
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Monday, 08 March 2010 09:46 |
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Part 2 of a 3 Part Series
QUESTION: I operate a local service business. What must I do to create a lasting bond with my customers and others with whom I do business?
ANSWER: In part 1 of this series we stressed that “loyal” and “satisfied” “customers are not synonymous terms. The worth of a customer is determined by a metric called Customer Lifetime Value (CLV), which is the net margin generated by the customer over the lifetime of the customer’s relationship with your company. Several factors influence the CLV, two key ones being the length of the relationship (retention) and the number of new customers referred by the customer.
Loyal customers are retained longer and refer more new customers than the average customer. For example, if the yearly sales to the average customer are $2,000 with a margin of 40%, and he/she is retained for 3 years and refers one new customer each year, the CLV would be $4,800. However, if the “loyal” customer is retained for 6 years and refers 2 new customers per year, the CLV increases to $14,400. This is a much simplified example used to illustrate the scale of difference between the average and loyal customer. A free detailed 20 page PDF on this subject can be obtained by emailing
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LOYALTY MANAGEMENT – A BETTER WAY |
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Written by Frank Friend
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Thursday, 18 February 2010 15:39 |
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Part I of a III part series
Question: I operate a local service business. I try to be competitive and do the right thing for my customers but, in spite of my efforts, some choose to leave because of price or other considerations. What must I do to create a lasting bond with my customer?
Answer: Loyalty Management uniquely combines “the right thing to do” with “the profitable thing to do”. It states that a company is more likely to prosper when it forges loyalty based relationships with its customers, investors, suppliers, and employees. The ultimate objective of Loyalty Management is to increase the number of loyal customers.
Compared to satisfied customers, loyal customers stay longer with the company, refer more potential customers, buy more, are more forgiving of mistakes and are less likely to be attracted by a competitor’s offer.
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DOING BUSINESS WITH THE GOVERNMENT |
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Written by Gray Poehler
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Monday, 08 February 2010 22:38 |
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QUESTION: I own a small contracting firm and want to participate in some of the infrastructure projects the Obama administration is funding. Where can I find information on this subject?
Donald W., Golden Gate
ANSWER: Federal, State and local governments offer many business opportunities to small businesses. Selling to the Federal Government can provide significant revenues, and the process is not as complicated as you may think. A good place to start is to visit The U.S. Small Business Administration (SBA) web site. It will help you understand the basics of selling to the government.
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