Short Termism and Lifetime Value

By Bob Morrell on May 3, 2022

We recorded a podcast recently for our ‘Bob & Jeremy’s Conflab’ channel which I am expanding on a little here. The paradox is simple. There are brands that know the potential lifetime value of their customers is many thousands of pounds, so if they can attract enough customers – and keep them, then that ensures their success. At the same time, those same brands, will appoint people who want to maximise share prices and customer numbers, often at the expense of that lifetime value. When was the last time a CEO was appointed who had a 10-year plan? The temptation to acquire customers is high, because the city appreciates customer numbers as a key metric. I’m not sure how closely they appreciate the churn of customers year on year. But if you can grow over a couple of years that looks really good and triggers life changing bonuses and dividends for shareholders. What it also risks doing is harming the medium to long term futures of the brand and its employees.

We have witnessed massive, household names go to the wall, simply because they would not invest in retention, and right now that investment, through a time of uncertainty, would surely do more to help brands sustain themselves.

We have spent years working in retention for major brands, in some cases training thousands of people whose job it is to keep customers. I think that’s the area that many need to really strategize on. If you think about it, winning low-cost customers isn’t that difficult, but keeping them and asking them to pay more is. That is a skill that many brands have not yet mastered. Please listen to our podcast for more information.