What’s the Lifetime Value of a Client?

Sure, for holidays and birthdays you may have a program in place to thank your customers for their business. But have you ever thought about the value those customers bring to your business? Run the numbers and they may surprise you.

Doing so may make you want to establish new ways to communicate with your customers so they can better understand your value and also to demonstrate how much you appreciate them.

Here’s a formula to determine how much a client is worth over the lifetime of a business:

For example, say you have 100 clients over the course of a year and your income from them is $500,000. Then that makes each client worth $5,000 per year. Over the next ten years, that client is worth $50,000. If each client refers 3 new customers to you per year, that nets $15,000 per year, and $150,000 over the next ten years. That not only makes it incumbent upon you to develop an appreciation program, you should also have a robust communication process in place to stay in touch with them all year-long.

Most businesses recognize it costs money to make money. It also costs money to keep money. We urge our clients to balance their marketing dollars between developing new business and keeping the business you have.

You can continue to stay valuable and relevant to your clients beyond your services by reaching out to them in a variety of ‘touches’ such as: information-driven newsletters, social media shout outs, occasional text messages, direct mail, calls and more. As your mother told you years ago, a good old-fashioned hand-written note of thanks goes a long way.