Retain customers for profit

As you are building your business there are many different area’s of customer management that you will come across. Things like lifetime value, cost of acquisition, and a range of other costs or averages that can be very helpful within your business. However one of the most important things to remember, is just how valuable a long term customer can be in place of a one off or short term customer.

The first consideration is how much the customer is worth to your business. Or in other words the Lifetime value of a customer. This is basically a estimation of how much any particular customer may spend over a certain period. It is something that can really be calculated over any period really, 1, 3, 5 or even more years. However while 1 or 3 years may be useful any further may not really provide any true insight, as even in 3 years many things can change. To calculate the Lifetime value of a customer you can find more details in this article.

The second consideration is that you need to make the most of every customer. Acquiring customers can be an expensive task, and although you may not realize it sometimes it can take multiple sales to a customer to recover the cost of actually acquiring that customer. Even though when you make a sale you see the cost of the product and the profit from that product. The cost of acquiring the customer is something that has to be taken into account in the long term, or it is very possible that you can have a very successful business that still fails.

Finally it is a simple matter of which do you see to be easier. Selling a product to someone that knows you business and likes to deal with you, or selling a product to someone who could not care less about your business and will deal with who ever they perceive to be the easier and more appropriate company. Or basically a sale to an existing customer is often much easier then to someone else.

At the end of the day it really comes down to, whatever you do, make sure you work just as hard to retain your exising customer as you do to get new ones. Because the existing customers very often are the lifeblood of your business.

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