Turn Customers into Assets: The Power of Lifetime Value

Hello and welcome. My name is Tavishima Aide. I'm the host of the podcast and I'm making today's recording in church because the kids are having catechism, so expect to hear noise in the background. Now the goal of this podcast is solving business problems. So if you have issues with getting customers marketing your site also or something is holding your business back, then this is the show for you. Subscribe on Spotify, YouTube,

Apple, or any player of your choice. And if you'd love to connect, then call SMS or send me a WhatsApp message on 08064662140. Now today on the podcast, I would like us to look at a couple of issues. The role of customer satisfaction, customer success, customer service. Yeah, we'll look at those three things, define what they are and how these things help to getting the most of our cost most out of our customers. Yeah, let me put it that way.

So, yeah, it's a whole source, a whole host of issues, you know, carrying over from the conversation that we had yesterday because, you know, I got home, delivered stuff to wifey, you know, had another conversation. If you if you listen to yesterday's episode, then you get the background to what it is I'm talking about. So go home to Wifey, deliver the package, then, you know, slept on it and then woke up. And I figured that there's some other issues that we can tease out because the goal of a business is to create a customer, at least according to Professor Peter Drucker.

There are some of you who are going to disagree. Some of you will say that the goal of a business is money. I'm one of those people who used to say the goal of a business is money. There are some other people who say the goal of a business is social impact. There are some people who say the goal of a business is personal development, and there are some people who say that the goal of a business is all three. However, reading Professor Peter Drucker, I've realised that the main reason why the main, the,

the main purpose for having a business is actually is to create a customer. And that is because unless you create a customer, there is no money. So if you're one of those money people, then actually we have to create a customer first because it's only when we have a customer that we can now get the money. It is only when we get a customer that we can worry about financing some sort of social impact. And it is only in the process of trying to create a customer,

keep a customer or satisfy a customer that we go through the process of personal development that being involved in a business. I'll put it and you catch my drift, trying to grow a business is also a journey in personal development for example, put it that way. So, but the first thing we have to do is to create a customer because if we do not create a customer, then all those other things that we want to do, all those other things that we want to achieve, they are going to come to naughty.

So with that in mind, now the goal of a business is to create a customer. I think we business owners, Nigerian business owners, we should start thinking about a few things very critically. Is the goal to just get somebody? I need to get one single transaction from them and then that's it, we have one. Or is the goal to get a customer, we get one transaction bomb, but then we keep them for a while. And so we can maximize something that our tech brothers and sisters like to call customer lifetime value.

Now this is the idea behind customer lifetime value. Customer lifetime value means that a customer is worth just the small coins that they're giving me now. So let's say I run a neighborhood shop and I sell earphones and the young man comes to buy earphones 35. My profit on the earphone is 500 naira. Customer lifetime value means that this guy is not just worth 3/5 and the 500 naira profit margin. If I can get him to come back to my shop multiple times a week,

multiple times a month, multiple times a year, he is going to be a whole lot more. Let me repeat, if this young man comes and buys one set of earphones from me for 3500 naira, let's say profit margin is 1 Ki, never get him to come back. All I have gotten is single transaction one time. That's all. But there's a whole lot more to be had if I can get him to come back multiple times during the week, multiple times during the month and multiple times during the year.

That is customer lifetime value. So if he buys earphones from me today, he buys Tom Song from me on Friday. In two weeks time he comes to buy, excuse me, he comes to buy a cigar and then in another three weeks he comes to buy bread and then in six weeks he comes to buy a cattle of Indo meal. You guys can see how everything is, you know, is adding up. Small, small, small. So this young man is worth a whole lot more than the earphone that he came to buy.

And so I'm making today's podcast episode because I think some Nigerian business owners don't understand that it's not just about one time single transaction, but we need to maximize customer lifetime value. Now, for those of you who've been listening to the podcast from day one, you will know the story that I mentioned about me and DD when I was in Kano and about how when I was leaving, the guy that actually sell me bread felt very sad and the guy dashed me too low.

So by the time I got back to the house now and I told the dead see what happened though I told this guy I was leaving, he was very sad. He prayed for me and then he now dashed me two bread. And then did they say, of course, now of course you dash you better and of course you'll be sad. And I said, why did they say think about it? How long have you been here? I said, I've been here for like a year, like 2 months, two months, three months.

