The Lifetime Value Of Your Customers

The cost of acquiring new customers is reaching untenable proportions. Appointments with prospects are nearly impossible to obtain, print buyers seem less knowledgeable about what's required or what's important, and price too often appears to be the driving factor.

Mirroring suppliers' experiences are buyers' situations. Support staff have often been radically reduced, buyer responsibilities have almost always been expanded, and written specifications of what's needed are practically non-existent.

As a reflective rule of thumb, whenever we hear cries of pain, we should also hear "opportunity."

If we're interested in quickly improving our in-plant's revenues and performance margins, be aware that our single most undeveloped opportunities could not be closer. They're called "current customers."

Be aware, though, that the greatest value of current customers to your in-plant is not so much what they spend, but all the other values they can contribute—if we're open to new opportunities for those contributions.

Current Customer Value

Education: Most customers know more about their market(s) than we know as their print supplier. Yet most of us know that what we learn from one customer can be helpful in dealing with the next customer, who may be in the same or similar business, or have similar needs.

For instance, if we learn to support a customer's trade shows through uniquely designed fulfillment services, there's no reason we can't offer similar services for other customers' trade shows. Experiences and understandings gained in creating perceived value for one account can often be offered to other customers with similar needs.

In fact, most in-plants would do well to inventory each product and service offered to all their accounts, and then review which customers aren't using certain services—but probably would—if they knew more about that particular offering's benefits. Asking the question, "If anything were possible, what would you change about how you buy and utilize print?"can open radical and invaluable opportunities.

Ideas: Whenever an in-plant introduces a meaningful new product or service that's quickly accepted by one or more customers, there's a natural tendency to think, "Aren't we smart?" Yet, on questioning, we often learn that at least one significant account demanded that the new service be available, or they would take their business elsewhere.

Every request from current customers, regardless of how subtle, should be documented, tracked and periodically reviewed. Markets constantly move. And if everyone in a supplier organization is attuned to the importance of those movements, along with subtle, indirect customer complaints or requests, then there should never be a lack of opportunity to become more important to other current customers.

References: One of the "buying signals" astute buyers offer is, "Who else are you supplying that I can talk to?" Knowing which buyers will practically swear by your performance can be "the clincher" for gaining new customer business as a result of your current customers. Yet, most in-plants fail to ask their most ardent supporters, "Do you feel comfortable with our using you as a reference with new departments or accounts?"

Referrals: One of the "secrets" of today's buying environment is that professional referrals are one of the quickest ways to open new doors. Buyers generally don't have time to visit with prospective suppliers—with all their other responsibilities. If they need a new supplier, they've quickly learned to call a trusted current supplier or friend and ask their advice. Most of us don't recognize that every current customer could potentially introduce us to one or two prospects—every year.

More work, when you need it: One of the questions I believe should be asked on almost every order is, "How long do you expect this order to last for you." Or, "When do you think you might need to reorder?"

Too often an in-plant has predictable periods (and particularly in the first two weeks of each month) when it is slow, but it is overwhelmed with work in the last week of each month, and particularly the last weeks of a calendar quarter. Customer service folks should be tracking when customers are expected to reorder, and then proactively contacting those buyers whom they believe are flexible—and who would be willing to place their work two weeks to a month before they normally need the work produced and delivered.

As a footnote, it can be helpful to look at what work came in the previous year at this time—and that appears to be seasonal. Proactively contacting those customers a week or even a month in advance can provide immediate and flexible work for slow periods. Every order gained through this process lowers your overall costs (and especially overtime), while often increasing your margins.

Flexibility: A "jammed schedule" raises everyone's stress level. What's surprising is that most suppliers with this situation don't make the effort to contact current customers with work already scheduled for the purpose of learning if there's extra time available to produce that buyer's work, in order to bring in more work that's trying to come into your plant.

My experience is that at least half the time there is extra time available, and the buyer who can provide extra time to the supplier delights in doing the supplier a favor in order to gain "a chit" or "I owe you" for needed future performance. Note: additional time to produce a customer's work often lowers the cost of both this customer's work and other work you're producing. That lower cost is often not reflected in your accounting system.

More profitable, predictable work: If I ask the question, "Who would you rather produce work for, a new account, or a current account?" the answer is almost always, "a current account." Spoilage is usually less; production is faster and more predictable; and managing your production schedule around that particular job is also more predictable—so that more work can reliably be scheduled.

Also, buyers generally prefer working with suppliers who are relentlessly pursuing the work from that buyer that they don't yet have, versus the supplier that seems content and reactive.

With buyers increasingly consolidating their suppliers, it's the smart suppliers that demonstrate they are not content until their current customers are awarding them all that's available.

Proactively managing current customer relationships, and the additional contributions current customers provide, can radically change not only your customer's value to you, but also your profitability.