An upmarket stationery business moved its location in a shopping mall for a smaller space because of the economy.
All well and good but business in the new location has been slow.
What’s happening, I asked.
I was told that the business was slow in the new location but they were hoping that things would pick up. After a few questions, I found out that the stationer had not informed its customers of the move, except for a sign on the outside entrance and word-of-mouth. That’s it. Oh, one other thing, they had developed a website to attract customers. How?
Did they have a customer list?
What? No customer list?
One or two of the sales persons had their own customer lists. But there was no main, central customer list.
Compare this to a Swedish Design store that opened a few months back in the same shopping mall. When I purchased an item, I was asked to fill in a simple card with my details which took less than five minutes.
A few weeks later I received an SMS from the store to let me know that new stock and arrived from Sweden. I was curious what had arrived and visited the store when I was next in the shopping mall.
I still can’t understand how the upmarket stationery store could make such an obvious mistake. But I see a lot of other businesses doing the same.
A “house” customer list, including all customers who have bought from you is pure gold. The way to look at it is by seeing a customer’s lifetime value (LTV). Or in more formal language, the future propensity of existing buyers to buy additional products from your store, catalogue or website.
“House” customer lists are so valuable that some marketers put a value on their lists – when they want to rent or sell their lists. (Some business people even scrounge dead businesses just for their remaining customer lists.) Lists can be valued by the cost of replacement method, buying potential method or list rental value method.
People aside, it’s not your investment in stock, equipment, furnishings and buildings that has the big value in your business. It’s your customer list.