I remember him dealing with obnoxious, impossible-to-please customers using a technique that basically boiled down to his pointedly telling them to exit the premises and not let the door hit their hind regions on the way out. He was not easily provoked and his business was never that robust but he could draw the line when he had to. When I heard the expression, ‘the customer is always right’, I thought that whoever came up with that needed to talk to Dad and watch out for the door.
Biting my lip
My next job was in a retail store where the policy was to be very nice to even the most difficult customers. We would never ask them to remove themselves from our customer population unless we caught them trying to stuff a leather jacket down their pants. My following job was with a public utility, where by law, we had to put up with all manner of deadbeats, liars and jerks – called our middle managers. Even those customers who so carelessly and incompetently used our natural gas product that it blew out their kitchen walls continued to be our valued customers if they remained breathing. We remained nice and polite to them, even when they showed up at rate-increase hearings to testify that we were no better than intestinal parasites.
So it is good to remember, with this talk of ‘lifetime value of customers’ that there is also something to be said for the death time value of a customer. The fundamental premise of the lifetime value crowd is that it costs more to attract a new customer than to keep an existing one and the existing customers are where you really make your money.
Cost benefit analysis
The premise of the death time value is it isn’t worth keeping a customer if the money generated by them is exceeded by the cost to keep them coming back. I think it must be harder to calculate death time value than lifetime value because you’re not really sure how much a lifetime value customer will spend over the course of their lifetime but you do have some idea of how much the death time customer is costing you, which is why you are thinking of the word ‘death’. One of the reasons companies want you to go away is that you return merchandise too often. With no prejudice toward females, this is apparently a problem with high-end women’s clothing retailers, where it is too common for a customer to purchase an expensive evening gown, wear it for one evening and then return it with some lame excuse like “it chafed my neckline” or “it caused an allergic reaction that led to an incurable fungal disorder”.
"My following job was with a public utility, where by law, we had to put up with all manner of deadbeats, liars and jerks – called our middle managers "
Identifying the enemy
Some stores have such a low margin that they ruthlessly seek out and banish customers who return merchandise. If you make $1 profit on an item that costs you $1.25 to put back on the shelf, well, it’s easy to see that if you have a repeat returner, you need to identify that person and maybe even pay them to patronise your competitors. Modern CRM systems can identify these problem customers and even complete the paperwork necessary to have them declared enemy combatants.
Think of the high death time value of my friend Rich. He scours ads to find the lowest-cost, all-you-can-eat buffets, then fasts for two days before descending on one. He once ate $78 worth of food for an outlay of only $1.99 (not counting the cost of his subsequent stomach-pumping). Sometimes, he will even complain about the food in hopes of getting it free. I know buffets in my city are getting more and more interested in Rich’s death time value. He’s hoping that they’ll pay him to eat somewhere else and they’re hoping that a cholesterol-induced heart attack may hasten the start of his death time.