Most businesses need to ensure that there is ongoing education of their team on the lifetime value of a new customer.
Lifetime customers represent repeat business and repeat business equals profits.
If you assume that the lifetime period of a customer is between 7 to 10 years on average; multiply the average sale by the number of times you expect to see that customer each year and then multiply the projected annual sales by the number of years expectancy for ‘lifetime”. This will give you some idea as to what the customer is potentially worth to your business. This means that one of the most affective ways of marketing your business is to increase the number of visits that your long-term customers make to your premises, as this will add to the lifetime value of the customer.
To develop lifetime value of customers, you could consider the implementation of a referral system where current customers are encouraged to refer new people to your business with an appropriate incentive being given to the referrer. This could be a weekly lucky prize or a discount off a product in your business.
How do you develop lifetime customers?
- Improve your referral system.
- Create outstanding service to all customers to encourage them to become lifetime customers.
- Create a database of customers and offer them outstanding service.
- Keep improving the level of service to customers.
- Offer special events and promotions for your customers.
- Go the extra mile.
- Get them to say ‘wow’!
What are some of the ways you’ve used to develop loyalty or improve the lifetime value of your customers?
Article by Christie Lewis
Christie is Practice Manager at Alan Lewis Accountants . Besides accounting, her passion is for all things small business (and blogging, of course). You can contact Christie directly at christie@lewistaxation.com.au.
Christie has written 811 awesome articles for us at Alan Lewis Accountants – BLOG
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{ 11 comments… read them below or add one }
The lifetime value of a client is a great perspective to take, especially I think when you are in those situations that make you question whether it is worth doing business with someone !
It occurred also to me, within the context of your reference to referrals, that the real lifetime value of the customer is also in how much business they generate for you, by talking about the valued relationship they have with you.
The customer’s real value then, may be far in excess of what they pay you.
Phil
Thanks for your comments, Phil. You bring up some good points.
You are absolutely right! I know that in our business, some of our top clients are not ‘big clients’ in any traditional sense. Instead, they are those people who voluntarily love to enthuse about us to friends and family.
As a direct result of some of our “basic needs” clients receiving A-grade service, we’ve picked up a considerable number of larger clients based on their enthusiastic recomendations. The value of these advocates (especially to small business) far exceeds any immediate monetary reward they might provide.
It is so important to nurture genuine client relationships as it naturally seems to create business evangelists… and once you have them, they are worth looking after!
Sorry, this is going to sound nit-picky and you can go ahead and delete this comment once you’ve read it but:
“This means that one of the most affective ways of marketing your business is to increase the number of visits that your long-term customers make to your premises, as this will add to the lifetime value of the customer.”
I believe you mean “effective” not “affective.”
Thanks for pointing this out, Anon.
I don’t think it sounds nit-picky at all (grammatical errors are a pet peeve of mine, so I’m actually a little embarrassed). I know some of my friends will just love seeing your comment as I tend to pull apart their punctuation and spelling on a regular basis. I can’t deny them this little pleasure by not publishing your comment.
Thanks again for the heads up!
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