It’s not just one sale!


How would you like to have not just one sale, but a lifetime of sales! For every customer that walks into your business, you should be able to tell just how much value they will be to your business over an extended period of time. How would you like to look at a customer walking in and, in that instance, determine just what they are worth to your business in the long run?

As with many of our tips, we’re going to include exercises for you to work through… so you can grow your business. Let’s get started!

Exercise: What’s a customer worth to you? Don’t do the math, just jot down a number that comes to mind (we’ll do math shortly).

What is the Value of a Customer to a business?

I know this may be a hard question to answer if you offer multiple products or services. Begin by taking a look at the number of customers you served in the past year and your total revenue earned during that period.

If you divide the revenue earned during that year by the total number of customers served, you will have an idea of what each customer’s contribution to your business amounts to. But that’s the value of a customer within just a year or an even shorter period depending on what timeframe you choose.

Total Revenue divided by Customers Served equals your Customer Value!

When it comes to lifetime value, things get a little more complicated. Over time, a customer may make more than one purchase with your business. Every time this customer comes back to you for more business, their lifetime value to your business increases.

For example: You sell household items, and a customer walks in one day and buys a mattress only to come back later to purchase a set of pillows and some sheets. After a few months or years, the same customer could come back to purchase a set of towels or bathrobes, or even switch up and purchase utensils.

So let’s take a deeper dive into looking at the purchasing history of your customers and come up with an approximate lifetime value of your customer. With this background in mind, every new customer that finds your business today can be looked at with regard to their potential (lifetime value).

Exercise: Take a few minutes to figure out what your customer’s lifetime value to your business is. Neil Patel has a great infographic that pulls all the pieces together. Make it easy on yourself – you can start by working out a simple average from the last year of sales. That will definitely still give you some useful data to start you off.

Why should you care about Customer Lifetime Value?

A healthy business is not only about waiting for chance, accidental, or referral customers, it means you employ varied methods of generating leads that convert into sales, and ultimately, profit. Knowing how much a new customer is worth to your business makes it easier for you to carry out advertising and marketing activities, because you can project how much you will gain as a return on your investment.

Here is an example. Imagine I walked up to you and said I could give you a brand new customer for $10,000. Would you say yes? I’m going to assume that you’d at least stop and think hard about it, because that would be of significant value to most people.

With the kind of knowledge you now have on a new customer’s lifetime value, if you know that, on average, their lifetime value is $50,000, the $10,000 requested for them initially would sound completely doable, right?

That is why it is so important to know what the value of a customer is to your business. You will be in a better place to make smart and more informed marketing decisions. Everything you decide to do for your business’ profitability will be backed by your data and knowledge and not be based on ignorant guesswork, but on a more robust plan. It just makes everything a whole lot easier!

How can you make your one-time customer a lifetime customer?

Here is a fun fact: Did you know that it may cost your business 7 times more to acquire a new customer than to retain an existing one? Interesting, right? So, you already know that you are better off banking on your existing customers, and also working on converting first-time customers into lifetime customers.

Before we finish, I know you are wondering how to make sure your one-time customer is a return customer so that their projected lifetime value actually converts. Shane Barker has a list of 20 suggestions to achieve a lifetime of conversions:

  1. Create demand by pointing out necessities
  2. Put your customers in the spotlight
  3. Be sensitive to customers’ needs
  4. Give customers a reason to celebrate
  5. Make doing business convenient
  6. Concentrate on quality
  7. Know your customers
  8. Give delightful surprises
  9. Personalize the shopping experience
  10. Go beyond standard product details
  11. Follow through on delivery promises
  12. Allow for multi-channel returns
  13. Reward customer loyalty
  14. Design programs for frequent buyers
  15. Get customers to register
  16. Show your appreciation
  17. Provide exclusive offers
  18. Create coalition programs
  19. Motivate purchases with urgency
  20. Encourage long-term subscriptions

Side note: You don’t have to tick off every item on Barker’s list. Not all strategies work for all businesses. So pick out the top 5 strategies that can work for your business.

Exercise: What strategies have you chosen to work with to try and increase your customers’ lifetime value?


Your Online Partner… for Success

Would you like to have someone with experience help with a review of the results of your exercises? Reach out – and schedule a free 30-minute session with Christy.