File: //home/webmarketingplus.co.uk/public_html/BK/ecommerce/lifetime-value.htm
<!DOCTYPE HTML>
<html><!-- InstanceBegin template="/Templates/consultancy.dwt" codeOutsideHTMLIsLocked="false" -->
<head>
<!-- InstanceBeginEditable name="doctitle" -->
<title>WebMarketingPlus - Understanding Customer Lifetime Values</title>
<!-- InstanceEndEditable -->
<meta charset="utf-8" />
<meta name="viewport" content="width=device-width, initial-scale=1" />
<!--[if lte IE 8]><script src="assets/js/ie/html5shiv.js"></script><![endif]-->
<link rel="stylesheet" href="../../assets/css/main.css" />
<!--[if lte IE 9]><link rel="stylesheet" href="assets/css/ie9.css" /><![endif]-->
<!--[if lte IE 8]><link rel="stylesheet" href="assets/css/ie8.css" /><![endif]-->
<!-- InstanceBeginEditable name="head" --><!-- InstanceEndEditable -->
</head>
<body>
<!-- Wrapper -->
<div id="wrapper">
<!-- Header -->
<header id="header">
<h1><a href="/">WebMarketing+</a></h1>
<nav class="links">
<ul>
<li><a href="../../specialist-advice.html">How I can help</a></li>
<li><a href="/consultancy.html">What I know</a></li>
<li><a href="/expertise.html">What I can do</a></li>
<li><a href="/success-stories.html" style="cursor:default;">Successes</a></li>
<li><a href="/Cost-and-remuneration.html">Remuneration</a></li>
<li><a href="/about_wmp.html" style="cursor:default;">About</a></li>
<li><a href="/contact.html">contact</a></li>
</ul>
</nav>
<nav class="main">
<ul>
<li class="search">
<a class="fa-search" href="#search">Search</a>
<form id="search" method="get" action="#">
<input type="text" name="query" placeholder="SEO Consultant" />
</form>
</li>
<li class="menu">
<a class="fa-bars" href="#menu">Menu</a>
</li>
</ul>
</nav>
</header>
<!-- Menu -->
<section id="menu">
<!-- Search -->
<!-- Links -->
<section>
<ul class="links">
<li><a href="../../specialist-advice.html">Consultancy</a></li>
<li><a href="/consultancy.html">knowledge</a></li>
<li><a href="/expertise.html">Methodology</a></li>
<li><a href="/success-stories.html" style="cursor:default;">Track record</a></li>
<li><a href="/Cost-and-remuneration.html">Costs & fees</a></li>
<li><a href="/about_wmp.html" style="cursor:default;">More about Will Brown</a></li>
</ul>
</section>
<!-- Actions -->
<section>
<ul class="actions vertical">
<li><a href="/contact.html" class="button big fit">contact Will</a></li>
</ul>
</section>
</section>
<!-- Main -->
<div id="main">
<!-- Post -->
<!-- InstanceBeginEditable name="copy" -->
<h2><a href="focus.html">Understanding Customer Lifetime Values</a></h2>
<ul>
<li>Understanding Customer Lifetime Values</li>
<li>The vital importance of Customer Lifetime Value</li>
</ul>
<p>It is always preferable to develop an ongoing relationship with repeat clients rather than depend on costly promotions to attract fresh custom. You should calculate your Customer Lifetime Value to highlight just how important this factor is.</p>
<p>To calculate your Customer Lifetime Value, take the average transaction size that you deal with. Multiply this by the number of purchases an average customer makes from you each year to calculate the average annual sales volume of each customer you have.</p>
<p>e.g. I determine that an average transaction is ?50, and that an average customer buys from me just once each year, so the average annual sales volume per customer is (50 x 1) ?50.</p>
<p>How many years does your average customer keep buying from you? Multiply the annual sales volume per customer by that number of years to calculate their direct lifetime value.</p>
<p>I have determined from looking at billing details that my average customer keeps buying from my company for around 3 years, so their direct lifetime value is 3 yrs multiplied by ?50/yr = ?150</p>
<p>How many additional clients are referred to you each year by your average customer? Multiply that number by the number of years that your average customer keeps buying from you.</p>
<p>I've ascertained that an average customer refers 2 new clients to me each year, so in the 3 years that they are clients, they refer (2 x 3) 6 additional clients.</p>
<p><strong>Finally multiply the direct lifetime value of the customer by the number of total referrals that your average customer brings, and add the direct lifetime value to the result. This is the total customer lifetime value.</strong></p>
<p>Since an average customer has a direct lifetime value of ?150, the 6 referrals bring (?150 x 6) ?600 and then adding the customer's own lifetime value of ?150 means an average customer is worth a total of ?750 (and more when you consider that the six referrals they brought may each in turn bring six more).</p>
<p>This shows precisely why some companies will choose to use loss-leaders - a deal they actually lose money on - in order to open up a new customer relationship. Losing a little on that first transaction can easily be made up over the course of the lifetime relationship with each customer.</p>
<p>However, there is a far more important aspect to customer lifetime values that you should be considering. Once you can measure something, you can start to manage it. Managing and optimising your customer lifetime values can reap huge benefits.</p>
<h1><br />
Here's exactly why Customer Lifetime Value matters</h1>
<div id="marketing">
</div>
