Keeping customers for life – that’s valuable!

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Running Time: 8:53

Date: 01/06/2014

Calculating the lifetime value of your customers allows you to decide how much you can afford to spend acquiring more of them.

Many businesses take a short-term view when analysing how profitable their customers are to their business. But Nick Schildberger says you should take a longer term view. Instead of looking at the break-even from one transaction, Nick suggests calculating the profit achieved over the lifetime that a customer will spend with you.

He takes us through the simple calculation, and highlights the importance of including this information in your budgeting so you can make informed decisions about how much to invest to acquire new customers.

This longer term thinking also encourages better relationships with your customers, which in turn provides further opportunities to increase the value of your customers to your business.