#MondayMotivation: You Could Be Missing a Lifetime of Value
Looking for a little #MondayMotivation? We’re pulling out past stories that are still just as relevant today. Here’s a pearl from Jim: A Customer’s Value Doesn’t Stop at the Checkout Screen.
Once or twice over the years, I’ve mentioned the term Customer Lifetime Value.
I thought I’d dwell on it for a moment because some might not be clear what it means in marketing terms and why it’s important.
What it means, perhaps obviously, is the total economic value of a customer to an organization for as long as that person is a customer. It’s not just the transaction at hand, but all future transactions, if any, and all other ways that person may create economic value to your organization, not just on that first trip through your checkout screen.
Let’s say, for example, that somebody buys two tickets to an event and the tickets are worth $100. Exactly one year later, they buy two more tickets worth $100 and do this every year for a total of five years, before they win the lottery and move to Antarctica to start a Penguin Ranch.
They’ve spent $500 with your organization and probably won’t spend anything more, so you can safely call their Lifetime Value $500.*
It’s important because when you do your marketing, you should have a sense of what to spend. Would you spend $150 in marketing to get a customer to spend $100? Probably not. You can count. On the other hand, you’d probably spend $150 to get a customer who’d spend $500, right? Good investment. If you don’t know what your customer’s lifetime value is or is likely to be or typically is for a certain kind of customer, how would you decide? …
Read the rest of Jim’s post: A Customer’s Value Doesn’t Stop at the Checkout Screen.