Lifetime Customer Value

What is the lifetime value of a customer to your business? Simply stated it is the calculated ‘average spend’ by a client over their lifetime of dealing with you.

Some known statistics are:

Ø $6,000 to your local Pizza Shop;

Ø $10,000 to your local Tyre Retailer; and

Ø $100,000 to your Local Food Chain (Woolworths, Coles)

So you see that for the local Pizza Shop, their investment in computer equipment that makes your buying experience a good one and providing subsidized delivery is a ‘no-brainer’ if they want to get their ‘full lifetime value’ from you. What do you do to keep a Customer coming back?

It is cheaper to get an existing client to spend again than it is to acquire a new client.

If you understand the lifetime value of a client, develop opportunities to regularly promote to your existing clients. In this way you maximize the opportunities to realise the Lifetime Value of your clients.

Take the time to work out what ‘value added’ offerings you can make to get clients to come back to your business on a regular basis. 

Written by Anthony Davis