Secret Marketer: Customer lifetime value is such an obvious concept, so why don’t more marketers get it?

It shouldn’t take a genius to work out that when it costs less to keep a customer than acquire one, it makes financial sense to offer an customer experience that keeps people coming back.

I believe Basil Fawlty, the infamous main character of 1970s sitcom Fawlty Towers played by John Cleese, has a lot teach us about important marketing topics.

Basil runs the titular hotel in Torquay, and is a bombastic snob who wants to be seen as “respectable”, with a penchant for verbally abusing his wife with phrases such as: “Next contestant, Mrs Sybil Fawlty from Torquay. Specialist subject, the bleeding obvious.”

The “bleeding obvious” is a favourite topic for marketers to grapple with too; for example, the concept of customer lifetime value. I mean, how difficult can it be to get your head around this? How difficult can it be to work out that a customer who comes back regularly is more valuable than getting new customers all the time?

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For the uninitiated – and there appear to be a lot of you – it’s really simple. It costs a lot to get a new customer. So, how about delivering a great product and service to ensure that they keep coming back. Then, you can lower your costs and plan your future around the hordes of customers who will keep returning. See also ‘customer retention’, ‘churn rate’ and ‘share of wallet’ if you want to get fancy.

Exhibit A: my mobile phone provider, a well-known brand that spends millions on advertising. However, it appears to spend a heck of a lot less on delivering a product that works when you sign up for their lengthy contract, and even less on looking after you when it comes to the end of a contract.

No phone calls telling me how wonderful I am for staying with them and giving them tens of thousands of pounds. Not even a hint of ‘here’s a free new iPhone 7 for having made huge gross margins from you for the last 10 years’. (More fool me, I hear you say – yes, inertia is alive and kicking in the Secret Marketer household).

READ MORE: Marketers that fail to address brand experience will see loyalty drop

Exhibit B: my local pub. I order a glass of white wine. I get offered a mini bottle of battery acid, masquerading as white wine, which, if spilled, burns a hole in the ground. I ask the barman why, with all the wonderful wines in the world, does he not offer a glass of something a little more interesting than a mini bottle of Chateau Heartburn. He proceeds to tell me that they would cause ‘wastage’. Now, given that, firstly, pubs are struggling to keep customers; and, secondly, regular customers are the bedrock of any good tavern, surely it is not beyond the wit of the pub landlord to give regulars a welcome change and give them a reason to come back?

Maybe it’s time for brands – be it the local pub or a behemoth mobile operator – to grasp the ‘bleeding obvious’. Customer lifetime value, not getting the customer in the first place, is the basic platform for any successful brand.

Forget the mumbo-jumbo brand images of surrogate lifestyles and imaginary experiences; create a great product and a great experience first. Ease up on wrapping it all up in a brand backstory, become a producer of products that deliver and give customers what they want, rather than what the brand wants to sell. That’s how you get to keep customers for a lifetime.

And, to paraphrase another British TV icon who is also a bombastic snob: on that bombshell, see you next week for another edition of the Secret Marketer.