By Tom Borg
Oct. 4, 2012
It has been reported that Wal-Mart takes its customers very seriously, and they very badly want to keep their lifetime customers. In their research they have discovered that each one of their typical lifetime customers are worth a quarter of a million dollars. That's a lot of money!
Think about it. At Wal-Mart, just some of the items a typical lifetime customer would purchase are: groceries, small appliances, toys, garden supplies, electronics, sports and fitness, clothing, household items, pharmacy, automotive services, health and beauty, and pet items. Over a period of 25 years it wouldn't take much to add up to $250,000.
It stands to reason that your business and mine is a lot like Wal-Mart's in that we want to keep as many as possible of our customers for life. Loyal customers are the lifeblood of every business. Without them we wouldn't be able to maintain a very profitable business.
When you stop to think about it, the only people standing between you and your lifetime customers are your employees.
You are probably familiar with what the answer was when one small business owner asked another, "How many employees do you have working for you? The other small business owner replied, "About half."
All kidding aside, let's take this thought process one step further and let me ask your this question: "How much is each one of your employees worth to your company?" For the sake of this article, let's use a yardstick of just one year. Hypothetically, the amount of money one customer would spend with your company over a 12-month period is $10,000. If each one of your employees comes into contact with ten customers per week, then when we multiply that number of customers over 50 weeks this comes to 500 customers per year, per employee. The potential retention power over the short term of one year has a financial impact of $500,000 per employee.
In today's economy we can't afford to retain employees who have the wrong attitude, or are lacking the necessary people or technical skill sets. These people are non-productive and take money away from your bottom line.
Some business owners are reticent in investing in training of their employees, offering the excuse that they cannot afford to invest in them, or if they did, they would be afraid the employees would leave and go work for some other company. To answer these concerns, I remember how one business owner told me that he couldn't afford not to train unskilled employees, keep them, and then have to pay their regular salaries and benefits. As he explained it to me, "I have to look at each one of our employees as a potential profit center. If they don't produce, I don't make money."
We need to hire the best people we can find and prepare them through the right kind of focused training and development programs.
For the employees you do retain, you can't afford not to provide the right kind of training that produces the right kind of skill sets for them. When you do this, they will have even more successful one-on-one encounters with your customers, whether it is in person, on the Internet or over the telephone.
Despite the abundance of technological options that your customers have to interface with your business, for most of your customers, face-to-face or voice-to-voice contact is still the most important.
So how much are your employees really worth to the success of your company? Let the numbers do the talking.
Tom Borg is president of Tom Consulting LLC in Canton, Mich. He works with small and mid-size businesses. He shows them how to find, attract, sell to and keep enough of the right kind of clients and customers and maintain a profitable business. Contact him at (734) 404-5909 or www.TomBorgConsulting.com.