Marketing
Issue No. 44 - December/January 2008
The real value of lifetime customers
by Kimon Lycos
Customers mean everything to your business. Thedegree of success you enjoy is directly related to yourability to continually attract new customers and to keepexisting customers buying from you, again and again.
In a perfect world, you might be able to sit back andserve only existing customers. Doing so inhibits growthbecause every business has a finite number of customers it can reasonably expect to serve. Whether you have 10 or 1000 customers, in order to cultivate maximum value from your greatest asset, you need to market to these customers again and again.
The best strategy is to continue efforts to attract first-time buyers and constantly stimulate sales from those who have purchased before.
Marketing is about keeping buyers you’ve already won over and encouraging them to buy from you repeatedly, for years. That’s where the real profits can be harvested.
According to world-famous marketer Jay Abraham, there are only three ways to grow any business:
1. Increase the number of customers
2. Increase the unit value of each purchase transaction
3. Increase the number of purchases each customer makes
The easiest and least costly sale you’ll ever make is to an existing customer. These people have already trusted you to deliver a product or service. You don’t have to sell them again on the merits of doing business with you, instead of your competitor down the street. They’re more likely to buy again with much less scrutiny than the first time around.
To capitalize on the true value of your customer list you need to be aware of product lifecycles, individual buying frequency patterns and the value of typical purchases.
To illustrate the value of your customer list, let’s look at an example. Suppose an average single purchase is $100. If that’s all “customer A” ever spends with you, the actual value of “customer A”, in terms of revenue, is $100.
Suppose this $100 dollar purchase is a...
