Before you build, know what you’re building.

Whether you’re building a business that requires serious investments for serious returns or you’re a solopreneur venturing off on your own, you have to learn how to build a fire for your customers to keep them warm.

Once your customers trust you, or at least find you irresistible, the relationship will catch on fire.


A hot customer relationship is when you and your customers are so satisfied that you become lifelong advocates for each other.

You feed each other.

There’s some joy. There’s some pain.

And there are many questions. But by tending the fire, the relationship keeps growing.

If you stop feeding the fire, competitors will swoop in and smother your profitable relationship.

Amazon and Netflix have kept the fires burning with their customers by continuously adding to the relationship and making sure to stay ahead of the competition.

The two behemoth companies entered their customers lives slowly.

They watched how their customers lived their lives. They watched consumers consume.

Then the future billionaire companies anticipated unmet, unknown customer needs.

They kept a keen eye on the competition and kept the competitive advantage while tending to customer relationships first and putting the customer on a pedestal.

Amazon: $9+ Billion in Subscription Services, $177+ billion in net sales (SEC 2017 10-K Report)

“We seek to be Earth’s most customer-centric company.“

Amazon to Customer: I’m going to give you everything you want at the best possible price.

Customer to Amazon: We will have a Prime relationship.

Amazon to Customer:  Invite your family members. Since you’re here, let me show you some personalized recommendations and ordering methods that are so easy, you don’t have to think. We’ll stock your entire home for you and alleviate holiday stress.

Customer to Amazon: I will let you into my home.


Netflix: 117+ million subscribers, $11 billion in revenue (SEC 2017 10-K Report)

“Our core strategy is to grow our streaming membership…with a focus on a programming mix of content that delights our members.”

Netflix to Customer: You can watch all the movies you want, whenever you want, for less than the cost of a movie ticket and a small drink. We’ll even mail them to you.

Customer: So many movies! Our family members can’t agree on what to watch.

Netflix: You can have separate profiles for family members. We’ll even give each person recommendations based on their personal movie viewing habits. You’ll see more “Action Sci-Fi & Fantasy Featuring a Strong Female Lead” and your sibling can watch more “Absurd British Comedies.”

Customer:  I’m telling all my friends on social media about my Netflix binge habits and sharing my recommendations.

Netflix: Now that we know what you like, look at these trailers for new movies we created.

Customer:  I will fall asleep with you every night.

These relationships didn’t happen overnight. Amazon’s website sprang up in 1995, but you can bet a whole lot of sweat equity went into the company before then.

The year Amazon filed its corporate papers (1994) Viacom bought Blockbuster for $8.4 billion dollars.

Blockbuster was doing well before then, but then its stock didn’t do so well.

In 1997, while Blockbuster was tending to its spiral demise and DVD players were just starting to infiltrate neighborhood homes, two software geeks, March Randolph and Reed Hastings started Netflix and began delivering DVDs to neighborhood mailboxes.

The fifty-cent rentals were popular, a subscription rate was offered, and millions were delivered.

It wasn’t until 2007 that Netflix movie streaming was announced—and that was after Amazon and Blockbuster started streaming. (Don’t be afraid to learn from others.)

Fast forward to 2018. Blockbuster has been snuffed out. Netflix and Amazon have disrupted industries while successfully building some hot customer relationships.


They had a vision.

They prepared themselves to create the vision. They knew the value of a customer. They tended to the customer. They kept the fire going. Customer relationships were the priority.

What are five ways you can build hot customer relationships?


You have a great business idea. You will need customers.

You want to keep those customers and you want them to grow with your businesses.

How are you going to keep track of them?

Configure company systems and operations to manage customer relationships.

When you start a fire, you plan where to have the fire. You plan for potential.

You have to be sure you’re not going to burn the house down (hopefully), and you’re not going to start the fire outside during a tsunami.

Bonfires on the beach are great, but you can’t start the fire where the waves are rolling in.

Amazon and Netflix didn’t say “hey, come out to the beach,” they said “you’re busy, let me bring this food and these movies to your home.”

Netflix knew from research that customers planned their DVD rentals a week in advance. The Netflix founders spent hundreds of hours inside post offices watching how the U.S. postal system worked.

They were confident in their crazy business venture because they were prepared. ($2 million in seed money didn’t hurt either.) They expected 10 rental requests the first day. They received 500.

