June 2024 - 35

POHMER ON ...
you do and how you do it, all focused on driving the value
proposition with your most important customers.
Successful marketing-driven companies are focused on the
lifetime value of a loyal customer, not just the sales made to
them today. This customer is the one that keeps you viable and
in business for the long term. This is the customer who should
be most important to you - the one where you place the bulk
of your emphasis and the one you strive hardest to satisfy.
Considering Lifetime Value
Here are some examples comparing a transactional and a
customer lifetime value perspective.
* Supermarket chains like Kroger or Albertsons look
beyond their customer spending $120 per week to their
potential lifetime value over 50 years of $312,000!
* Starbucks doesn't only look at their customer spending
$6.90 for a latte 4.2 times per week, but rather that
same customer spending over $1,500 per year, and
$37,674 over a 25-year span!
* Coca-Cola looks beyond the $10 their customer spends
on a 12 pack of Coke products each week to the
$20,000-plus in purchases over a 40-year life cycle.
If these companies tried to justify the marketing and
advertising investments they make based on just the
weekly or monthly customer purchases, their return
on investment (ROI) would fail miserably. But as an
investment to establish and nourish a brand relationship
that transcends decades, it makes perfect financial sense.
Further, even at $6.90 for a cup of coffee and looking at
things transactionally, it's tough to justify Starbucks allowing a
customer to literally set up shop in their store (squatters) and
provide them charging stations and free Wi-Fi. But viewing
things from a longer-term perspective of a month, a year or a
lifetime, it's a very viable investment on an ROI review.
Since you're measuring the transaction value and
frequency of visit with CLV, you can more easily measure
the effectiveness of new strategies, products and programs
to help drive increased transaction value or frequency
of visit. But building on the relationship to maximize
the potential of CLV is all contingent on being able to
consistently maintain higher quality standards, service
standards and the overall experience delivered.
The retail experience is supposed to be us identifying
customers' needs and then providing the environment and
products that meet those needs. It's understanding that we
need the customer. She doesn't need us; she has alternatives
to what and where she buys. It's critical for you to identify
your core high-purchase/high-profit customers with whom
you already have a strong relationship, then add value to that
relationship that will make them customers for life.
Stan Pohmer is president of Pohmer Consulting Group in
Minnetonka, Minnesota. He can be reached at spohmer@
pohmer-consulting.com.
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June 2024

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