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How to Calculate Lifetime Customer Value
By: Steve Martinez
Who would have thought my old comics or baseball cards would be so valuable. It is just like the value of my best customers. The better I take care of them, the greater value they yield. Do you know the lifetime value of a customer? If you knew, you would take better care of your customers.
A Simple Formula Reveals Value
In most sales, we need to prove to customers, we have something that will improve their situation. A simple equation calculates the value of customers. It is surprising to learn how much each customer is worth. We need two pieces of information to determine the value. We needed to know how much the average customer does year. We need to know how long the average customer does business with us. Multiply these two factors and you will have your lifetime value.
Customers are like gold, we must strive to retain all our customers and multiply their value in two ways. One way to generate more business is to increase the frequency and value of orders. Another way is to duplicate good customers through referrals, bringing in new business.
Building Strong Customer Relations Is Important
Business research tells us that it takes 5 times as much time, work and money to find a new customer as it does to keep one. If this is true, how smart are we if customers are lost through our poor salesmanship. How often we stay in touch with our customers is one factor that makes a difference in the success of a salesperson or a business.
The purpose of this article is to remind us of the importance of keeping in touch with customers so, they keep coming back. We must realize that our competitors are trying to take our best customers everyday. If we don't treat them like vintage playing cards, we won't develop a successful business.
We should set a plan to contact our top customers and thank them for their business. If you don't do it, who will? If you don't know the value of your customers, use the simple calculation in this article. Discover how much your top customers are worth. Take the next step and ask for referrals to duplicate good customers and add more value to your business.
Steve Martinez is the Founder of Selling Magic. His company makes selling easy - revolutionizing Sales Management by automating the sales process. Subscribe to his ezine to Increase sales with the best practices of sales management at http://www.sellingmagic.com |  |