When customers flooded in, Amazon and Netflix made sure the customers weren’t just a name and address on a computer to be shuffled away for a year-end analysis.

The companies studied customer preferences, pulled data and built algorithms.

They maintained social media contact. They resolved complaints. They didn’t forget their customers. They sent offers and reminders.

They had a system to manage customer relationships.

You need a system to keep the fire in customer relationships growing.

You’ll need to gather supplies to start the fire and gather supplies to keep it going. You’ll need to light the fire and keep it under control.

Where are you going to keep your potential customers and future customers?

What systems are you going to use?

Lack of customers and out of control customer demand will snuff out your profits, and likely your business.

Manage your customers.

Basic Customer Relationship Management (CRM) Systems

You have to manage your customers and the knowledge you gain from your customers.

You may use one system or a multi-faceted system.

A customer relationship management system may be as simple as a free spreadsheet template or as complicated as managing the algorithmic preferences for Netflix movie-viewing customers.

Customer relationship management is the parent of customer relationship marketing. Managed customer potential is the base for customer relationship marketing tactics.

When you create your list, you’re putting into place kindling that’s going to light the path on which sustainable customer relationships will grow.

Basic choices for a Customer Relationship Management system:

  • CRM software or cloud programs
  • Apps
  • Spreadsheets
  • Outsourcing

Medium and large sized businesses will undoubtedly be better served using the advantages of CRM software or cloud-based programs, or outsourcing.

Three big players in CRM software and cloud programming are:

  1. Salesforce (Plans start at $25 per month) – Clients include T-Mobile, Yeti, Adidas and Aston Martin
  2. Microsoft Dynamics (Plans start at $40 per month) – Clients include Aston Martin, Dell, Delta
  3. Zoho (Plans start at $25 per month) – Clients include Amazon.

It’s worth noting Aston Martin uses Salesforce for sales operations, but Microsoft Dynamics for accounting purposes together with other Microsoft products. Find the right mix for your business.

Three notable players in Customer Relationship Management systems are:

  1. Hubspot (Free for solopreneurs, plans start at $50 per month for others)
  2. Apptivo (Free plan, Premium plans start at $10 per month)
  3. Insightly (Free plan, Plus plans start at $29 per month)
Think about your customer acquisition journey. Ask yourself “why” at every step. When it’s time to sit down and test out CRM free trials, ask yourself the following questions:
  • Can I afford it?
  • What parts of the customer relationship do I need to manage?
  • Will using this software service grow with my business?
  • Can I import the data I have now into the system?
  • Can data be integrated at all customer touchpoints?
  • What are the import/export options and compatibilities with current and future systems?
  • Can I incorporate the reminders and schedulers with my current system of managing time?
  • What team sharing capabilities and privacy options exist?
  • Will a sales employee with limited tech knowledge feel comfortable using this?
  • What are my limits?
  • How do I manage customers and contacts?
  • How do I manage segmentation?
  • How do I mange conversations?
  • What types of conversations can be managed?
  • What options are available for sorting and filtering?
  • How do I track leads and progress in the sales and marketing funnels?
  • What automation options are available for integration with current operations?
  • How do I mark a follow-up on leads?
  • Is it easy to manipulate changes and priorities?
  • How fast can I get a quick status view?
  • How long will it take to learn the software?
  • What will be the cost of training team members on the software?
  • How many people will be actively using the system?
  • Is it convenient or cumbersome?
  • Will employees be negligent with data entry because it’s a pain to use?
  • What makes me hate this program?
  • How long does it take to enter one full customer entry?
  • What analytics are provided?
  • Can I determine why customers are staying?
  • Can I determine why customers are leaving?
  • How easily can I track, measure and adjust my key performance indicators?
  • What tech and help support system is available and what are the limits and cost?
  • What backup options are available?
  • Is it secure?
  • Is it flexible?

You will also need to protect your customers.

If you do business in the United States, keep abreast of the rules and regulations from the Federal Trade Commission.

If you’re doing business in the European Union, use a checklist to stay up-to-date with GDPR rules and regulations. Legal battles will burn a hole in the company pocket and dim customer trust.

Fortunately, the legal gods work a little slower than the tech world.

Tech moves fast.

All the major CRM companies are vested in artificial intelligence. Salesforce uses “Einstein” to make recommendations based on collected data.

