A look at customer lifetime value
Knowing your customers and their behaviors will pay off if you ever wish to retain your customers for lifetime. You can predict future behavior if you know who your clients is and what they like. Reward your active customers. Happy customers like to "win". If send out a flyer for a 20% discount, it makes your active customers feel they are in control because they are smart about the decisions they make. Your business on the other hand will profit since promotions encourage active behavior.
If you want your customers to do something for you, you have to do something for them. Many stores have set up customer appreciation cards or discount cards for frequent shoppers. Studies have shown that if your promotion makes your customer feel good, they are more likely to use the card or follow through with the promotion.
Keep an active relationship with your customers. You will gain customer retention by sending them a newsletter or birthday card, anything that shows you care about them and want them to come back. If you don't keep your customers active with you, they will slip away and no longer be customers.
Knowing what your customers think is another important aspect of business marketing. Many companies offer surveys. The Olive Garden is a prime example; they select a few customers and tell them the manager would like to talk to them. The manager makes the customer feel important since they were "singled out" in the entire restaurant. The customer is given a receipt with a phone number to take a survey, at the end of the survey; they get a certain amount off their next meal. Great plan, you give them money so they can come back to you and spend it at your company!
Develop a strategy to retain your customers and make your business profitable. This sounds easier said than done, but with a little effort on your part, it can go a long way. Deliver the right message to your customer with the right promotion that will return excellent sales for your company.
To obtain the customer lifetime value, you will take the average transaction size and multiply this number by the purchases an average customer makes from your each year. This amount will calculate the average annual sales volume of your customers.
The number you come up with will help you calculate how much money you can make if you can encourage your sales staff to make just one extra sale each year. This can affect your lifetime profit. You can see the average profit you will receive from each customer and how you can obtain new customers by spending less money and making a profit.
Every company is looking to make a profit. By taking the time to make and build strong customer relationships, you can obtain customers for life. This provides you with customer lifetime value that can ultimately have a large impact on the future of your company. The customer lifetime value calculations can give you a greater understanding of how much money you can spend to acquire a new customer and what you will gain in return.
Doing proper calculations of your customer lifetime value, you will have a greater edge over your competitors. You will know how much you can spend, what you will get in return and how your company will profit from it. Be sure you stay on top of your cash flow before you start spending money to obtain new customers. Lifetime profit is a must if you expect to stay in business for a long time, and keep valuable customers returning.