WHAT IS THE VALUE OF A CUSTOMER?

Bay of Plenty Beacon, Volume 5, Issue 95, 24 August 1942, Page 2

WHAT IS THE VALUE OF A CUSTOMER?

The real weal.h of a business docs not lie in the accumulated value of its machines, imposing premises, the number of workers, the wages paid, nor even the policy on which lines the business is ;un. The Avealth lies in what customer thinks of the business . Ln a more familiar word, it is the goodwill of idle business thai promotes its prosperity. ]'t is dill'ieuil to assess the exact value of goodwill. One customer might say he likes to place his orders because of the excellent service rendered, another because the prices are reasonable, and yet another because of the high quality of the work turned cut, but there can be no exact monetary value set against each customer's reason; therefore', the value can onfy be placed at an imaginary figure based on the assumed customers' opinions taken as a whole. If, for instance, a firm can claim that 50 per cent of its customers have regularly placcd orders for the past ten years, then obviously the opinions of the customers must be very favourable tOAvards the firm, otherwise they would not be .so loyal to i:t. If, on the other hand, a firm cannot keep its customers, so that it must of necessity be constantly seeking for new customers to make it pay its way, then there must be something wrong. The goodwill is small. Why? It Avould appear to be almost a wise plan to create —An Analysis imo the Ledgers for a period of years to conform how many customers are old ones, how many left after a number of years' business, and how many are new. The outcome would sure be interesting, and a chart could be .clraAvn up to classify the results for easy reference. Ilere are some headings:

Old customers : 10 .years and over. 5 years and over. 3 years and over. New customers (less than 3 years). Left for unknown reasons. Left for Iknown reason. (Give the reasons)— Bad debt. Liquidation. Gone out of business. Decease:!. Forgotten Firms The analysis would probably bring up the names of firms which had been forgotten because no orders had been received from them for some time, and it will occur that a good plan will be to try to revive some of these neglected customers with travellers' calls, advertising printing and sales letters. There are many things which will be thought of —for instance, if the value of all lost customers' orders is assessed, the result may be surprising. A further value may result in revealing. Why the Majority of Customers Leave Is it price, is it quality, is it service? Loop-holes in the organisation may be uncovered which only need a little tightening up to ensure more efficient working. Customers are too valuable to be lost, they constitute the goodwill and mainstay of the business. Without them the business would soon close its doors to pass out of existence. A retailer refers to his customers' talks over the teacups. The free advertising he gets is of tremendous value to him. What about the buyers' talks over the coffee cups? As they sit and chat over this 30 o'clock and the topics flit from sports and politics to business, is your name ever recommended for service, quality and price?

That also is the value of a cus-i tomer. The super salesman subconsciously Avorking for you in your interests, purely because he has been so Avell satisfied with the Avay you have done business with him.