For instance, a pattern in customer engagement may prompt Einstein to tell you it’s a good time to contact the local fire department to see if they want to purchase that fire hydrant you have for sale.

Interestingly enough, Amazon’s first book sold to a non-employee back in 1995 was about artificial intelligence (“Fluid Concepts And Creative Analogies: Computer Models Of The Fundamental Mechanisms Of Thought” by Douglas Hofstadter).

Be prepared for the future. Amazon was.

Doing the Data

Despite over $220 billion dollars being poured into CRM programs from organizations, more than half of business owners referenced in a MIT report did not see expected returns.

Executives run into an endless pit of analytical data. Data is just a pile of ashes slipping through fingers unless it’s applied.

Frame your data. Don’t let it get out of control.

  • Define the improvements you want to make.
  • Define the decisions you need to make in relation to those improvements.
  • Use your data broadly.
  • Create decision-making models you can scale.
  • Continuously improve your decision-making models, and apply them to new business ideas.
  • Map your key relationships.

Outsourcing Customer Relationship Management

Have you thought about outsourcing?

A company has the option to outsource the management and implementation of customer relationship software and cloud programs, the IT and staffing needs for customer relationship management, emails, chats, phone calls, order-taking, and any individual segment of the customer relationship spectrum.

Many businesses utilize call centers to deal with customer complaints and CRM data collection.

Outsourcing is a useful tactic to prepare for an unusually heavy response to a new product or marketing initiative, and it can save on infrastructure and operational costs.

When you outsource, you’re not spending your money on the training required for data entry, customer service and sales.

A cost-benefit analysis will tell you if outsourcing makes sense.

The downside is often lack of security, lack of control, and lack of personalization.

As anyone who has ever called a call center knows, customers don’t always receive a high-level of service from call centers, despite praised employee practices and training programs that might be in place.

How many times have you received a call from a call center and immediately recognized the background noise of telemarketers busy at work? Are you glad they called?

The data between your company and the outsourced vendor may not be easily integrated or exchanged. According to CRM magazine, it will cost you around $27 an hour to run an in-house call center.

Is that feasible?

Will you lose more than that with an inefficient call center?

You will still have to establish the metrics to measure the success or failure of outsourced operations, and the end results need to be measured.

If you don’t have the means to handle customer relationships, you either need to build up your company to handle relationships, or outsource. The choice is yours.

The only other option is to ignore your customer relationships, and that’s not an option for business success.

A survey of 70,000 Americans published in the Journal of the Academy of Marketing Sciences demonstrated that senior managers grossly overestimate customer satisfaction.

Make sure you have a feedback loop for customer complaints and compliments.

Solopreneurs, Micro-Businesses, and Small Rural Firms

If you are a solopreneur or a small professional practice in a rural area, you may be able to get by using Google contact advanced features and spreadsheets for customer relationship management.

If you don’t expect more than 100 customers per year and you don’t work with tech savvy employees or clients, then these methods may work for you.

If you’re just starting to manage customer relationships, you should, at the very least, develop a benchmark for the expected net contribution of a new customer and an existing customer to company profits.

Tweak as needed when you’re developing your customer relationship management system, and apply what you learn from using your developed CRM analytics.

Here’s a video demonstrating the steps to access a customer relationship management template from Google Drive. (The template was kindly provided by the CRM G Suite company Prosperworks. Great way to build a customer fire. Create a template to share.)

Having a CRM program is not enough.  The data and activities have to be actively applied to other customer relationship strategies.

You need some tinder to get the fire going.


You are attracting strangers.  Find strangers that share your values.

Amazon starts its Leadership Principles with customer obsession. The earth has its iron core, Amazon has customer obsession running through its veins.  Given a choice between competitor focus or customer obsession, Amazon chooses customer obsession.

Amazon sold its first book to a computer engineer friend, John Wainright, interested in artificial intelligence. John ordered the book online from Amazon in 1995 at the request of Amazon’s first employee, Shel Kaphan, a former coworker (who is now very rich). It was ordered using a dial-up connection.

The story told is that unknown to John, the book he ordered was out of stock.  Jeff Bezos ran from store to store to find the book to mail to his first non-employee customer. It was delivered. The credit card was processed. Amazon just gave birth.

