Posts Tagged ‘Frederick Reicheld’

Lifetime Value of a Manufactured Housing Customer

August 15th, 2010 No comments

When planning a campaign to place a business on page one of the search engines for a given set of keywords, one of the criteria used to establish a reasonable ROI to achieve that result is the lifetime value of a customer.

“Successful companies, [Frederick] Reichheld (author of The Loyalty Effect) points out, have three things in common: loyal customers, loyal employees and loyal owners. The customers are often loyal, not so much to a bank, for example, as to employees that they know and trust who work for the bank.”

While we aren’t sure what the future holds, history suggests that the average homeowner will be back in the market in 5-7 years. For our purposes, I will use the higher figure of 7 years. This means a manufactured home retailer may have the possibility of selling a customer two or three homes in a lifetime.

Multiply the average price of a home over the next 25 times the number of homes that customer may buy in that timeframe and you have the expected lifetime value of a customer.

Other factors

When you sell a customer a home, is the quality of their buying experience such that they will be likely to return to your place of business when they want to:

  • Upsize
  • Downsize
  • Re-locate
  • Move for Personal Reasons

If it isn’t, you need to ask yourself why?

As an industry, we need stop thinking of our customers as “one-time” buyers. The same retailer can, over a lifetime, move a buyer from an entry level, to a larger more upscale home and beyond.

Much the same as a Chevy owner, having had a good experience might upgrade to a Buick or Cadillac, or a Ford owner might move to a Lincoln, your customer having had a good buying experience will have a tendancy to come back to you when the time comes to move up.

It’s all about establishing loyalty to the product, the manufacturer and the retailer.

There is an excellent article on Frederick Reicheld’s The Loyalty Effect here.

It’s about the quality of the experience – and that page one Google ranking wouldn’t hurt you either.