Stress can make something brittle (meaning "liable to break or shatter"). When something is subjected to stress, it is more predisposed to breakage.
You may not think of the word "brittle" within a business context, yet it is an excellent word for understanding the strength or fragility of your customer relationships. When a customer relationship has reached the limit of its strength, it usually either deforms or fractures.
Strong customer relationships translate into financial value. The notion of a relationship suggests a long-term view. The strength of customer relationships are enumerated in two powerful metrics: Customer Lifetime Value (CLV) and Share of Wallet (SOW).
As a marketing and business metric, CLV is a forward-looking financial indicator and provides one of the best customer-centric key performance indicators. It is the sum of cumulative cash flow of a customer over his or her entire lifetime with the company, after accounting for the average cost of capital to acquire and serve the customer.
SOW is the percentage of your customer's total spend for a product/or service.
Over a decade ago, Peppers and Rogers posited that the purpose of building customer relationships was to grow SOW (i.e., the percentage a customer spends in a category that goes to a particular brand or product).
Timothy L. Keiningham, Lerzan Aksoy, Alexander Buoye, and Bruce Cooil conducted a two-year longitudinal study of more than 17,000 consumers, looking at purchasing across a dozen industries around the world. They found that the rank that customers assign to a brand relative to the other brands they use predicts share of wallet.
Strengthening customer relationships merits your effort and investment.
Take the first step (it's free).
You may also like:
- Marketing in Controversial Markets: How to Build Trust
- Keep Consumers From Cheating on You: Foster a Community to Stay Together
- Six Ways to Be More Genuine in Your Customer Interactions
- The Power, Potential, and Process of Personalized Marketing [Infographic]
- Customer Satisfaction 101: A Guide [Infographic]