So yes, I say how many times used to go and buy bread? I said oh, every other day and every time we wanted to go and buy bread. How many loaves did you buy? So I used to buy 2 loaves of bread when he put it that way. And I understood why that guy was sad because I was not just worth one loaf of bread because since I landed in Kano on a Deja Rd. where we used to stay, I used to buy bread every other day. On Monday I'll come and buy 2

loaves. Wednesday I'll come and buy 2 loaves. You know, Thursday come and buy 2 loaves Sunday come and buy to lose. You know like that like that because I was a bachelor at the time the day the guy who was squatting me was a bachelor as well. Once in a while, his wife Ulama well now his wife, then his girlfriend, she will pass through Moses, our good friend was a chef in Tahir hotels, you know will come through so and then I'm attorney Cano can be very, very cool.

So, you know, we'll just sit down, be watching TV, you know, be chewing on some bread and drinking tea and abusing politicians. So that was my own contribution to the household. So the guy was sad because I was not worth one loaf of bread. I was worth how many loaf of bread? Now if I'm buying Tutu every week and now sometimes I was branching that guy like 4 times. So I worth 8 loaves multiplied by four weeks, I'll be 8 * 4 is what was I is I48 hope I don't display my poor man skills.

Then multiply that by 52 weeks of the year. Abby No 8 lows multiplied by four weeks. Then take that and then multiply that by 12:00. So that will get the true value of what it is that I was worth. So we Nigerian business owners, we need to start thinking in those terms that it is not just one transaction. The goal is to create a customer. The goal is to get somebody to come back over and over and over again and if possible refer their friends, their family members, their associates so they can come and buy from us as well.

So that's how we're going to be looking at the role of customer satisfaction, the role of customer success and the role of customer service in growing our businesses. So like I said, the background is this whole thing about me going to pick up a, a delivery for wifey yesterday, That's my wife and it was from a fashion vendor on Instagram who is based in Lagos. And I went into detail yesterday about the field customer experience.

So for the full details, just listen to the previous podcast. There's no point in me repeating the whole thing over here. Now, let me just give you guys the fallout because yesterday I made the podcast recording when I picked up the package and I made a quick recording of my own ideas about how the business owner could have taken responsibility for a number of things. Then by the time I go home now because it's closed now and you know, like most Nigerian babes,

my wife loves clothes. She loves brand new clothes, of course, not as if we get to buy them every day, especially now that we have kids. You know, when we're young man, we used to live the life, you know, buy clothes, go to movies, you know, go to cinema each or my, you know, just the flex anyhow. But then you have kids, you know, you have responsibilities, you grow up. So it's not as if we buy stuff all the time. So I was thinking she was happy now she would get to see her new clothes.

But by the time I go home now and I gave her the package, honestly my wife was not enthused at all. She was just, she just took it, no excitement, no nothing. She opened it should now look at it up and down. She looked at one trouser, she said OK, I wanted this one for work. She look at one shirt, I wanted this one for this. Then she now just crumpled everything and then she now threw it on the clothes pile and then that was the end of the whole thing.

I repeat my wife who likes clothes only normal. What happens is when we receive a delivery, my wife would say come and sit down. She'll now do fashion parade for me. She wait, she'll walk up and down. She'll look in the mirror. She will check her side. She will check her front. She will check everything. You see how everything is. Do you like this one? You don't like this one? I can customize like I can accessorize like this.

I repeat. What my wife did was she took the thing, no enthusiasm. She opened it. She look at one, she look at another. She now cropped everything. She now threw it on the clothing pile. Yeah, like that. So the question that I want to ask you now, listening to the podcast is with everything that has happened, the gist that I've given you yesterday and the gist that I gave you today, has a customer been created? That's the question I'm asking you.

Has a customer been created? Or has this Instagram fashion vendor, all she's been able to do is she, has she been able to create a single transaction? That's all. Has she created a customer? Is there any customer lifetime value? Do any of you think my wife is going to buy from her again? Do any of you think my wife is ever going to refer and given that, you know, my wife and I have already blocked this person, you can say that there's already been some so an unblocked and reported, you know, some negative fallout.

