Many businesses are yet to fully understand what the value of a customer is.
The questions seems easy enough (What profit does each customer bring each week? Each year? Over a lifetime?) But many businesses still struggle with these questions and this gives rise to 2 problems:
Customer Lifetime Value
Formulas for calculating customer lifetime value (CLV) abound, but a basic approach requires breaking down the calculations into five digestible parts in this manner:
Sure, this is a somewhat simplified equation, but even a ballpark figure is more helpful than no idea about what each customer is worth to your business. With this figure you can decide things like: the amount to spend in customer acquisition, how much to spend in fostering loyalty, and so on.
A benchmark CLV will give you a helpful base in marketing and loyalty programs, as well as inform your sales goals for the coming year.
For more on the subject, you can take a look at the complex method which Starbucks used to determine their CLV at an incredible $14,009.
Your Customers Are Your Future
Your customers are directly related to your future success and your livelihood, and it will be difficult to thrive without investing heavily in acquiring new customers.
So, what are the obstacles between you and your target audience? Has the uncertainty of direct mail marketing been a thorn in your side of late? Why not reach out to us for help? We offer sophisticated, simple ways to reach a mass audience for an amount that works within your budget.
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