What is Your Customer's Lifetime Value?

Posted by ShawnHessinger under Strategy
From http://sethgodin.typepad.com 5468 days ago
Made Hot by: stillwagon428 on November 29, 2009 3:35 am

Seth Godin asks business owners to consider not what each customer represents in a single purchase or contract for services, but rather what the lifetime value of a happy customer who keeps coming back might be. If we did, Seth suggests, we might spend more time, energy and money to bring good customers in, give them great service, try to keep them happy and avoid their leaving us for someone new. Think about how much you spend to keep your customers happy or better yet what a happy customer is worth to you.

Who Voted for this Story

Top BizSugar Users

This week's most active BizSugar users. Join Them!

Comments

Written by silviya dineva
3088 days ago

Thank you for sharing Seth's tips. It is very important that businesses implement CLV. Yet, only 5% of online businesses actually measure and use CLV.

- 0 +

Written by ShawnHessinger
5466 days ago

Seth's observation here may have more to do with focus than pragmatic execution. Perhaps it is less important that we calculate the time, money and energy we spend on each customer based on what we assume their lifetime value may be to our business than that we try, in every way that we possibly can, to treat each customer as if they represented a large lifetime value instead of viewing each as if they represent only a single short term sale.

- 0 +

Written by TonyJohnston_CNi
5468 days ago

Thanks for bringing more visibility to Seth's insights, even though they are a bit flawed. True, business likely would make better decisions if they better appreciated the value of the annuity each and every new customer represents. Consider it like fishermen do: you want to get your hook well and truly lodged in the fish's mouth before you start trying to reel it in. Problem is, business owners can only do 'over pleasing' on first time customers to the extent that the business's current cashflow will allow. Another challenge is, particularly in retail, how do you sort out first time customers from repeat ones - it can be done, but it is not that easy to do in practice however.

- 0 +

Written by silviya dineva
3088 days ago

A nice fishermen comparison.

- 0 +