The Lifetime Value of a Customer AND Employee

Understanding the Lifetime Value of a Customer is a powerful concept. I first saw it in legendary Cadillac Dealer Carl Sewell’s excellent book – Customers for Life back in the 1990’s. The philosophy works! They have grown from one store, to 18 stores, 21 brands, 3500 associates and over 50,000 annual car sales.

Their goal is to make each customer – a customer for LIFE. He did the math and calculated back in 1990, his ‘customer for life’ represents $332,000 in car sales, plus parts and service. He actually underestimates the value of the customer because of the potential referrals the customer might make.

The average new car price has TRIPLED since 1990! The number now is pushing $1,000,000. Carl would say, “You can not do enough for someone that is going to spend a million dollars with you!

I was the “opening experience” for the first Institute Summit for auto shop owners in St. Pete last week. These shops are part of an ongoing coaching program, monthly financial accountability, site visits to other member shops, and consistent training for them and their teams. I asked the audience if every tech working on the vehicles and service writer knew what the lifetime value of a shop customer was? A few owners did, but it was not common knowledge for their teams.

I asked them to sit down with the team to determine the realistic number so they know how it was calculated and they believe it! Look at their customers, average ticket, how often they visit, number of cars serviced, how many are generated by referrals? The driver who drives 20,000 miles a year will spend on average $1800 on their vehicle.  For many the number is over $55,000 for the lifetime value of a customer.

How nice and clean are your bathrooms, seating area, quality of refreshments, check-in area, quality of shuttle cars to get people to and from home, do you wash their car, vacuum, and clean the windows? The key is to consistently EXCEED expectations.

Every customer touch point and each repair has $55,000 on the line NOT just that one ticket. Create the systems to get it all right, the first time.

When I interviewed Brian Bates from Eagle Automotive Services (7 locations) in CO and a top operator, he told me one of his secrets is to also understand the LIFETIME VALUE of an EMPLOYEE. Turnover is very expensive. You have to invest in them and treat them right. Brian and other shops will be using my 37 wellness video series to drive healthy habits every 10 days for a year. Health care costs are out of control and they want to decrease absenteeism of the valued techs who do the work. Find out more at 

Has your business calculated the lifetime value of your customers? Does everyone understand how you got that number and the role they play in maintaining that relationship? Does your company embrace the Lifetime Value of an Employee?