The value of treating a new customer like a long-term returning customer.
Many business owners fail to understand the true potential value of a customer nor do they come close to realizing that value. It takes time, effort and resources to close a sale with a new customer. If that customer returns to buy more from you—even if its a small purchase—the cost associated with the closing that second sale is far less; they already know you, your business, how you operate and therefore they don’t require convincing. Future sales are equally profitable. Every customer that walks in the door is an opportunity to build a customer for life. This is the value that small businesses need to assign to each customer. Customer lifetime value or CLV is calculated by multiplying the average sales per year to a customer by the number of years you can realistically expect them to buy. The client that walks in and spends $50 with you could actually be worth thousands of dollars if you are able to keep them coming back. When considering different strategies for acquiring new customers and retaining existing customers it’s important to consider CLV.
About small business finance expert Mike Periu
Mike Periu has experience in small business finance. He founded Proximo, LLC a company that offers consumer and small business training services focused on technology and money.
Mike Periu teaches individual empowerment through entrepreneurship and financial literacy. He has appeared 500+ times on television and radio. Visit the Reach and Media pages of his website to learn more about where he has appeared.
You can read more of Mike’s articles on his blog or at American Express OpenForum, Yahoo! Finanzas and the Huffington Post.
Mike has a degree in International Business and Finance which he received at Georgetown University in Washington, DC. He received a Fellowship from the Kauffman Foundation for the Labs for Enterprise Creation program in Kansas City.
