Companies like Verizon and AT&T have millions of customers who have been with them for many years. These companies spend a lot of money in acquiring new customers. For example, they give new customers subsidized phones in return for them signing a 2-year contract. Many customers continue to remain with the company after the initial 2-year contract term is over. The reason they can spend money to acquire new customers is because they have guaranteed return for at least the initial contract term. This is what Seth Godin is referring to when he talks about embracing this concept of lifetime customer value.
Most small businesses, however, do not have luxury of asking customers to sign up for a contract. They have to do hand-to-hand combat with their competitors one customer at a time every day. For proof, download a report from your POS system showing how many customers have not ordered in the last 90 days. You may be surprised to find that more than 70% of your total customers have not come back to your business in the last 90 days. And you are not alone. Most small businesses have far less repeat customers than what their owners would like to think.
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