The greatest asset of your business is your Customer,

specifically, its customer lifetime value.

In my many years in Sales and Marketing, I have met many CEOs and

business owners who do not have much idea of ​​what the Customer

Lifetime Value is, much less its importance and the impact that

have on your bottom line. For most of them, the most important thing is

to increase revenue through the continuous acquisition of new one-shot

customers.

This is one of the fatal mistakes many business owners make;

It is a sad scenario, but it is also reality. Let me tell you

something: it will cost you 5 times more to attract a new client

to bring back one of his old clients.

I don’t know you personally, but if you’re a smart businessman,

you will understand that every penny you invest in advertising is

Going towards acquiring new customers. You will also notice that

once you’ve acquired customers, you simply can’t afford to leave

they go

So what is customer lifetime value?

Customer lifetime value is defined as the total value, in

monetary terms, of your average customers spanning the entire

period in which these customers are likely to do business with you.

It is the potential contribution of your customers to your

business for a period of time.

This is how customer lifetime value is calculated:

1). Suppose you have 2000 regular customers and these customers

stay with you for an average of two years; for the last two

years, his net profit was $700,000.

Customer lifetime value can be calculated as:

$700,000/2,000 = $350.

What this means is that over an average customer lifetime of

two years, every new customer you could acquire and keep is worth

$350 to you in profit.

2). If you don’t have the actual numbers, you’ll need to

estimate. Since customer lifetime value will have a significant impact

impact on your results, my advice is to be careful and

conservative in his estimate.

Why is it so important to you and your company?

Customer lifetime value is important to you and your business

for the following reasons:

1). Knowing the Lifetime Value of your customers is crucial to

you and your business, as it serves as a reference point without which

you will be groping in the dark.

When you know the lifetime value of your customers, you can

determine how much time, effort, and money you can afford

invest to acquire that customer in the first instance.

In other words, you can invest more today to reap a much larger amount.

profits later down the road as long as your cash flow is healthy

and can bear it.

Every marketing campaign you undertake costs you money as

in addition to reaping benefits such as higher sales, better

corporate image, etc. But how can you be sure that the benefits

Would it outweigh the costs or investments? This is where to know

customer lifetime value is so powerful that it helps you

Determine this before you even launch your marketing campaign.

2). When you realize that customers are actually a

income stream instead of a one-time sale, you can refocus

your marketing efforts.

Instead of constantly striving to acquire more and more new

customers, you can now begin to focus on maintaining your current

customers longer and selling to them repeatedly, in other words,

repeat sales.

You can spend more as you make yourself stronger and more attractive

offers that its competition in the acquisition of new clients now that

they will be your money spinners tomorrow.

This makes sense because you now know that, on average, you will have more

to come back over the years that customers are with you

and therefore could afford to break even or even lose money

now on acquiring new customers.

Start shifting your focus to customer lifetime value and maximize your profit today!

Begin to have a proper understanding of customer lifetime value

because it is key to the success of your business. will allow

you to acquire more customers than your competition through

better and more attractive offers; will increase dramatically

your bottom line through more repeat sales and skyrocket your profits.