15 December, 2013

1-5-7 finance: Lifetime value

It is the cumulative value of the customers that stay with you for a long time

-          These customers worth initially the entire series of purchases they have made over time
-          Plus that they will bring you more customers, acting as a mobile marketing station for you
-          Plus that they are so easy to be brought back again if they drift away for some time

So, you need to know the lifetime value of your lifetime customers be answering these questions

-          How much does it cost to acquire a customer?
-          How much does it cost to keep him?
-          How much does he pay you over his staying?
-          What is the average period they tend to stay with you?
-          How many customers come to you based on their recommendation?

If you find that their value is high enough, it is totally worth it to give away some money to keep them around