That same friend also bought some of the first iPhones on the market. Clearly an early adopter, his contribution as a customer helped build Amazon. (John remains a Prime Amazon customer.) Amazon named a building after John Wainright.

Despite a dial-up connection and an out-of-stock book, John remained an Amazon customer for over twenty years. What would have happened if Bezos just told Wainright “sorry, the book is out of stock?”

When you start a fire, you need some easy burning tinder to get the flame hot.  John Wainright was a friend of an employee. He was the ideal first customer. Do you choose your first customers as carefully?

Answer these three questions to help you find your early adopters.

What are three company values?


What interests do you share with your ideal customers?


Who do you know that can influence early adopters?


Shared Values Build Customer Relationships

Shared values merge societal improvement with economic benefit.  Problems your customers experience contribute to the cost of doing business.

What social problems affect your business, suppliers and customers?

What social problems, if solved, would help you do more business, improve procurement, and build lifetime customers?

How can you change your business operations to address these social problems?

What innovative products and services can you introduce to address these social problems?

Does your company support any of the following social values?

  • Education
  • Healthcare
  • Wellness
  • Transportation
  • Technology
  • STEM
  • Space Exploration
  • Accessibility
  • Disabilities
  • Acceptance
  • Inclusion
  • Poverty
  • Reading Literacy
  • Diversity
  • Civil Liberties
  • Civil Rights
  • Gender Equality
  • Fair Trade Farming Practices
  • Fair Labor Practices
  • Consumer Protection
  • Animal Protection
  • Safety & Security
  • Intellectual Property Protection
  • Open Source
  • Transparency
  • Sharing Economy
  • Environment

You probably have customers (and potential customers) that support the same social values.

A 2013 report by Professor Michael Porter at Harvard Business School gives some examples of shared value applications:

Beckton Dickson is a healthcare company that redesigned needles to prevent accidental injuries which helped slow the spread of AIDS. The product was their largest source of company growth. What clients care about the prevention of AIDS?

Regions bank wasn’t reaching 25% of their customers because they were “under-banked” customers. (Living paycheck-to-paycheck.) The bank reached out to the customers with prepaid cards, billpay services, and lower checking account fees.  What products and services do you have to meet an unsolved need?

Hotels that “go green” reduce energy costs and help the environment. What potential customers care about the environment?

Now imagine everyone in your circle of business shares the same value.

What do you stand for?

Nike once stood for shoes, now they stand for health and wellness. Starbucks wants to “inspire and nurture the human spirit.”  Dove used to be about soap and skin, now they sell confidence and real beauty.

Shared values inspire emotions. Emotions inspire communication and sales.

When you find a shared value between your business and your customers, you’ll get the customer flame rising to new heights.


Once you get the early adopters, you need to spark the conversations.

Will you be meeting your customers in person or online?

Will you be pushing them in, pulling them in, or will your early adopters do the pushing and pulling for you?

Sam Horn, not the baseball player but the “Intrigue Expert” and business coach who will be a speaker at the Women in Defense National Conference, believes intrigue is the answer to sparking a conversation and landing a sale.

“If we want to succeed, we must intrigue!” – Sam Horn, Business Coach

Sam has an eight-step intrigue process which involves “did you know” questions.

A mini-version of sparking a conversation could go like this:

First: State an interesting fact about a problem that your product or service solves.

(Example: Did you know that NASA did a study to identify the types of plants are best to reduce indoor air pollution?)

Then: Ask the potential customer to “just imagine” how all their problems will be solved.

(Example: Can you imagine if we could just find the right plants to get rid of all air pollution?)

After that: Relate the trivia and imagination to real-life examples of your product or service with hard numbers.

(Example: By the way, did you know the Gerber Daisy removed 107, 653 micrograms of Benzene per plant? Benzene is found in heating and cooking systems and building materials. What’s your favorite color? Blue? How about that! We have blue Gerber Daisies on sale this week! You can treat yourself and keep your home healthy! Would you like to see one?)

Create the same question flow for your products and services.

You can watch Sam Horn’s video for tips on sparking a conversation with potential customers:

Online Customer Communication

Not everyone likes to talk to a person. Psychology Today estimates between 16% and 50% of people are introverts.

The act of making a phone call cuts into our personal time and is dependent upon the environment.

You’re not going to have the customer’s full attention with a train or city street in the background, or kids screaming and dogs barking.

