Thoughtful Thursdays – On lifetime value of a customer
I have mentioned lifetime value of a customer several times. So what is it and why is it important?
My interpretation of lifetime value of represents the total amount of dollars your customer is going to spend on your goods and services for the period of time opportunities exist.
To quantify this value, say your customer purchases $2,000 per month and the life cycle of the opportunity is 10 years. That equates to $20,000 in total opportunity. Expect profitability to increase as processes are improved and you can extrapolate the value to your business.
If your customer is happy with the way you deliver your products and services, it is reasonable to expect they will offer new opportunities for you to participate in. This speaks to growing with your customer as they grow.
The more customers you have with repeat business the more likely the chances are that year to year sales growth will be achieved.
Make a habit of focusing on prospects with higher potential lifetime value rather than the one time sale. This will help secure your long term position in the market.
Have a question about sales? Contact Sakanashi and Associates Inc. and I will be happy to respond.
Comments are closed.