If you haven't listened to yesterday's episode, go and listen. There may be these questions will make more sense. But with all the story we've been saying now this fashion entrepreneur, yes, he has collected money, but has she created a customer? And is this how we should be conducting our business? Is this how we are going to be creating customers? Anyway, Like I said, you know, as far I'm a business person now, so I understand that things happen every once in a while.

So I still try to maintain a cordial, you know, somehow, somehow with the woman. And so I sent her the screenshot that oh, that the phone number was off, that that was the problem. You'll believe what the lady how as far as she's concerned, her attitudes are, look, that is not my fault that the logistics person had the wrong number. That was our responsor. It's not my fault the logistics person had the wrong number. If you want to know the details,

just listen to yesterday's episode. But then it brings me back to another question I keep asking on the podcast and I keep asking Nigerian business people when we meet, live in the flesh and ask them, look, are we business to make money or when business to be right? I mean, there's times when things are criminal or unethical. I mean, and in that case, yes, I will put my foot down and look, we are not going to do anything criminal here.

But outside of that, look, let me frank with you, There's sometimes that I'm like, here's the customer's fault, man. I'm after this money. That's some things. I'd also look, so I can just get this money. I never overlook anything unethical or criminal. So are we in business to make money? Are we in business to be right? I've already mentioned the things that you should have taken responsibility for in a previous episode.

So just listen to yesterday's episode and you will get caught up to speed. Well, now let's define a number of things that have come up since yesterday because yesterday I spoke a lot about customer service. Today, I'm now mentioning customer success as a business function and customer satisfaction as a business function. What do these things mean? What is the difference? Customer service, of course, is reactive, especially in Nigeria,

customer service means yawa Dong gas. The customer is pissed, something has happened, there is a problem. We are dealing with this problem. So some people say that the definition of customer service is broader than that and I agree with you. I'm just saying that for the purposes of Nigeria, when we hear customer services, it means something has happened, Yahoo has gas, customer is angry and you know the SHIT has hit the fan and we have to resolve that.

So that's what customer service means. Now customer success and customer satisfaction on the other hand are a little bit proactive. They're aimed at preventing problems or trying to figure out problems that are festering, dealing with things before they become a big issue. So customer satisfaction is the business function where we're trying to figure out auger customer, are you happy, which is what I recommended that the fashion entrepreneur from yesterday should have.

In a business, you should have a customer satisfaction function. There should be somebody whose job it is to call the person to say, Madam, have you received your offer? Was your offer in one piece? Was anything damaged or stolen? Did you get all the quantities that we promised? Well, I hope you are happy. We hope everything fits. We hope you are glad. Did you get it for a birthday party and everything? I hope you look absolutely stunning on that day.

Thank you very much, Ma for doing business with us. We're looking forward to wowing you some more. We hope you will come back and do business with us in the future. I hope you don't mind. I want to, I hope you don't mind to reach out to you from time to time to let you know what new things that we have in store. OK, Enjoy the rest of your day. Ma got the phone, right? That is the customer satisfaction function in the business that we all should have.

Now customer success on the other hand, is the function of the business where we're trying to figure out if the brand promise of our product was our service was fulfilled is taking things a little bit further. How will I put it now, OK, when somebody buys a product or a service, the Nigerian person thinks that they're just buying one product or one service, but actually they're buying a whole lot more. Like the example that I gave a couple of days ago about the person who engages a fashion entrepreneur and she's looking for a dress because her sister is getting married.

And the reason why she's doing that is because she wants to sleep like she wants to kill them at the reception. Some people will say she's buying the dress. No, she's not buying the dress. With the particular example I gave, what she's buying is an opportunity to be noticed or to upstate her sister or to cause some chaos, some good chaos on the floor because she has a right. So you know, as a fashion entrepreneur, if you call that person back, that was addressed.

OK, The thing held no was OK, you're happy with it. That's customer satisfaction. But if you asked her that, I hope you I hope you killed them as in when you got there. I hope you killed them. And when the ladies like her now you should have seen me when I was there, people could not keep my eyes off me. The eyes off me. The photographer man was just taking picture of me anyhow. Anyhow, as in there you try that dress you did for me was was was one in town.

By the time you're having that kind of conversation with your client. Now as a fashion designer, you have been able to exercise the customer satisfaction function. A customer is happy, you have also been able to achieve. You've also had the conversation around customer success that the brand promise was fulfilled. The reason why she bought this dress, the promise was fulfilled. So we in our businesses, we need to have these functions.

