Some customers are more valuable than others. But just how more valuable? The longer a customer stays a customer, their value to you as a business continues to grow over time. For instance, as a loyal customer to Pinkie’s Bakery twice a week, in over a year, I will contribute over $624 to their revenue. If I stay a loyal customer for years, that’s easily thousands of dollars. Wouldn’t it be nice to have hundreds or thousands of customers who contribute that kind of revenue to your business?
This is called Customer Lifetime Value: the projected amount of revenue a customer will generate over their lifetime at your business. You want your customer lifetime value to be as high as possible, you don’t want a ton of new customers who come once and never come back again. Repeat loyal customers is where the bulk of your revenue is; loyal customers generate over 10X more revenue in their lifetime!
So here is an infographic covering what customer lifetime value is, how to calculate it, and how to increase it across the board at your small business. We have five ways to not only increase customer spending over time, but how to use a customer loyalty or rewards program to accomplish your goals as well.