What is the individual value of a customer and why is it so important to know?
Federal Express (FedEx) uses this information on a daily basis. If, for example, a single company sends 30 packages a week at $25 each, that’s $750 a week. On a yearly basis, the same company will spend $18,750 a year sending packages through FedEx. If that customer is angered by just one $25 package that is late, FedEx has the potential to lose that customer (and $18, 750). That’s why FedEx supervisors are authorized to grant a $100 refund on the spot, no questions asked. $100 is a small price to pay to retain a customer worth thousands and thousands of dollars.
Calculating a customer’s worth helps determine how much you would be willing to spend to acquire new customers, or for that matter, how much it costs your company to lose one! To compute the value of your customers, use these simple guidelines:
- How long will a customer patronize your business?
- How much will that customer buy from you during the year?
- What is your gross profit margin?
Learn more about effective advertising budgeting and tracking.
Contact RainMaker for a free consultation, and let’s create the right strategies and tactics to attract those valuable customers and keep them coming back for more.
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