What is Your LifeTime Value?
"There is only one valid definition of business purpose: to create a customer. The customer is the foundation of a business and keeps it in existence. He alone gives employment … Because it is the purpose to create a customer, any business enterprise has two, and only two, basic functions: marketing and innovation."
"There is only one valid definition of business purpose: to create a customer."
"Mr. Drucker is famous for a series of questions: What is our business? Who is the customer? What does the customer value? The answers to those questions, asked by generations of managers around the globe, became known as 'the theory of the business.' The most distinctive hallmark of the managerial mindset is that it operates from that theory. Major decisions and initiatives all become tests of the theory. Profits are important in part because they tell you whether your theory is working. If you fail to achieve the results you expected, you re-examine your model. It is the managerial equivalent of the scientific method, starting with hypotheses which are then tested in action, and revised when necessary."
--"Modern Management Expert Peter Drucker dies at age 95," 11/11/05. [All emphases above added]
When Peter Drucker's ideas about "customers" came into the modern church growth movement, it began to change the Church:
1) Marketing became integrated with evangelism, changing the way lost souls were identified and approached, recruited and enlisted. The very definition of "salvation" came to have a "close the sale" connotation.
2) Parishioners were seen as "customers" who had purchased the product -- a new style of doing church, new methods, new music, new formats, new covenants, etc. As such they were viewed in economic terms as a source of income, activity, and outreach for recruiting new "customers."
3) Certain "customers" were assigned more value to the mission of the church because of their talents and abilities, endeavors and activities, and large donations to the ministry.
Observing this marketing phenomena, Dr. David Wells commented:
"First, the churches, in larger and larger numbers, are adapting themselves to felt needs in the congregations much as a business might adapt its product to a market. In other words, the Church is sanctioning the idea that when someone comes in its doors it's okay to view that person as a consumer, somebody who is going to attempt to hitch up a product to their own felt needs. The products in question, of course, are the activities, the experiences, the amenities, and the message of the Church. However, what people who are coming in these church doors today are thinking about, and what they want, is not primarily personal salvation. What they want is a sense of personal well-being, however momentary and fragmentary that personal sense of well-being is and our churches are beginning to cater to this. I have no doubt at all that they are going to become very successful. Indeed, some are successful already and they are going to become more successful because marketing in America is what makes the wheels go around. They are, in other words, simply doing what Pepsi has done, what self-help groups have done, the auto makers, the makers of jeans, the makers of movies, and what Madonna herself has done. So why shouldn't churches do this, somebody might ask? Why shouldn't they want to be successful in the same way that Pepsi and Madonna are?
Peter Drucker has had a tremendous impact on evangelical pastors, particularly his ideas about marketing. When Drucker passed away in 2005, Leadership Network wrote about his work among evangelical leaders:
"Buford wanted to create a network of church leaders who could learn from each other and provide working models for other churches. So he naturally contacted his mentor for guidance. Drucker gave him three pieces of advice:
- 'Build on the islands of health and strength' (that is, recruit leaders from successful churches as Leadership Network's first customers);
- 'Work only with those who are receptive to what you are trying to do';
- 'Work only on things that will make a great deal of difference if you succeed.'
"These principles became the founding strategy for Leadership Network, but Drucker's influence was only beginning. His impact on Leadership Network has been so extraordinary that the organization 'belongs partly to him,' Buford says.
"Events sponsored by Leadership Network often featured Drucker as a speaker and resource, and his writings have been excerpted in its publications. In the early days, church leaders attending Leadership Network seminars could meet with Drucker in small groups and get to know him over shared meals.
"Some leaders, like Father Leo Bartel and Pastor Rick Warren, followed up with telephone calls seeking Drucker's advice on pressing issues, and even made trips to consult with Drucker in his home. . . .
". . .Warren says his staff reads and discusses Drucker's writings, using them to manage the church's multi-faceted ministry. Everyone who walks into the pastor's office is reminded of Drucker's well-known advice, which appears on a print that Drucker signed and gave to Warren:
- 'What is our business?'
- 'Who is our customer?'
- 'What does the customer consider value?'" [emphasis added]
Similar Druckerian concepts can be found in Greg Stielstra's book PyroMarketing, which we have been reviewing. In Chapter 6, "Save the Coals," Stielstra explains the basic concept of databanking customer records. In this day and age, databasing programs and the Internet "form a match made in marketing heaven, a one-two punch that allows you to collect reams of valuable consumer data. . . ," says Stielstra on page 197. Privacy concerns aside, there are other issues of concern.
In selling a new type of toothpaste it might not be a big issue if you identified "your best customers and their interests so that you can better target them with relevant offers" (p. 179). There are good customers and better customers, and databasing is a way of sorting out whether some customers are "far more profitable than others" (p. 186). And you can "[m]easure the value of certain customers. . . ." (p.186).
In fact, your database can track something called the Lifetime Value (LTV) of certain customers, predicting their future value as a customer. Echoing the words of Peter Drucker in the Leadership Network excerpt above, Stielstra suggests:
"Not all customers are created equal. Some are much more valuable than others. By segmenting your database you can calculate the LTV of different customer segments and separate the wheat from the chaff. . . .
"Just who are the most profitable people? . . .
"You can arrange them according to the affiliation groups they join or by causes to which they donate their money. You can even segment them according to their value as customer evangelists by tracking how often they recommend your company and its products." (pp. 193-4) [emphases added]
This philosophy resembles Drucker's ideas about people possessing an economic value. Perhaps in a perfect marketing world, this makes sense. It does leave out the poor, however, who aren't profitable by these definitions.
And, how far and wide has this Lifetime Value concept permeated the modern evangelical church? Could it perhaps account for the new elitism, leadership emphases, the focus on results, assessments, "health," and "significance"? The list could go on and on. . .
In the next few posts, this issue will be addressed further, Lord willing. . . .
Continuing his thoughts on marketing in the Church, Dr. David Wells wrote:
"The answer is that marketing will produce success but not necessarily the kind that has much to do with the Kingdom of God. To start with, the analogy between the business world and the world of Christ's Kingdom is a completely fallacious analogy. Consumers in the market place are never asked to commit themselves to the product they are purchasing as a sinner is to the Christ in whom belief is being invited. Furthermore, consumers in the marketplace are free to define their needs however they want to and then to hitch up a product to satisfy those needs, but in the Church the consumer, the sinner, is not free to define his or her needs exactly as they wish. It is God who defines our needs and the reason for that is that left to ourselves we would not understand our needs aright because we are rebels against God. We are hostile both to God and to His law and cannot be subject to either, Paul tells us. Now, no person going into the marketplace, going to buy a coffee-pot or going to buy a garden hose, engages with their innermost being in the way that we are inviting sinners to do in the Church. The analogy is simply fallacious."
"Thus saith the LORD my God; Feed the flock of the slaughter; Whose possessors slay them, and hold themselves not guilty: and they that sell them say, Blessed be the LORD; for I am rich: and their own shepherds pity them not." (Zecharaiah 11:5)