The Value of a Single Customer

When a person walks through the doors of your business, in-person or online, and purchases something from you for the first time, at that moment, they become your customer, your patient, or your client.

The question is, what is the value of that individual to your business or practice?  Is it the amount of profit from this one-time purchase or, is it the potential lifetime value they create?

Most experts will tell you that the cost to acquire a new customer is ten times more than what it costs to keep them.

With that said, most successful business owners have a well thought out advertising plan, or at minimum, an advertising budget intended to acquire and attract “new” customers, but very few have a plan to keep their “current” customers, patients, or clients.

Since we agree that keeping them is far less expensive than acquiring them, understanding the true Lifetime Customer Value should be enough to persuade you to at least consider implementing a plan to keep them.

There are 4 factors we need to consider when calculating a “Lifetime Customer Value”:

1) Average profit per individual sale including upsells and add-ons

2) # of purchases per year

3) # of years they will remain a customer

4) Word-of-Mouth – average # of people they persuade to do business with you

Paid media advertising is the best way to acquire new customers. Word-of-Mouth advertising is the best way to multiply your customers, and over-the-top customer service is the best way to ensure your customers become repeat customers.

Understanding the “Lifetime Value” of your customers will inspire you to create a strategic plan to serve each customer with more passion.