How Long is Your Customer Lifespan?

Gerald JohnsonSabacon Ideas

The customer lifespan is the amount of time that a customer needs your product and or service. Customers leave our businesses for a variety of reasons: inferior products or services, new competition, pricing, poor customer service, internal politics, and yes the customer lifespan. The customer’s lifespan is oftentimes missed as the reason we lose customers. We also must recognize that sometimes customer service issues are the reason that customers leave our businesses. Nevertheless, the lifespan must be understood to ensure marketing efficacy.

Our job as leaders is to ensure that customer loss isn’t systemic, but is part of the natural course of business and not due to poor customer service. Marketers who understand the customer lifespan for their business will make better smarter marketing decisions. Managers who recognize why and when customers may leave their business can better manage the customer experience and cash flow. There are two factors that will influence the lifespan of your customers: the products and services you offer and client size and type.

Products and Services Offered

Keyboard with Product and Service keysThe products and services companies offer will help establish their customer’s lifespan. For example, Babies R Us carries products for babies and parents of babies that are younger than 30 months old. Whereas, Toys R Us might have customer as long as the customer has a child or knows a child between two and ten years old. In both cases the products the companies carries determines their customer’s lifespan.

Businesses, whose products and services are based on lifestyle choices of and events in their customer’s lives, have a customer lifespan that are dependent on external considerations. Therefore, hobby shops will have a customer, so long as that customer maintains their interest in the hobby which could be a few months or many years. The best the wedding planner can hope for is a referral or divorce once the wedding is over. In these businesses, the customer’s interest or involvement with the product or service determines the customer’s lifespan.

Client Size and Type

The customer’s lifespan is not always based on the types of products of services that the business offers. The lifespan of a client is sometimes based on the size of the client. For example, one of my former clients, an accounting and bookkeeping firm, kept losing about 17% of their clients after a number of years of service. The firm worried that their customer service and service in general was not up to par. Upon further investigation, the clients who left the firm did so for efficiency reasons. It became cheaper for those clients to hire an employee to keep the books rather than continue to pay for external bookkeeping services. This does not mean that the accounting firm overcharged for their work or did a poor job. In fact, they did an excellent job of servicing their clients. The accuracy of the information they provided allowed their clients to make prudent business decisions and grow their business. This accounting firm’s clients remained with them as long as the client’s size was in the optimum range for their services.

A group of People holding letters that spell Customer

The types of customers you have will also affect their lifespan. Let’s look at a commercial printer. They might have two types of customers. A business to business customer (B2B) who prints brochures monthly and a mother who is ordering invitations for her son’s graduation party. The B2B customer might be a client of that printer for years while the mother’s patronage may only last that one time. A knowledgeable marketer, needs to know the customer lifespan for each of their customer types. Marketers can target and focus on the most profitable types of clients once the lifespan is understood.

Girl with shopping bagsIn conclusion, your knowledge of the customer lifespan for your business’s clients will allow you to improve your marketing tactics and customer service. A well-defined target customer is the first step in developing a strong marketing plan. You should focus on customers with longer lifespans for greater profitability. Your comprehension of the telltale signs that a customer is on the verge of leaving due to lifespan issues might allow you to stave off that customer’s departure or at least prepare for it.

In order to consistently provide excellent customer service, you must understand why customers leave your business. Did the customer leave because of the customer lifespan or because of errors your business made? Leaders must periodically examine their customer service personnel, procedures and policies to determine why they lose customers. They must understand their customers in order to develop a successful marketing plan and provide superior customer service. The process of analyzing why you lose customers is not fun. You will have your work cut out for you, if you determine a majority of your customer losses is not because of the lifespan. But, you can rest assured that progress will be made if you understand your customers and their lifespan..

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