Do you know the value of your current customers?

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do you know the value of a customer


Use the following formula to calculate it:


  1. $_______ How much does your average customer spend per transaction?



  1. _________Multiply ‘A’ by the number of times that customer visits or patronizes your business each year.


  1. _________Multiply ‘B’ times ten (this is the number of years a lifetime customer will stay with you. (C = B x 10)


  1. _________A lifetime customer will bring you at least one additional customer through referral. (D = C x 2)


Now deduct the cost of getting and keeping that customer to determine the value of your average customer.


An example from a retail store:


  1. Average customer transaction: $100


  1. Number of time customer buys per year = 6

A x B = Average customer expenditure per year                               $600


  1. $600 x 10 (B x 10) = average years a customer will

stay with you and their expenditures                                               $6,000


  1. One additional customer brought by

your original customer (lifetime value)                                           $6,000


Cost of getting and keeping

your original customer =                                                                    -$500


Total value of a current customer = $11,500


How did you do? Are your current customers worth more than you thought? Retaining your customers through delivery of excellent service is just as important as attracting new ones. Yet many businesses put all their efforts and most of their budget into getting new customers.

trevina broussard head shotAbout Trevina Broussard

I share powerful Customer Service tips and insights for front line managers and employees on how to deliver customer service to keep your customer coming back. The name of the game is customer loyalty and it’s not just about satisfaction. It’s about a willingness to be a repeat buyer, willingness to recommend you to others, and resistance to switching to a competitor. Fortunately, I learned this lesson through my 15-year corporate career. Poor service is an all-too-frequent experience for us all. I provide a framework for implementing ongoing processes that can build customer loyalty.

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