The lifetime value of a customer is defined by how much revenue they bring to a business throughout their entire relationship. This not only includes the amount of money they spend, but it also includes the amount of money that comes from referrals and other customers who might not have ever purchased products or services from the company if the original customer hadn’t been a customer in the first place.
While placing a dollar amount on this requires speculation and possibly some research, it can be done fairly accurately.
The Lifetime Value Of A Customer
To maintain a thriving business, owners should think past the basics of one-time sales. Instead, they should focus on the lifetime value of each customer because the knowledge gained from analyzing a customer’s journey can be extremely powerful.
For example, an ideal customer relationship includes much more than a one-time buying experience. It includes multiple happy experiences that bond a customer to a specific brand and the brand becomes their regular go-to for purchasing a specific product or service. As the relationship develops, both parties feel somewhat loyal to each other. Then, ultimately, both parties continue to happily do business with each other over a long period of time while other customers will be gained from relationships and referrals.
By analyzing each customer interaction beyond a customer’s first purchase, it helps owners better understand the purchasing cycle of those who buy from them. Then they can strategize accordingly to keep customers coming back, and they can also come up with ways to gain new customers from their connections.
Important To Remember
As a business owner, focusing on ROI is natural. With that in mind, it helps to know which customers have the potential to provide the highest ROI over long periods of time.
Likewise, it is important to understand that nobody ever really knows how much revenue a customer will produce. Remember, the lifetime value of a customer is defined by how much revenue they produce as well as the amount of money spent by others who come from their referrals and relationships. Understandably, owners may wish they had a crystal ball to determine this, but safe assumptions can be made and practices can be put in place to give consumers reasons to be happy, regular customers.
With that in mind, it only makes sense to view every customer as a potential gold mine and treat them accordingly.
How To Keep Customers For A Lifetime
Companies who invest in marketing can make the most of it by focusing on the lifetime value of each customer. Some of the ways they do so are by providing great customer service, selling quality products or services at competitive prices, and recognizing the needs of consumers from a customer’s perspective. Those are ways that will genuinely help people feel good about buying from them.
Ways they can turn them into customers for a lifetime are by giving recognition, treating them fairly and honestly, providing discounts or loyalty programs, giving them perks, providing superior service at all times, keeping their locations clean and user-friendly, and helping them feel like their happiness truly matters.
The companies who make strong efforts to understand their customers, including their personalities and the businesses they own or operate, have the best chance to succeed in creating loyal customers who keep coming back. Then, if the right strategies are put in place, they set themselves up to truly enjoy the lifetime value of their customers.
To learn more about how Villager Magazine can help you gain new customers or keep the ones you have coming back for more, contact us today.