What is a repeat customer worth to your business? What is it worth if that customer keeps coming back again and again? I can not think of many businesses where the bottom line would not benefit from seeing the same customers over and over. So why then do many businesses discount the value of that?
Glenn Ross, my fellow AllBusiness.com Business Adviser, wrote comparing the practices of the recent Home Depot CEO (Robert Nardelli) as compared with those of Henry Ford. Ford got loyal, highly productive workers by shortening the work day and paying better than average wages. Nardelli cut Home Depot’s workforce and lost business to competitors who offered better customer service.
What really got me about Glenn’s post, though, was he focused not on the value of the repeat customer but the cost of losing customers:
Remember, Generally Accepted Accounting Principles (GAAP) does not measure customers who don’t come back. Nor does it measure the number of customers who walk out of stores in frustration without buying anything.
Think about the cost to your bottom line if customers walk away and don’t come back. What you can do to improve your customers’ experience? It may well begin by hiring employees who feel valued and understand that customers are to be valued, too.