Ritz Carlton co-founder Horst Schulz estimated the lifetime value of a Ritz customer at $300,000. How did he determine that figure is anyone’s guess. However, the fact that he did estimate the value of a customer was meaningful to Schulz’ and Ritz’ success because it signaled that one of the company’s most important assets was customer loyalty.
Rob Markey, a principal at Bain & Company, argued in a HBR article that customer value should be a key metric in determining a company’s worth. He offers four broad strategies for building customer loyalty that when properly implemented increases profits, employee satisfaction, sales and company value.
Determining the Lifetime Value Of Customers
This involves determining the following:
This information can be used by capitalizing on analytics and tracking consumer response to different company initiatives.
Use Design Thinking to Build Loyal Customers
Design thinking is defined at looking through the lens of customers to better serve their needs and actually observing how customers interact with your business. The goal of a product or service is not simply to generate revenue through sales, but to improve the lives of customers that the company earns their trust and loyalty. Using design thinking to create raving fans among your customer base involves making it easier to do business with you, eliminate obstacles that take time and increase stress and tracking customer interactions with the customer. Amazon does this by recommending similar products to ones that customers have purchased and by identifying additional products that other customers have purchased when they bought a particular product.
Organize Around a Customer’s Needs
That’s why asking customers questions at the start of the design process is critical. Who is going to use the kitchen, how often and for what purposes? How much storage space is required and what is likely to be stored? How long do you plan to stay in your home? What are the ages of different users? What works now in your kitchen and what would you like to improve? Asking the right questions and actively and intently listening to the answers will help you organize your proposal to meet the customer’s needs.