Likewise, the sales staff attempts to size up the sturdiness of their client relationships. Lento says that the company tracks not only traditional LCV items such as repeat business but also whether a customer's purchasing decisions are based solely on cost. Obviously, clients that buy on price alone may not be the greatest long-term bets. Convergys managers also examine the value of a salesperson's customer contact; the higher up, the better. In addition, they regularly assess whether a customer views Convergys as a strategic partner or merely a commodity service provider; strategic partner beats commodity provider.

Of course, such figuring is not exactly a hard science. And for his part, Hackett's Smith believes that LCV calculations should be in dollars. Right now, Convergys management assigns customers a ranking, from one to eight, for each of the intangible categories in the index. Still, it's hard to argue with results. Convergys recently won an additional billing contract from AT&T Wireless — a longtime customer that scored high on the LCV index. "There is typically a great deal more business we can do with current customers," says Rolls. "Just in billing, there's a lot of potential lifetime customer growth."

Sales head Lento says the value of LCV goes beyond numbers, beyond entanglements and partnerships and share of clients. By his lights, LCV has dramatically changed the way workers view customers. "We constantly talk with staff about servicing new or existing clients," he notes. "When you hear employees ask, 'Well, what's their lifetime value rank?' it's kind of music to your ears." As it turns out, quality is quality.

John Berry is a contributor to eCFO.

Max Factors

The LCV rating system used by Convergys factors in nonrevenue items for a more accurate picture of the reliability of customer spending.
Sources: Convergys; Peppers and Rogers

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