Being a good supplier, offering good products at a good price is no longer sufficient to keep your customers buying from you.

The ever growing greed for cheap products will drive your customers towards your competitor as from the moment their prices are 15 to 20 percent cheaper.

Customer Lifetime Value = (Customer Acquisition cost + Contribution to your Profit - Customer Retention cost) over the time the customer stays loyal to you. Knowing this, the main questions when having acquired the customer are: how do we increase their contribution to our profit and how do we keep the retention cost as low as possible whilst keeping the customer as long as possible (when this makes sense economically of course).

In order to maximize the contribution towards your profit you need to increase the share of the customer and increase the margin where possible. Increasing the share of the customer means that you will try to cross-sell, have him buy the related services from you as well. If he buys your paper for his printers, try to sell the cartridges, maintenance and paper shredding services as well. And let's not forget to up-sell, make him buy the better and more expensive paper.

Minimizing the retention cost is probably the more difficult part of the equation. Identify your cost drivers within this process through analysing data and information from the past: how many visits does it take to keep the customer happy, how many calls, how many business lunches, ... Examine with how little usage of the cost drivers you can keep the customer happy. It might be enough to visit your customer once every two months in stead of every month. Maybe you can replace one of the visits by giving him a call to check if everything is still fine and what is new.

Within this context, I would like to talk about how customer intimacy can help you retain your customers longer and make him less sensitive to cheaper prices.

It is one of the winning customer strategies at the moment. The product/service must always be good, the price may even be more expensive but the relationship must be tight. You are partnering up with your customer and making him like you and your product. When the customer thinks of the product, he will think about you. When the customer thinks about a new cleaning product for his printer he will ask you.

Increasing the level of customer intimacy will allow you to increase your profit margin and creates a barrier for your competitors.

Get to know your customer very well and think together with him. Pamper him a bit and make it a pleasure for him to work with you. This takes a further investment on your part but it is the only way of making a customer genuinely loyal one and if you are very lucky he will spread the word and generate some more business for you.

So, if you want a winning customer strategy that increases your customer lifetime value, you should start thinking "Customer Intimacy".

I know what I'll be working on.