Lifetime Value of a Customer

You go to a restaurant two times a month every month for a year. The average bill for two at this restaurant is $75. Over the course of a year that is $1800 plus taxes, tips etc. If this continues for 5 years that is $9000. The big question is, if you were selling a $9000 product or service to a customer, would you use a minimum wage employee to do so?

We have to start looking at the lifetime value of a customer and asking ourselves if we are treating them properly, especially with their initial contacts. It’s too easy to look at the customers initial purchase and see a low value and not think about their long term value to your organization.

In my case, since I don’t do any advertising or marketing, I am completely dependent upon my current customers being satisfied in order to keep them as clients as well as to get referrals for new business. The person who might have started as a small customer might either become a much bigger customer or might refer someone who becomes a big customer. That all has to be factored into their lifetime value to my organization.

Start looking at peoples lifetime value and not just their value to you today and you might start treating them a bit differently.

Have a great day!

Lawrence

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