Customer Lifetime Value – The Key to Maximizing Your Profit!

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.

two). 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.

two). 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.

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