People also like to keep their shopping and personal needs private from their surroundings.

Millennials, (the new Baby Boomers), see the internet as normal as a toilet, and the Internet Generation (Generation Z) has grown up communicating online.

Conversations with Siri, Alexa, and now Google are a part of everyday life. When a Millennial or Z’er wants something, they expect to be able to click a few buttons and get it.

They expect information at their fingertips with questions answered instantaneously. They want self-service.

Talking to people to make a purchase or lodge a complaint is a bother. Ask a Millennial.

Enter Artificial Intelligence.

Chatty Chatbots

Chatbots can funnel sales, algorithms sweep customers along their journey, and automated data collection and management define steps for future visits.

Chatbots have the conversation so you don’t have to.

Do you know Amelia? The Next Web has introduced us to some friendly chatbots.

Amelia is a chatbot that combines customer natural language with previous interactions and company knowledge to answer customer questions. If she’s wrong, the customer gets transferred to a human. (She must have a soul.)

Soul Machines is a chatbot that works with emotions. Do robots need two to tango?

Nadia is the first offspring of Soul Machines. She likes to watch human facial expressions and the tone of a voice.  Despite all of these emotions, even banks are using chatbots.

Bank of America has Erica, a chatbot working the bank’s mobile app. Wells Fargo uses chatbots with, er, Facebook. (Maybe 2018 isn’t a good year to mention that.)

“First there were websites, then there were apps, now there are chatbots.” – KiK (mobile chat application) in The Guardian, April 6, 2016, “What is a chat bot, and should I be using one?” by Julia Carrie Wong

Chatbots aren’t ready to take over the world, but they can be integrated into a system to spark conversation.

Welcome – You have mail.

Email isn’t dead either.

A study of 1.5 billion emails lightened us up to the fact that Welcome messages and abandoned cart messages are the emails most likely to be opened. Hubspot reports over 80% of professionals prefer email for business.

Are you in B2B sales?

A welcoming email may be just what your company needs.

Constant Contact was nice enough to share a 2017 chart of open and click through rates for email marketing campaigns. Emails have an overall open rate of about 18%, but it varies between industries and devices.

The highest open rate was in the education industry, and the lowest open rate (no surprise here) was in marketing, advertising and public relations.

Have you welcomed a teacher lately?

Social Media Communication Sparks

Social media communication is the match that sets the tinder on fire.

Communities are formed on social media. Companies are praised, pranked and pummeled on social media. Customers reach out for help and share their joys and sorrows.

“The more connected you are with your customers, the more loyal they will be to your brand.” – Social Media Today,  Using Social Media For Customer Relationship Management, by Benny Coen, January 28, 2016

You can use Sam Horn’s tips (listed above) in social media conversations.

You can communicate your shared values and engage with commenters. You can build a community with hashtag events or Facebook groups. You can go live on YouTube, Facebook or Periscope and showcase your product, service or company, or do something good for the people you want to meet.

Go where your customers are.

Find out what their interests are and start engaging your business in the social media conversations and sharing opportunities.

As you likely know, customers are more apt to interact with you if you have something to offer.

However, it is not necessary to have something to offer to interact with customers.

Even when you aren’t interacting with customers, the silent customers are slowly stalking you. Will they like what they see?

To build your presence social media, you can start with friends, family, coworkers, employees, business partners, suppliers, industry leaders and community ambassadors.

To reach your customers, do a hashtag or keyword search for terms that represent company interests.

Do you sell matches?

Search for keywords like camping, candles, and pyro. Engage with people who have an active presence and a non-threatening stream.

Sparking Social Media Conversations
Name ten keywords related to your company.

Name five activities your ideal customer would participate in.

Find influencers related to those keywords and activities.

Find potential customers using those keywords and participating in those activities.

Name a shared value you and your customers might have.

Engage in company-appropriate conversation with people that share those values.

Create a channel on YouTube. Provide your customers with knowledge or entertainment, or both.

Tweet something funny on a trending Twitter hashtag.

Post unique images on Instagram. Add a traditional hashtag and a unique hashtag.

Interact and promote community events.

Create intriguing Pinterest boards and comment on customer pins.

Answer questions on Quora and Reddit.

Remember, it’s not about your brand, it’s about the customer. (But always maintain your brand during customer engagement.)

Does your customer management relationship program integrate with your social media management programs?

