The Big Rock in the Focus Jar

rocks-in-a-jarEntrepreneurs and small business owners have more hats than heads when they are growing and sometimes saving their companies. Given their “head on a swivel” world, what is the one metric they should always stay in touch with? Is it cash flow, market share, sales, or debt service coverage?  My answer is simple, the lifetime value of a customer.


Three key words combine to be the biggest rock in the jar of focus. And we all know that if you get the big rock in the jar, the pebbles and sand tend to fit in nicely.


Lifetime – Would anyone like to compete on customer turnover? Only the scammers and spammers approach business this way. Lifetime recognizes the commitment we all want in our relationships.  To think of your customer like your family changes the way you interact. Decisions become strategic first and tactical second. You don’t ditch your kid for a newer smarter one. You work to bring out the best in what you have while deciding whether to grow the family.


Value – How many of us value our customers?  I mean really value. Have you thought  of all the volume that lifetime customer relationship has meant to you? Have you thought of how many dollars you have saved in searching for a replacement for their business?  Have you valued how much word of mouth referral business a customer has brought you? I continue to do business with people that recognize my contribution and let me know it. I choose being valued over price nearly every time.


Customer – Is anything more crucial to your survival in business than a customer? Is there anything worse than losing a customer? Anything more draining than a mad customer and anything more satisfying than meeting and surpassing a customer’s expectation? The heart of servant leadership is always focused on the customer and not the company.


And the best part of this metric is the power it possesses. When you lengthen the lifetime value of a customer, revenues increase without increasing your costs. Marginal advertising and customer service tend to also go down. When customers feel valued, they become less price sensitive, and they help you avoid having to compete on price.  Finally, when your lifetime value exceeds your competition’s lifetime value, your enterprise value grows exponentially given the increase in both cash flow and the EBITDA multiple. Who wouldn’t pay more for a 25-30% higher length of tenure than your competition?


So keep swiveling but never lose sight of the lifetime value of your customers.

About pro356rick

I am the founder of Pro356 Consulting which focuses on promoting organizational wellness, productivity, and profitability. I hope to share insights I have learned from so many others in living my life. If they prove useful to anyone, then my time here is well spent. While I have a Harvard MBA, I think I learned quite a bit as a 11 year old paper boy. And I know I will learn from anyone who comments back. Wishing you a masterpiece day, Rick
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