Do You Know the Lifetime Value of Your Customers?

How often has it happened to you or one of your employees where you took a customer for granted? When you stop to think how much a customer is actually worth it makes you sit up and take notice.

Calculating the Worth of Your Customer
For example, let’s say Joe Barnes, one of your clients, spends $100 every time he does business with your company and he places an order four times per month, equaling $400 dollars per month. If he does this twelve months of the year, this comes out to $3,600 per year. Joe is the kind of customer that you could easily keep for ten years. So ten years times $3,600 per year equals $36,000. Joe Barnes is a $36,000 lifetime client!

This kind of thinking makes it mandatory that even though Joe has a few quirks in his personality, and he is only placing an order for a measly $100 this week, he is still an extremely valuable customer. When you look at your customers as lifetime relationships, it can help you and your employees become aware of the fact that they are extremely important to the long term success of your business.

Clarify Miscommunications
As in any good relationship, you are going to have your misunderstandings and misconceptions that need to be clarified and resolved. By taking the time and investing in the education, training and patience that is necessary in handling these kinds of situations with your customers, you are insuring an excellent return in profits.

Don't Take Your Customers for Granted
Taking customers for granted can be a very costly mistake. As the above discussion shows, your customers are worth a lot. What needs to happen is each person in the organization from the CEO to the front liner would be wise to keep this concept in mind when dealing with their customers.

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Tom Borg is president of Tom Borg Consulting, LLC. He is a business consultant, speaker, coach and author. He helps companies and organization become more profitable by increasing their value and lowering their costs through the professional development of their managers and employees.