If you don’t have a social media management program, start using one.


Flames die if they are not tended to. When you have the customer’s interest, you must continue to keep them interested in you.

Customers are not bits and bytes of data.

They are complex and unique human beings.

Help customers determine their needs

Captial One uses microsegmentation.

When a call comes through, a customer’s entire history is pulled up and the call is transferred accordingly. Employees are empowered to be customer advocates, and upsell a choice of financial services to qualified customers, based on individual customer preferences.

Upselling opportunities for financial services aren’t wasted on customers closing their accounts.

Are you using microsegmentation in your marketing strategies?

General Motors worked with a website to offer a tool to help customers figure out which car is best for them.

The tool simply asks questions, then provides the customer with eight suggestions.

Similarly, QWEST Communications has a tool that helps customers determine which plan is tailored for their needs.

How do you help customers determine their needs? What tools can you create to help your customer?

When you help your customers get what they need when they need it, you are advocating for the customers.

Help customers explore during the journey

Hold the customers hand and let them explore. While they’re exploring, glean information on their preferences. Take a look at your pipelines and funnels.

Does everything go in one direction? Flames are crazy. Customers are crazy.

You never know what they’re thinking.

This is how I presell to customers:  _________________________

My most profitable product to upsell is: ___________________________ _______________________ _________________________

These are opportunities I offer customers to downsell: _________________ _____________________ ____________________

I offer this new product: ___________________ when customers _______________________.

Customers see my reviews on ___________ (insert number) pages when not looking for reviews.


Can your customers explore without getting lost in a maze of webpages?

Will your customer explore just products, or will they also see emotions and knowledge?

Can you microsegment a customer’s exploration journey based on intent?

Can your customers always find their way home?

Don’t just say “do you want fries with that,” tempt them with the fries without being intrusive and make sure they get a glimpse of dessert right around the corner.

Maybe they came in for a salad, but they left with a salad and 1000 extra calories. Great sale! Unfortunately, regret may lead to abandonment.

Did the customer see your “please only offer me healthy choices” or “I’m on a diet” personalized option? Will they remember it?

Customers need air

Lay off the commitments. Customers need air.  Customers are decisions makers, and decision makers ask questions.

They get scared.

They will evaluate the cost of making the wrong choice.

They may run.

Give customers time to think and time to test before they commit. Amazon and Netflix have won with no-commitment strategies.

Countless software companies offer free trials. Warby Parker sells eyeglasses with a 30-day exchange policy. Ikea and REI have one-year return policies. Car sales professionals offer free test drives.

What confidence do you offer your customers?

Do you make it easy for customers to delete an item from their shopping cart?

Can they save an item in their shopping cart for later?

Do you have an easy no-stress return policy?

Do you offer a free Trial?

Customers feel safe to buy when they feel it’s safe to make a mistake.

Lay off the intrusive pop-ups. Nobody wants to see a pop-up with every click, and popups that can’t be easily closed are not clever, they are intrusive and rude.

You are interrupting a customer that is concentrating on your website, and you are wasting the customer’s time. Do you think that will be appreciated?

Give your customers room to breathe in everything your magnificent website has to offer.

Don’t be a bully. Be a guide.

Review your website. How many times do you interrupt the customer?

Now ask someone to interrupt you that many times when you’re doing something you enjoy.

Lessen the Guessin’

Simplicity is the most important factor in decision making.

Make purchasing easy.

Harvard Business Review reported the results of an interview and survey mix involving 7,000 consumers. The study found the most important factor in decision making is simplicity.

The business magazine gave an example of two websites selling cameras. One website (let’s call it SPECS) had tons of technical specifications and views for each product. Another website (we’ll call it GUIDER) guided customers on a segmented journey.

Serious camera buffs were directed one way, newcomers just browsing or looking for gifts were guided in another direction, and then further segmented into hobby categories. On the way, guests were shown reviews and given explanations in non-technical terms.

The GUIDER website actually made the buying decision simpler.

A business has to create many things to make things simple for the customer.


When you tend to the flame, your happy customers will spark up new business for you. (Old folks call that word-of-mouth advertising.)

The old Pareto Principle says to concentrate on the 20% of your most profitable customers that bring in 80% of the revenue. It’s considered sage advice to “fire your customers” when they run you down.

Even Tony Robbins agrees.

