Most people appreciate the value of starting with the end in mind. Yet companies rarely pay enough attention to one specific endpoint: when a customer stops being an active customer.
Businesses don’t think through the experience and value of past customers or “customer alumni.” Instead, they focus on maximizing customer acquisition or eliminating attrition altogether. But by doing this, they often unintentionally undermine their total lifetime earnings.
The Value of Your Customer Alumni
It’s important to note that when I say “customer alumni,” I’m not implying these customers will never buy from you again, only that they’ve gone through your customer cycle and exited on the other side.
For example, patrons of a restaurant become customer alumni when they move out of town. Much like former graduates of a university, they can be incredibly valuable to the customer cycle. While they won’t be making donations, they’re very likely to invite friends to eat at the restaurant every time they come back into town, or to longingly recommend the place to others who live close by.
When you plan in advance and deliberately leave your past customers with something meaningful, you create a positive feedback loop in your customers’ journey, and they’ll share your offering with others.
There’s a discipline that comes with knowing your true value, and it requires not doing business with people when they’re not going to receive that level of value from you. If you hastily add suboptimal offerings to try and retain customers rather than building a thoughtful transition strategy to alumni status, you’ll end up degrading your offering’s perceived quality, customers’ goodwill and their nostalgia.
The Power of an Exit
An interesting example of someone we all know who handled this transition well is Jerry Seinfeld, who couldn’t have done a better job when he ended his namesake TV show. During the ninth and final season of “Seinfeld,” the show was so successful among Seinfeld’s customer base that he had to turn down an offer of $115 million, a whopping $5 million per episode, for a 10th season.
Instead, Seinfeld left the audience wanting more. He effectively transitioned his fan base to alumni and reaped higher profits through syndication, DVD sales and streaming episodes than he would have if his hit TV show had continued.
This decision wasn’t made in a vacuum; it was part of a deliberate strategy that shaped the show from the start. By asking from day one how they could maximize the show’s value, the show’s producers bucked the trend of including timely plot lines and commentary on current events. They even passed on using misunderstandings caused by new technology for comic effect. With the exception of telephones or the glow from a TV (note, not the TV itself), you rarely saw anything that would prematurely date the show.
Obviously, there was little that could be done with the clothing, cars and hairstyles that would clue viewers in to the decade when Seinfeld was filmed. Still, the writers focused on the mundane, universal things in life that audiences decades in the future can still relate to.
These small refinements allowed “Seinfeld” creators Larry David and Jerry Seinfeld to earn more than $400 million per five-year syndication cycle, even 30 years later.
The Takeaway for Businesses
Your business’s long-term value gets carelessly discarded when you’re not deliberate about when your customers stop being customers. Always keep your customer alumni in mind. Just like fans who still relish reruns decades later, they’re waiting to be your brand champions.
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