There really isn’t a better testament for your business than having repeat customer sales. It tells you you’re doing something right because your customers are coming back for more. But the true magic of repeat business is understanding the frequency a customer buys, what they buy and the value of their purchases.
In Small Business Minute #21, I discussed how profitability increases when you deal with existing customers, but now I want you to leverage this information so you can enhance a customer’s lifetime value to your organization.
Customer Lifetime Value or CLV has been used by large corporations for years. Companies like Gillette and Schick realized a long time ago that if they can get one of their shavers in your hands and you like it chances are that you’ll become a loyal and profitable customer by selling you an ongoing supply of blades at very high margins.
The same goes for printers. Once HP, Brother or Canon get you to buy one of their inexpensive printer, they know that you’ll produce a steady stream of high margin purchases every time you run out of ink.
So if you haven’t calculated the Customer Lifetime Value for your business, now may be the time. By analyzing how, why, when and what your current customers are buying, you may begin to uncover patterns that you can start to exploit and market to your entire customer base. Finding continual opportunities to be of service to your clients increase not only their value to you but your value to them.
I’m Greg Weatherdon and this has been your Small Business Minute.
Copyright © Greg Weatherdon 2016
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