It is not just the fashion entrepreneur from yesterday that had, you know, this messed up experience. You know me, her and wifey as by the delivery, but every single person, even you that you're listening. So why do all these things matter? It matters because this is a very simple formula. If you have a happy customer, by the way, we say customer means somebody that has bought something from you before. We are praying that the person will buy again, but at least person has bought something from you before.

So this matters because when you have a happy customer and the brand promise was achieved, Excuse me and if there any problems the problems are resolved. It is then that we stand the chance of getting a loyal customer and a loyal customer is somebody who buys from us again and again and who also sends people that see this guy, this, this babe, this is my person. Anytime you need this and this and this go and buy from that person.

It's a very, very simple formula. Is the customer happy? Yes, Plus, did we achieve the brand promise? Yes, plus were there any problems and did we resolve those problems? Yes. It now equals loyal customer. Loyal customer equals repeat purchase. They keep coming back again and again. Plus referrals. Remember what Professor Peter Drucker said that I repeated that I said again at the start of today's episode. The goal of a business is to build a customer.

We want somebody who'll be coming back again and again and again. Because it doesn't matter whether you sell business consulting or whether you sell software, or whether you're a fashion entrepreneur, or whether you sell bread, or whether you sell super glue or slippers, or whether you sell podcasting services or whether you sell computers or mobile phones. If you just get one single transaction from somebody, it is not a win.

The win is when you get somebody coming back again and again and again. For example, in Lagos, the first jalopy that me and my wife brought that we now carry to Abuja, it was all from the same person that we bought. We bought the car from the same place that my brother-in-law bought from the same place that my mom see bought from the same place that my brother bought one guy. Excuse me, one guy hooked us up, five people.

That is the whole, that is what I'm trying to say. Where do you think big money comes from? Big money does not come from selling one car. But if you do a good job and one person is happy because the first person was my brother-in-law. And my brother-in-law says bro, come and try this guy. My brother buys a car and then he says bro, come and try this car, this guy. And then I buy a car, their mumsy also needs a car. And then we say come on by I

mean can you see that the money is not in one transaction. The money is in keeping people nice and keeping people happy. Now, of course, we've not gone to buy from this guy again because you know, life happens. My brother has Jack Bar, my brother-in-law too has Jack Bar Mumsy is no longer in Lagos. Me and wifey were now in Abuja. You know, it's just one of those things but really there is no money in just selling one car.

There's money when you get a loyal customer who is coming to buy from you again and who is also bringing people to come and buy from you in the future. So that is the goal. Don't be like this Lagos fashion entrepreneur who as far as she's concerned, she has collected 37K. It's not her fault, it's not it's everybody's fault, it's my wife's fault, it is my own fault, it is the logistic from it is everybody's fault apart from my own fault.

As actually as consensus can collected her money. Verily verily I said on TV there's no profit in that 37 round. Not real profit. The real profit would have been in my wife being happy. I know how you may not know for you May 1 is never enough, you say. And that one that I bought was was last year. It was last year Christmas or was last year on my birthday. So this year Christmas, I supposed by another one or for this best they are supposed by another one.

Sorry, I'm not trying to be patronizing, you know, I'm just saying as it is, at least in this part of the world anyway. I mean for most men, one is 1. OK, I bought the shirt two years ago, but the shirt still fits me now. I wore it last year on my birthday. I can still wear it this year on my birthday. So that's a that is OK. That's what the profit is. The profit is that somebody buys now, buys on birthday, buys on Valentine, buys on Christmas,

buys on no special occasion except that a deal pulled through and I have some extra money. So I saw it on your Instagram page. Let me just buy again. That's where the real money comes from. All right, so another question, since this is now 23 minutes, whose job is it to do all of this now? Because honestly, this job is plenty. Customer service now is plenty on his own customer satisfaction. You never heard of it before,

but now you know it's a business function, customer success. You've never heard of it before, but now you know it's a business function. Whose job? It depends. The one that I prefer is it is the sales team's job, whoever it is that is responsible from lasting with the customer from the beginning on to when you collect deposit. In my own opinion, that's the person who should be following up on all these things from the beginning to the end.

