Whether you want to build a business or influence, you need to understand who needs maximum attention and who you should not spend time on.Dr KC Onyima
The most important resource that humans don’t have in excess and cannot store is TIME. And that is why setting priority and having focus is so important.
Customer lifetime value (CLV) is the amount of money which a particular customer will spend on your business throughout the time you are in a business relationship with him
CLV reveals who your VIP, loyal and active customers are. Have you noticed that some people don’t go to banks rather bankers go to them
Some people also don’t que in the bank, rather they are offered seat inside. It all depends on the perceived worth and what the bank feels they can get from you.
So if you have a business, take time and calculate how much you can earn from a single customer over a period of time such as 10 years
It will help you to know if the customer worth pursuing or not.
There are some customers you cannot afford to loose no matter what. This is because of their CLV
There are also potential customers who you should do everything possible to acquire because of their value
To calculate CLV, multiply average order value with the purchase frequency and subtract the cost of getting the customer
It is important to know that in emphasis is shifting from just getting customers to retaining customers.
Customer retention is key to growth. But to retaining a customer is costly and not easy. That is why you focus on customers with high CLV
Probability of a new customer patronizing your business is 18% while probability of an existing customer is 60%
As an entrepreneur, you should be worried when the a large percentage of your customers stop buying from you or pull out of your business
That is why for your important customers, you should check their data at least every month. Check for:
1. The last time they patronized u
2. The frequency at which they patronize you
3. How much they spend on each transaction
4. Number of referral they have given for your business
This is era of data driven marketing and we should not shy away from getting information about our customers
As marketers would say, follow your customers on their life”s journey so that they will grow with you.
Conducting CLV on our customers will help you to plan the kind of relationship you will have.
It is not advisable to treat VIP, relapsed and new active customers the same way. If you do, you will loose their loyalty
When you know your CLV, you can make personalized recommendation, create loyalty programme, communicate dynamically and know which products to put in bundles
In conclusion, learn to ask the right questions if you want the right answer. Huge projects are difficult to start but once they start, little effort is required to keep them going. Many rewards you see today are products of incremental efforts made over the years. Customer is still the King in every business and do your best not to miss valuable customers. Spending on them is worth it.