Disney's Approach to Lifetime Value

As I mentioned in my last post, we returned from a Disney Cruise a few weeks ago. All my east coast readers know how fortunate anyone who managed to find sun in February was. I've never felt more rejuvenated by vitamin D in my life.

The kids were beyond excited to see what Disney had in store for them (even our 8 year old). All I could picture was an endless array of princesses and theme parks dedicated to picking my pocket. 

Instead I discovered science lab and cooking school, gaga and basketball, movies and live shows, swimming pools for toddlers and little kids and big kids, and dance party after dance party after dance party. Three generations of one family wearing a grin for four days. Parts of the ship were reserved for kids, with organized activities until midnight. Other parts were reserved for adults, with everything Grumps expect from a luxury vacation. 

My biggest surprise came early in the cruise when it became abundantly clear Disney was focused on my returning for another cruise, rather than milking my family for every penny we were worth. We were not forced to walk through gift shops. We were not relentlessly subject to the sale of merchandise. In fact the only things my kids encountered to buy was popcorn for a show and a water pistol for the pool. I was happy to oblige. 

Ironically for a business operated by Disney, the ultimate test for me came in the form of cocktails, which were basically the only thing on board you had to pay for. I've seen my fair share of double digit cocktail prices in NYC and while trapped in hotels and airport lounges. Imagine my expectations for the price of a drink on a boat in the middle of the ocean!

Much to my surprise, beers were a few bucks and cocktails five or six. Reasonable. Unlike the theme parks, Disney Cruise's strategy is designed to prioritize customer LTV over current income. And it worked. We may do it again in a few years when the kids are old enough to appreciate Alaska.

Disney Cruise management knows the basics: Never stop putting yourself in your customer's shoes. Never be afraid to trade short term thinking for long. And always be confident that building long-term customer relationships will unlock surprising value. 

Jesse Hertzberg