How much are your existing customers worth to your company? If you don’t know the lifetime value of your customers, you need to find out.
What is the Lifetime Value? Simply put, it is the total amount of money a single customer will spend with a company over their lifetime. In the case of business to business sales, the Lifetime Value is total amount of money a single customer will spend over the normal period of purchases.
Where all else fails, use 50 years. For example, the lifetime value of a supermarket customer is $250,000. Put another way, the average customer, you and me, will spend $250,000 buying food and other products in our lifetimes at the supermarket.
Why is this information important? Because it puts a real cost to losing a customer.
Laura Liswood is a researcher specializing in lost customers—what makes them go away, what can we do to keep them, and so on. Her research quotes some amazing statistics. They are frightening.
She calculates that if a business loses just one customer per day and the average customer spends $50 per week, then the net loss to annual revenue is a frightening $989,000!
Couple that with the Lifetime Value and you begin to see why customer retention is so critical.
How well does your company handle customer complaints? What is your customer defection rate? If your company is continually replacing lost customers, you are stagnating your growth and wasting precious resources.
It’s critically important we remember Laura Liswood’s research. And, it’s even more important we take action on it, don’t you think?
