Small business Marketing - Lifetime Value Of Your Clients
Every business owner needs to fully understand the life time value of their customers.
This is the total profit that a customer will bring to your business over the lifetime of your dealings with that customer.
The following example will explain why it’s important to know this number: Let’s pretend you own a book store. If your customer spends $50 every time they walk into your store, and they visit once a month for 4 years, a customer is worth $2400.00. The math would look like this: $50 (average bill) x 12 (number of visits) x 4 (number of years).
Think of how much money you’re missing out on if you were thinking of only one transaction?
Let’s take a look at another example: John Smith sells a cd plus manual kit on how to self-publish a book. The initial manual set is worth $500. John knows that over the lifetime of a customer, a significant number will spend somewhere between $20,000 and $40,000 with additional products!
By knowing his numbers he can afford to allocate a significant amount of money towards his advertising budget to bring in more customers. Why? Because he is equipped with information that he’ll make it up on average over the lifetime of the customer.
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About the Author: Yves Marie Danie Baptiste is an expert in small business marketing.
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Tags: Business owners, Marketing, Small business