Calculating what they are worth.
WHAT TO CALCULATE
What an average customer spends per purchase How often they buy How long they continue
THE RESULT
What a customer is worth over their whole relationship with you.
WHY IT MATTERS
It tells you what you can afford to spend acquiring and keeping them.
THE COMMON MISTAKE
Valuing a customer at one transaction.
That undervalues them substantially and leads to underspending on retention.
WHAT SMALL IMPROVEMENTS DO
A customer buying one extra time a year, across your whole base, is a large revenue increase with no acquisition cost.
WHAT TO COMPARE
The cost of a retention effort against the additional revenue it produces.
Retention activities are usually far cheaper than advertising.
FOR SERVICE BUSINESSES
A customer who returns annually for years is worth many times a single job.
WHAT TO DO WITH THE FIGURE
Justify spending time on retention.
Most businesses cannot justify it because they have never calculated it.