Even if you have an admin person or a customer service person who will be doing it, but still the salesperson who started this transaction from the beginning onto collection of deposit, this person should be in touch. And the reason why is because this person is the face of your company. Yes, you have built an expensive brand and everything and you're the one who is on the social media and everything. But if when the person picked up the phone and started this thing, the person was talking to Nkechi and the person has dealt with Nkechi until the end, then Nkechi is the face of your company.

And so I think Nkechi is the one as a salesperson who should be doing nothing or Bio or Julius or whatever the person's name is. Now, if you're self-employed, that means not only you, the also you're the business owner, then unfortunately this is your job. You have to be doing it. But if you're making small progress, you know, maybe it's you. You don't have a salesperson, but at least you have one admin or one secretary.

Well, maybe you can outsource it to admin. But remember, I really think the best thing is for the person who initiated this thing in the beginning should see the whole thing through, even if admin still will do that again as their own job is not a problem. If somebody receives 2 calls from the business to say I trust you are happy, believe me, it's not a bad thing especially in Nigeria because in Nigeria, most people are not even receiving one call from a business that will say you bought from us,

were you happy? So the final thing that I'd like for us to take away from this, not just today's episode, but yesterday's episode as well is this. So the transaction was not that big, was about 37 grand if I remember correctly. But just remember the goal, remember what Professor Peter Drucker said, create a customer is now creating one of purchase. So the goal is not making 37K today in one transaction. The goal is to try and set up your business so you can make multiple 37 K transactions in the future.

It's also to try and see how many other 37 K referrals can you get in the future. And then over time, how can you raise this 37 K transaction into 45K75K205K, 400K700K. Some of you say, how can somebody spend 700K on clothes? People do. You're just not moving into circles yet. People do. I was talking to one of my clients. The guy was teasing me that I do all my work from my phone because I do do all my work from my phone.

And I told him that I've been seeing this tablet, this folding phone I want to buy. So my client started healing me say, ah, you've arrived. You're a big boy. I say big boy how? He said, you don't know that phone is 2.5. I shout. I say 2 point what he said, 2.5. So yes, people spend 2.5 million on the phone. You're just not rolling in those circles yet. So yes, we will spend those money on clothes. So that is the goal.

It's not just to collect 37 K today. I say it's not my fault. The goal is to collect that is 7 K today. See how you can get the amount to spend 37 K next month, maybe in a few months. See how you can get referrals from her. Let her send us a standing law too. Then by next year, you see how you can get DuMont to spend 45-K200K. We're going up and up. That's the whole goal. Basically, we should do anything to avoid customer attrition or customer churn.

Customer attrition, Customer churn just means customer loss, just means customers don't you know, customers they miss. That's what customer attrition means. Now there are some things that we can do nothing about when it comes to customer attrition because like I mentioned, some customers who attrition, some customer who just lost because he's normal. Like in my own case, me and my wife, we moved, Muncie moved away. My brother-in-law and my brother, the Jeopardy, they also moved away.

So some of your customers will move. That's the reason why they're not buying from you. Again. Some of your customers priorities will change, Like take my wife and I, all those three are places and Shama places we used to go to. Priorities don't change. We have children on ground now, so we can't be eating Shama every Wednesday and Friday. So for the customers, priorities will change. What else? Then? God forbid, It's unfortunate,

but you know, people also die, so some customers die. So for those ones, there's nothing we can do anything about people moving, customer priorities, changing, customers change, moving into a different phase of life and then people dying. We can do nothing about that. And we can, well, we can pray that people should hang around, but customer attrition that comes from poor customer experience, please avoid it. Customer attrition that comes from product or service issues,

please avoid it. Those two in particular, please avoid it. And that is the reason why I'm making today's episode. And I think I'll just wrap this up, bring this up to a close, and I'll bring up this matter anymore. Well, Please remember, I'm not trying to badmouth anybody's business at all. It's just that I was trying to make these things practical. So rather than discuss these things in theory, when I see live cases, whether it's my own clients or whether it's something I've seen, something I've heard, I like to bring in and talk about it so that this is live are practical and relatable.

So that's reason why I brought it up. And by the way, I didn't mention on the lady's name. I'm not trying to shame anyone. I'm just trying to put out some Nuggets here so that we can all grow together. So that's it and that's all. Remember if you'd love to connect then call SMS or WhatsApp me on 08064662140. Thank you for your time and attention. I'll catch you next time. Same place in your headphones or in your speakers.