Customer Lifetime Value: The Key to Maximizing Your Profits!

The greatest asset of your business is your Client,

specifically, your customer lifetime value.

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

business owners who don’t have much of an idea of ​​what the Customer

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

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

to increase revenue by continually acquiring new one-shots

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 customer

to bring back one of his old clients.

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

you will understand that every penny you spend on 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 its 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 over a period of time.

This is how the customer lifetime value is calculated:

1). Suppose you have 2,000 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 for you in earnings.

two). If you don’t have the actual figures, you’ll have 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 business?

Lifetime customer 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’ll 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.

earnings 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 exceed the costs or the 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.

two). When you realize that customers are actually a

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

your marketing efforts.

Instead of constantly struggling to acquire more and newer

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 stronger and more attractive

offers than your competition in acquiring new customers now that

they will be your money spinners tomorrow.

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

to go 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 profits 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.