Timeless Marketing 4 – Customer Lifetime Value

For today’s episode of Timeless Marketing, I’m going to share with you a cornerstone concept in marketing.

Back in 1993, I already had been marketing for ten years. When this concept came to me, it changed a lot about the way I think about marketing. About everything, really.

The concept comes from a story about a marketing master named Jay Abraham. He was hired to help a business that sold irrigation pipes make more sales. He asked them the basics of their company. What do you sell the product for, what is the cost of goods, etc. But then, he asked the most important question: How often do your customers buy from you?

This is the concept of the lifetime value of a customer. The lifetime value of a client that regularly buys from you can be in the hundreds of thousands. This is why holding onto that customer and maintaining a relationship with them is so incredibly important.  It helped this company dramatically improve their results by changing their compensation plan to their salespeople.

Understanding not just how much a customer spends when they do business with you, but also how often they come back and what amount of money they end up spending with your business over the entire lifetime of their relationship with you, could be a game-changer for your business. Once you know this information, you can then get an idea of how much you can spend on bringing in a new customer.