Monday, February 9, 2009

VIDA and the lifetime value of a customer

It's not often that I run across a company that I would love to work for. In fact, it took me almost ten years of working various places before I found my spiritual home at Hardwood Artisans.

Today I read about VIDA, a fitness company with three locations in the DC metro area, none near me all the way out here in the suburbs. This is a company that gets it, probably because they have a CEO who gets it--he has a passion for working out. I can relate. I'm a bit of a workout fanatic myself. I love to play softball, have had personal trainers at various points and really, truly enjoy working out.

To be honest, I don't so much mind that my gym focuses on selling cheap memberships, locking people into long-term contracts and banking on the fact that most of them will work out for a month then never come back. It means that the gym isn't crowded (yes, the resolution crowd has already dispersed), but it's also not terribly honest. The gym knows they make more money when people don't come back.

But VIDA does the opposite. By basing optimal profit levels on a certain (lower) number of memberships sold and focusing on giving those members great experiences, they have created a tremendously loyal following of people who love to go there and increasingly put other aspects of their lives under VIDA's control (nutrition, laundry, spa services). It's called the "lifetime value of a customer" and it's something that not enough businesses focus on.

Even though the reporter focused on the business aspects of VIDA's model, there's a moral aspect as well. When you sell to someone who you know isn't coming back, you're not doing that person a service. When you sell a membership (or a product) to someone with the express purpose of making sure that they love it so much that they absolutely have to come back, you're adding something to that person's life.

We do the same. When a customer who has come to us before comes back, not only are we able to provide increasingly good service, we're developing a real, human relationship. And what's great about working here is that I can sit around all day thinking about how to offer better service instead of how to make more money. That's good for everyone.

Now, off to the gym!

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