Article: How To Determine Your Customer's Value
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How To Determine Your Customer's Value
This literally can be the most profitable thing you'll ever do for your business and that is to understand exploiting the actual value of your customer. It's been called the Marginal Net Worth and the Lifetime Value.
What is the current worth of one of your customers or prospects? It's the total profit of an average customer over the lifetime that they do business with you. That includes all subsequent sales minus advertising/marketing and your fulfillment expenses.
Let's say the average customer brings you $75 per sale. They re-purchase 3 more times in a year. Their average order amount is $300. On each $300 reorder, you make $150 gross profit The average life lasts 2 years. Every new customer is worth $975.
You reach the 975 by adding the $75 ...
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