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Repeat Customers

Sometimes with clients I’m aware I totally undersell the value of what we can do for them in terms of marketing

The lifetime value of a customer is something we actually rarely touch on in that initial meeting with clients

Partly because so often small businesses think of the present – the effect that social media marketing will have on their bottom line right now for this month and the next couple of months

Partly because we don’t want to confuse them with science

And often because the here and now value alone of Social Media Marketing stacks up VS what current marketing they’re doing

So what is the Lifetime Value Of A Customer?
Customer Lifetime Value is defined as the total £££s flowing from a customer over the entire relationship with that customer.

Can you explain that to me in simple terms?
It’s how much a person is going to spend over the period of retention

How do I calculate this?
(Average Order Value) x (Number of Repeat Sales) x (Average Retention Time)

Can you give me some examples?
This is just me – but in these examples I’m more than likely the norm

My favourite restaurant in my local town is as follows
(£65 – I go with at least 1 other person each time) x (5 times a year) x (3 years) = £975

The bar I go at least once every week
(£20) x (52 times a year) x (3 years) = £3120

Or the local gym
(£10.99) x (12 times a year) x (3 years) = £395.64

Ah I think I get it now
Yes – that is why you will often see taster nights at restaurants or a gym giving away one months membership

It’s profitable for them to do so if you look at the Lifetime value of a customer figure instead of just the profit figure for that month

It’s also why the best businesses marketing continually rather than just the odd one off bit of marketing each year

How does this link into my Small Business marketing?
Most small businesses look at marketing simplistically like this

* I spent £250 this month on marketing
* The income generated from that this month is 10 customers at £30
* When I take my other costs away I just about broke even

What they don’t look at is the fact that those people come back 5 times a year off the back of that one piece of marketing

They always think in the micro-moments and the here and now

Each of those customers is worth an average of £450 in their lifetime and you’ve just won over 10 customers – £4500 from £250 of marketing

Do you think it’s worth repeating?
The figures speak for themselves – it is profitable to do great marketing

The problem with when small businesses is at times of a recession they actually cut back on their marketing budgets to save short term costs – whereas if they invested in marketing that worked the increased value via long term customer
spend would see their business expanding rather contracting

Work out the lifetime value of a customer for your business

Email us on or call 07806774279 and we can have a chat about increasing your customer base in a cost effective manner that delivers profits

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Alex McCann

Author Alex McCann

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