David Cummings on Startups

Personal Lifetime Value Instead of Customer Lifetime Value

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David Cummings

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Inc. magazine’s latest edition has a great article up titled How to Sell to Humans where the author Jeff Haden interviews HubSpot’s Dharmesh Shah. Here’s one of my favorite passages:

A delighted B2B customer is a long-term customer: He will tell friends and colleagues (boosting your algorithmic brand), and if he leaves his job, he’ll take your business with him. But forget about Customer Lifetime Value. Person Lifetime Value matters most.

Over the years I’ve seen the power of a happy person repeatedly occur in three common use cases:

  1. Referrals – Word of mouth referrals are the best sales introduction possible, and happy people are most likely to make referrals
  2. Job Changes – When a happy customer changes jobs, it’s one of the best opportunities to earn a new customer
  3. Account Cancellations – Even with a seemingly successful account, everything can change when the cheerleader for the product leaves, demonstrating that people drive decisions, not companies

The next time someone brings up customer lifetime value, take it up to an even higher level and think about personal lifetime value.

What else? What are your thoughts on personal lifetime value instead of customer lifetime value?

Comments

4 responses to “Personal Lifetime Value Instead of Customer Lifetime Value”

  1. jeffrodrian Avatar
    jeffrodrian

    I think if you are doing your job right, your customers often feel a connection that goes beyond a product or service. You’ve not only gained their business, but their respect. This respect for you then works wonders on your behalf through their life, wherever they may go. Definitely something that adds value to your business, both tangible and intangible.
    Great stuff!

    Reply
  2. brandtpage Avatar
    brandtpage

    I have weeded out so many email subscriptions that I have signed up over the years, but I will not stop reading yours.

    You keep it simple, to the point and for me as a b2b entrepreneur running http://launchleads.com I value just about every post you out out there.

    Thanks for taking the time and energy in putting this content and experience out here for others to learn from. It’s inspiring me to think about doing the same.

    Brandt “Bubba” Page http://launchleads.com Sent from my iPhone

    Reply
  3. Peter N. Hebly Avatar
    Peter N. Hebly

    Consider that it’s not only people who represent and drive decisions at the (B2B) customer, but it’s also people, often dedicated sales people, representing your own company in business. These people get measured and compensated on the basis of customer retention. For clarity, the customer in this context is the company who paying the bill, not the perso driving the decision. Yet, a focus on Personal Lifetime Value as proposed remains valid. The idea is that to mitigate the risk of loosing a customer, a sales person should seek and delight more than one potential sponsor in the customer account. Not only will that mitigate the risk of loosing a customer, ‘multiplying personal lifetime value’ across multiple sponsors will also multiply the number of new business opportunities when these people move on in their careers and try to bring you into their new companies. And, of course, working with more happy people is a very satisfying thing in itself. But it’s also sheer professionalism.

    Reply
  4. theotherbottomline Avatar
    theotherbottomline

    It’s always about people and our relationships with them. What are companies if not made up of people?

    Reply

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