When you think about business, a lot comes in to mind like investment, revenue, store, employees, marketing, profit margin, inventory, and so on. With all the hustle and bustle that comes in running a business, most tend to neglect one question…
Do you know how much your customers are worth?
You may already know the answer or may have looked into it before, but more important questions arise – Do your employees know your customer’s worth? Do they understand how this knowledge impacts your business? Do they even care?
When you search “customer worth” on the internet, you will come across terms such as Customer Lifetime Value (CLV) and Lifetime Value (LTV). What is CLV or LTV? There are a number of definitions that you will find, but to simplify it – “total revenue coming from a customer over the entire duration that he/she transacts business with you”.
It is a fact that customers transact business where they feel good and see value in the products and services that they get especially for those who do business routinely. It has been said many times that it is easier and cheaper to keep existing customers than to gain new ones. This is generally true, but not always.
Let’s look at 5 different customers:
Customer 1: Visits your store once a week and spends $500 or more.
Customer 2: Visits your store every day and spends $3 – $5.
Customer 3: Rarely visits your store and spends $100 – $150 per visit.
Customer 4: Visits your store just once and spends $300.
Customer 5: Visits your store at least 3 times a week, but never purchases anything.
Which of these customers will can we consider as important and has the highest worth or value. Just by looking at the amount each customer spends, we would choose Customer 1, but there’s more to it than just that. We always need to consider all possible aspects of each customer’s situation to have a better understanding on their worth or value.
Take for example Customer 5. It’s just that he/she may not find anything he/she needs from your store, but likes to keep going back to your store to check on your products. This person may have a huge network of friends and associates who may need the products that you sell and it just takes a simple conversation and mention what he/she sees in your store. Though in terms of revenue, his/her worth or value may be $0 for now, but he/she can bring in new customers for your business.
Let me give you another situation to think about…
If a customer regularly buys products from your store and spends around $500 monthly, this customer’s worth or value to your business is around $30,000 over the next 5 years. If you lose 10 customers, this means losing hundreds of dollars of revenue, and we’re just talking about 10 customers in a span of 5 years.
Let’s say you have another customer whose worth is 10 times more. Wouldn’t you agree that it’s worth spending a little more to keep this customer? However, what if a potential customer’s worth is 20 times more. Wouldn’t you also agree to spend more to acquire this customer? The question now is, which type of customer do you invest time, effort, and money in?
Without enough proper data to use for analysis and correlation, the answer to these questions will always be situational, and you cannot be situational in making decisions for your business.
ExitShopping®’s survey techniques and methods can gather extensive information from a huge number of your customers for us to analyze and correlate with other essential data that will help tell you whether you are on track or indeed give clear guidance as to where you need to set in and step things up a bit. The report also will help you anticipate what your customers further need to further increase higher potential revenue for your business.
The report that we will provide incorporates all useful information that is crucial to help your business from actual and potential customer worth or value, customer retention, customer acquisition, products, and services. This can also be used to present to your employees to ensure they understand how these aspects of the business impact the customers, them, the store, and the business as a whole. Bear in mind that employees who don’t care about anything except to get paid are the one who have no idea on what’s happening with the business that they work for.