Which is More Valuable – A Past Customer or a New One?


scaleIn today’s fast moving world, many businesses have had to adapt and change their core services and product offerings. Some companies do this to be innovators, some to try keep up with competitors, or in other cases it’s done in desperate survival because of declines in revenue.

Regardless of the reason for change, most companies still carry with them customers that bought existing products and services. The question I raise is this: How do we treat existing customers when the product or service they bought is less profitable to us than our current offering?

This scenario holds true regardless of your industry. In multifamily you may have residents that signed leases with deep concessions and some that are now paying market rate. In the past, a company offering ISP services may have focused on hosting websites for $10 a month, but now they are selling high priced VOIP services. Auto manufactures still support cars made over previous decades and they sell high-priced new cars. We can’t get around the fact that as we update our product offerings, there is a real chance we will have some customers that are much more profitable to our bottom line than others.

In focusing more on profitability than good relationships, some companies are treating their customers differently. Recently, I had a company I worked with for 10 years tell me the service I used wasn’t worth their time anymore and just stopped communicating with me. In just focusing on their bottom line, what they really told me is that I wasn’t worth their time anymore. You bet going forward I will never buy any of their other services and I will discourage anyone I know from doing so either.

Given, there are times when it costs a company more to support an existing product than they make back and sometimes they choose to cut it loose. Regardless, if your product offering has changed and you find that a customer is less profitable than you would like, you can choose to still give them great service or not. You can even choose to end your relationship in way that helps them rather than hurts them. Any consumer will be much more loyal to a brand they have a positive experience with than one that was negative. Even if they stop doing business with us now, they can still be a customer; a customer will naturally come back in the future, or even as good, tell all their friends to the same.

So, which is more valuable, a past customer or a new one? I say all our customers are valuable.