Customer Lifetime Value represents the net present value of the profit to be realized on the average new customer during a given number of years. It can be used as a yardstick of performance by measuring cost per sale, rate of customer retention or conversion of prospects. It can provide a good guide to profitable strategy.

Get your customers to give you data, and build it into a database complete with purchase history by keeping track of their spending. Then use the data to segment your customers by profitability.

This is what you are likely to find:

The top 20% of your customers gives you 80% of your profits. You will also find that marketing heavily to your Gold customers is not as profitable as they are already giving you all their business. They are "maxed out." What should you do for them? Continue to make them feel “special”. Give them special services and attention so as to retain them. On the other hand, focus on your Silver customers, who are just below Gold. They are your most “growable” or highest potential customers. They are the ones who can move your sales up by leaps and bounds. They have the ability to move up to Gold, if you will only encourage them.

Move your customers up to GOLD. Ask us how!

Further topics of interest: ........................................................ Baseline Master Strategy Marketing Integration The New Customer Economy

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