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« You are not the lowest common denominator | Main | Steal, don't invent »

Thinking lifetime (don't break the chain)

The traveling salesman, the carnival barker and the old-time businessman can hit and run. Make the sale, cut your costs, move on.

Today, though, in the connection economy, two huge factors are at work:

1. Subscription. The lifetime value of a customer is high and getting higher. You might buy $50,000 from one grocery store over time. If you own an inkjet printer, it might come to a thousand dollars a year in toner expenses, with a profit margin approaching 90%...

2. Spreading the word. Every customer is also a media outlet and a publisher if she chooses to be. That means that unhappy news spreads far and fast (and that remarkable products and services need lower ad budgets).

But this seems to be almost impossibly difficult for companies to embrace. A simple example:

HP offers inkjet printers at a slight loss, knowing that over time, they'll more than make it back in high-priced toner. When a customer shows up at their website then, searching for a new feature like eprinting or getting their wireless to work, it's both an opportunity and warning sign. Drop this ball and it costs thousands of dollars in lost profit.

At every step along the journey, HP drops the ball. The website, knowing my model and serial number, shows me pictures with instructions that don't match my printer. The site won't let me into the chat support window, because my printer is out of warranty. And when I call, they put me on hold and then route me to an overseas call center. After fifteen minutes, I'm told, "your printer is obsolete, you should buy a new one."

The thing is, a customer is never out of warranty, even if his product is.

Twenty minutes ago, HP knew everything they needed to know to tell me that I needed to buy a new printer. Think of all the ways they could have used this as an opportunity to make it more likely that the new printer would be an HP printer. Instead, they punished me for a quarter of an hour and then demanded I buy something new. They broke the chain.

Sure, I had to buy something, so I bought a Canon.

Of course, it's entirely possible that Canon's support is no better, but that's not the point. Every time the chain is broken, value is lost. I lose value, they lose value.

Think of the interaction at the deli counter or the pump or the bursar's office or the alumni office or on the website from the point of view of the customer and the chain. Where are the moments where you might lose her forever? What are the key places where you need to intervene and invest in the relationship instead of milk it, or drag it through the mud? Assuming that your competitors are just as selfish and metric-driven as you are isn't a great strategy, because you're still losing when you break the chain.

Support is not a cost center, it's a profit center. Treating customers with urgency and clarity and respect (maintaining the chain) is more urgent than ever. But companies are busy measuring time on the phone or cost per hour of support people instead of even trying to measure customer churn.

Think lifetime, all the time.

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« You are not the lowest common denominator | Main | Steal, don't invent »