Host: Lorraine Ball
Lifetime Value of a Customer
One of the critical elements of building a marketing budget is understanding what a customer is worth. Why? Because you can’t decide how much to spend to acquire that customer if you don’t really know the value of that customer.
Too often business owners make the mistake of looking at what the customer is spending today and see that is the only value of the customer. But, if you’re in a business where customers come back time and time again, you need to look at the total picture to determine the complete value.
If a customer stays with you three or five years, there’s going to be additional sales revenue without that sales expense. And, there’s more. When the customer really knows you and loves you they are more likely to talk about you to their friends and their families. This goodwill has the potential to create multiple new opportunities.
So, as you start thinking about how much you can afford to spend to generate leads, you need to calculate the lifetime value of each customer.
What is a Customer Worth To You?
The answer to this question is different for every business. Use this worksheet to calculate the lifetime value of your customers so you can set an appropriate customer acquisition budget
about the marketing minute
Each week, host Lorraine Ball shares just a few words on a marketing topic. She boils down creative ideas, practical tips, and decades of real-world experience into a mini podcast which is always less than two minutes.
Look for these mini bits of marketing inspiration every Sunday. Then come back and enjoy the longer interviews every Thursday.