By Mo Yusuff One of the most frustrating times in my life was when we had too many brown...
24th August 2017
By Mo Yusuff
How much is a customer or client worth to you?
If you’re not sure, here’s a really simple way to find out.
First, take your annual sales, divide it by the number of customers you have, and then apply your overall margin to get the actual profit you’ve made.
For example, if your annual sales last year was £1 million and you sold to 500 customers, your average customer spent £2,000. If your margin was 33.3%, the profit you made on average per customer was £667.
Stay with me here, it starts to get really interesting now and you’ll discover something most people just don’t get.
You could say your average customer is worth £667. And if you did, you’d be totally and utterly wrong.
Want to know why?
OK, I’ll tell you…
There are two other things you need to factor in.
The first is the life time value of your average customer and the second is the likelihood they’ll refer you to their friends and colleagues (if you do a great job, which I’m sure you do, you’ll get referral business without asking, and if you do ask…work it out for yourself).
For example, your average customer or client stays with you for three years. That makes them worth £2,001. And they refer just one person to you that buys from you.
This means your average customer is worth at least a whopping, £4,002 to you.
So, here’s a question?
If your average customer is worth so much more to you than you thought, you wouldn’t want to lose them, would you?
And showing them that you appreciate them is a good way to keep them, right?
How about sending your top customers or clients a small thank you gift in the post? Simply work out how much your average customer or client is worth, choose the customers that spend the most with you and say a great big Thank You.
If you need a hand, just get in touch with your resident promotional products experts. We’ll choose the best promotional products that will suit as thank you gifts for your favourite customers and they will surely come back to you over and over again along with their referrals.