Sprint has fired customers who call customer service too much.

In many industries, more profitable customers are given a higher class of service than the peasant customers. Continental Airlines only emails highly profitable customers frequent flyer miles with an accompanying apology when flights are delayed.

Financial agencies may send wealthy customers to a private consultant and a low-value customer to a call center.

Thousands of articles from reputable sources will tell you that your business is wasting resources on low-value customers. Not everyone agrees.

A couple Wharton professors will tell you to keep your low-value customers, because if you don’t, competitors will poach your more profitable customers.

The professors advise you to instead improve the quality of service to high-value customers and manage the costs related to low-value customers.  Their philosophy implies a shift from money management to customer relationship management is needed to retain a competitive advantage.

I can improve the quality of service to high-value customers by: _________________________________.
I can better manage the costs related to low-value customers by: ________________________________.

Loyalty Secrets

Sometimes loyalty programs are a secret, but they don’t stay secret for long.

A posh hotel had a secret loyalty program which gave personal ambassadors to high-tier guests.

Those guests couldn’t help but proclaim their satisfaction and stature.

The Marriott’s loyal members had the opportunity to release baby sea turtles into the sea.

I can create this unique experience for my loyal members: _________________________.
I can create this experience that showcases my unique community: _______________________.

Loyalty programs should provide social benefit and special treatment.

In return, your business receives higher purchasing frequency, lower customer churn, and savings in your customer acquisition budget. You should also receive plenty of free advertising.

To build loyalty, you have to reduce churn drivers. Why do people leave and what is it costing you? Find out before you lose a lifetime customer.

Lifetime Value of Customer Relationships

Customer lifetime values based on mathematical formulas are a useful metric for developing strategies, focus and budgets.

They range from the easy to the complex. The metric does not represent the full value of the customer. You cannot see all of your customers’ interactions outside your company.

Your low-value customer could have been the person that told your high-value customer to check out your website.

Even if you had the access to pull all the analytics from every customer’s social media platform, you won’t have their family dinner discussions, professional interactions at work, and interactions while traveling.

What if you could help all of your customers be successful? Lifetime value would increase.

Innovation is the key.

Harvard Business Review points out innovation investments increases a customer’s health and wealth. When you help customers be successful (Apple) your business is successful.

Let building customer relationships be your guide. Use innovation to thrive.

Customer lifetime value metrics are a tool to help you maintain a strong fire with customers while keeping your business profitable.

To find your customer lifetime value, you will need to look at purchasing frequency, revenue streams, acquisition costs, servicing costs, a discount rate, and the length of customer retention expectancy.

Not an easy task.

A University of Sydney Professor, Geoff Fripp, was kind enough to provide a free CLV calculator and free Excel spreadsheets on his throwback to the 1990s website.

Harvard Business Review has a classy slide calculator to help you calculate customer lifetime value.

If you have a few million to spare you could just follow Nike’s lead and acquire a consumer data analytics company.  Nike’s primary focus working with Zodiac’s data will be NikePlus members.  Thanks to Nike’s new analytics, revenues have increased since Zodiac joined the team.

Can’t afford to acquire an analytics company? The April 2017 issue of Business and Management Review, Volume 8 Number 4, in the article “The importance of customer lifetime value in determining their profitability” by Grzegorz Lew, has a general formula and a more complex formula for determining customer lifetime value: has one of the easiest customer lifetime value formulas around:

The simplest way to estimate lifetime value: Plug actual or estimated (if you’re in the planning stages or just starting out) numbers into the following equation:

(Average Value of a Sale) X (Number of Repeat Transactions) X (Average Retention Time in Months or Years for a Typical Customer)

An easy example would be the lifetime value of a gym member who spends $20 every month for 3 years. The value of that customer would be:

$20 X 12 months X 3 years = $720 in total revenue (or $240 per year)

Now go plug in your numbers or ask your analytics team to do the math.

The lifetime value of one of my customers is: $__________________.

Use your results to implement and test customer acquisition and retention strategies. Rinse and Repeat.

Fire up your customers for a lifetime. Get them excited about your unique loyalty programs. Gear them up for success in their personal and professional lives.

Keep your business focused on building hot customer relationships and your company will see the light to a profitable future.

5 Ways to Build Hot Customer Relationships - The Fire-Building Process that Sparks Profits and Long-Term Value

Comments are closed.