Igor Mann about LTV (lifetime value)
Igor Mann : customer value
Now let's talk about customer value for life. Recently I was asked what the most important metrics and indicators are and can be used in marketing. There are many of them, but one of these metrics or indicators - there must necessarily be a client's value for life. Very often, company employees are not very good with customers, visitors, and customers. They think: “Well, I will not sell to one client what we will lose, in the worst case, we will lose the cost of one purchase or the value of one contract.” In fact, the concept of “Customer Cost for Life” makes you see in every potential buyer, in each visitor, in each client, a large amount of money.
How is it considered? We take and multiply three indicators. Suppose you are a store, a buyer comes to you, and you ask yourself the question: “About how many times this buyer will come to me throughout his life?”. Suppose he is 20 years old, he will come to you for another 10 years. The second question: "For these 10 years, every year, how much will he make purchases?" Well, suppose he will go to your store every 2 months, I don’t know, that is, in a year he will make 6 purchases. And the question: “Each time he will punch a check?” This is the average purchase price - multiplying those and other numbers, 10 by 5 and the average check, and gives you the cost of a client for life.
Once I advised one company, an automobile. When we calculated with them the average cost of a client for a lifetime for a car dealership, it turned out 312 thousand dollars. That is, not 20 thousand dollars, not 25 thousand, as usual, managers thought when they would sell or not sell the car, but 312 thousand dollars. The company immediately decided, immediately decided to become the most customer-oriented automobile holding. By the way, it did.
At Mann, Ivanov and Ferber Publishing House, we calculated the cost of a client for a lifetime, and it turned out to be not very large - 1000 euros. And each employee understands that if you do not sell a book that costs 5 or 10 euros, you do not lose 5 or 10 euros, you lose 1000 euros. Therefore, it is very important to do the same - calculate the cost of a client for life for your business and be sure to visualize it. Remind your staff how much the customer's value is for a lifetime. So it will be easier for them to take care of customers, so they will become customer-oriented.
Once again: the cost of a client for life is the figure that every manager of any business must know, and every employee must know (know, love your client and not lose).
© Igor Mann