Nov 25, 2013

Let's worry about VALUE!

"Consider the conventional wisdom - 'it costs so much more money (5-10 much more) to acquire a new customer, so (better to) work hard to keep the ones you have!'

I'm sure that many of you have heard that advice, and even if you haven't, it makes a lot of sense, right? 

I don't want to suggest that conventional wisdom is untrue. It probably is true. It does cost more to acquire a new customer, especially a good new customer. But what's my take on it??

Let's NOT focus on costs. Let’s NOT worry about costs. 
Let's worry about VALUE!

We're spending too much time, more importantly, we're spending too much money, retaining customers who aren't really that valuable to us. 

Maybe we'd better off reaching a little bit higher, spending a little bit of money to go out there and find a customer (or a group of customers) who might actually be more valuable than some of those, eh, 'customers' we're spending so much time trying to retain and develop.

Again, the conventional wisdom might be right. But when you take this forward looking value oriented perspective, then this kind of conventional wisdom won't really impact you that much.

Don't be so cheap. Don't be so lazy. Go out there and figure out where the valuable potential customers reside. And do what it takes to get them on board, and then let nature takes its course."

- Peter Fader, Wharton Marketing Professor on one of his lectures on Coursera, An Introduction on Marketing - Customer Development Part II. 

..

The way I understand it...
For such and such reason, some of us have that tendency to keep everyone, who has touched our life, to be always around. Alas, it potentially creates biases that influence our decisions, which sometimes can do more harm than good.

Firstly, the fact that we are all not inherently similar/equal/compatible makes it necessary for us to recognize that some people are (subjectively) more 'valuable' than others.

Please don't get me wrong. Here when I mentioned 'valuable', though the epiphany was from a business lecture, that has nothing to do with money. Trust you can understand that.

Furthermore, it is also important to know that even when two people are compatible at the present time, there MIGHT be an expiration date. Why? The answer is simply because people grow. Some people grow towards the same direction, some others grow apart. Needless to say, the expiration date applies to the latter.

Acknowledging those facts above, I think, will help us in reminding ourselves to keep connected with and surrounded by the best people we can have. It will help us to screen those who are just too trivial to be worth keeping.

All in all, I should note that, no, it's not because one is better/higher than others. That's not the point. And no, it's not about making a choice of whom we should treat well or badly - I believe we should always do good to everyone. 

But it's more about making a choice of who are valuable enough that they deserve our (continuous) efforts.

Lastly, one question remains. 
How do we distinguish the valuable ones from bunch who are not?
Well, that, I think, will be another discussion.