When was the last time you considered the life-time monetary value of just one of your good business customers? In terms of dollars and cents, how much is one of your good customers really worth? Do you really know? Most business owners have not thought this question through. They just don’t know the answer. That kind of approach to running a business is not for you or me.
Here is an easy way to get a good idea of the lifetime value of one of your small business customers. For example, let’s say Mary Smith, one of your customers, spends $200 every time she comes into your business and she makes an order two times per month, at $400 dollars per month. If she repeats this order twelve months of the year, this comes out to $4800 per year. Mary is the kind of customer that you could easily keep for ten years. So, ten years times $4800 per year equals $48,000.
Mary Smith is a $48,000 customer!
This kind of thinking makes it mandatory that even though Mary has a few quirks in her personality, and she is only buying $200 worth of products or services every other week, she is still an extremely valuable customer.
When we look at our customers as lifetime relationships, it can make us, our employees, and our managers aware of the fact that they are extremely important to the long term success of our small business. As in any good relationship, we are going to have our misunderstandings and misconceptions that need to be clarified and resolved.
Communicating the value of the life-time value of your customers to your managers and employees is critical. By taking the time and investing in the education and training of your team on the importance of getting and keeping lifetime customers, you will continue to build your small business and ensure an excellent return in profits. When you do this you will be truly marketing your small business.
Tom Borg is a business expert who works with small and mid-size companies to improve customer retainment. He can be reached at 734-404-5909, tom@tomborg.com or visit his website at www.tomborgconsulting.com