<p>Take a look at those figures and calculate how much more you would make if you could encourage a customer to make just one extra referral each year, and also to remain a customer for just one extra year. It makes a big difference doesn't it?</p>
<p>3 referrals a year for 4 years mean a total of 12 referrals, with each having a direct lifetime value of (4yrs x ?50) ?200, so the total lifetime value of the average customer would be (12 x ?200 + ?200) ?2,600</p>
<p>If that doesn't show you exactly why gaining customer loyalty and building ongoing customer relationships is so incredibly important, then you are probably not cut out for business. Customer relationships are absolutely vital to any business.</p><ul class="actions">
<li><a href="/ecommerce/make_a_million.html" class="button big">Continue Reading</a> </p>
</li>
</ul>
<!-- InstanceEndEditable -->
<h2>campaigns | strategies | analysis | advice | expertise |
</h2>
<p><strong>Perhaps the best way forward</strong> is to call <a href="tel:020 8405 6418">07802 944593</a>, take advantage of my free hour's consultation to evaluate your site and to discuss improvements. <strong>You be the judge on whether or not I can help. </strong></p>
<p><img src="../../images/analysis.jpg" width="932" height="203" alt="analysis"></p>
<!-- Post -->
<!-- Post --></div>
<!-- Sidebar -->
<section id="sidebar">
<!-- Intro -->
<section id="intro">
<a href="#" class="logo"><img src="/images/logo.jpg" alt="" /></a>
<header>
<h2>Will brown</h2>
<p><a href="/">independent google consultant available on a freelance basis</a><br>
</p>
</header>
</section>
<!-- Mini Posts -->
<section>
<div class="mini-posts">
<!-- Mini Post -->
<article class="mini-post">
<header>
<h3><a href="#">expert advice professionally delivered to help your business meets its digital goals</a></h3>
<time class="published" datetime="2015-10-20"><a href="/consultancy.html">More</a></time>
<a href="#" class="author"><img src="/images/avatar.jpg" alt="" /></a>
</header>
<a href="../../consultancy.html" class="image"><img src="/images/will-brown.jpg" alt="Better SEO from a freelancer" /></a>
</article>
<!-- Mini Post -->
<article class="mini-post">
<header>
<h3>specialist fields include content marketing, link analysis <br>
</h3>
<time class="published" datetime="2015-10-19"><a href="/services/index.html">SEO Services</a></time>
<a href="#" class="author"><img src="/images/avatar.jpg" alt="" /></a>
</header>
<a href="../../services/index.html" class="image"><img src="/images/business-strategy.jpg" alt="" /></a>
</article>
<!-- Mini Post -->
<article class="mini-post">
<header>
<h3><strong>free telephone consultation</strong> on london 07802 944593 </h3>
<time class="published" datetime="2015-10-18"><a href="/contact.html">More</a></time>
<a href="#" class="author"><img src="/images/avatar.jpg" alt="" /></a>
</header>
</article>
<!-- Mini Post --></div>
</section>
<h2>
<!-- Posts List --><a href="/knowledge-base/" class="button">Knowledge base</a></h2>
<h2><a href="/why-organic-seo.html" class="button">Why Organic SEO?</a></h2>
<section>
</section>
<!-- About -->
<section class="blurb">
<h2><a href="/about_wmp.html">About Will Brown's SEO consultancy</a></h2>
<p><strong>My client retention level is 93.2% </strong>and our year-on-year growth is 268%. Whilst I am supported by the other four consultants, they in turn are supported by a number of admin staff. As many processes as possible are automated with an emphasis on speed and efficiency. <strong>All work is carried out in the UK.</strong> <a href="/about_wmp.html">More</a>.</p>
<p><strong>Find out about Influencer Marketing</strong>. <a href="http://www.webmarketingplus.co.uk/How-to-Step-Up-Your-Influencer-Marketing.html">Click here</a>. </p>
<h3>What's New for 2019- 2024</h3>
<p><a href="/secrets-behind-a-successful-tender.html">Secrets behind a successful tender</a><br>
<a href="/google/how-to-keep-the-creative-juices-flowing-when-creating-content.html">How to Keep the Creative Juices Flowing When Creating Content</a><br />
<a href="/how-to-use-email-segmentation-effectively.html">How to use email segmentation effectively</a><br>
<a href="/how-to-utilise-the-cloud-for-marketing.html">How to Utilise the Cloud for Marketing</a><br>
<a href="/creating-video-content-for-marketing.html">Creating video content for marketing</a><br />
<a href="/how-to-pitch-seo-presentation-to-client.html">How to pitch an SEO presentation to a client in the real world</a> <br /> <a href="/How-to-Achieve-More-with-Your-Website.html">How to achieve more with your website</a> <br />
<a href="/7-SEO-Should-Be-an-Important-Part-of-Your-E-commerce-Business-Strategy.html">7 SEO should be an important part of your e-commerce business strategy </a><br />
<a href="../../how-to-deliver-successful-focus-groups.html">How to deliver successful focus groups</a><br />
<a href="/3-critical-online-marketing-mistakes-new-businesses-make.php">3 critical online marketing mistakes new businesses make</a><br />
<a href="../../blog/digital-marketing-things-to-expect-in-2017.php">Digital marketing � things to expect in 2017 </a>
<br />
<a href="/google/SEO-Basics-Are-You-Doing-It-Right.html">SEO Basics Are You Doing It Right?</a><br><a href="../../google/The-Steps-to-Take-When-Starting-a-New-SEO-Campaign.html">The Steps to Take When Starting a New SEO Campaign</a><br>
<a href="../../google/How-to-optimise-your-online-visibility-to-increase-relevant-traffic.html">How to optimise your online visibility to increase relevant traffic </a><br>
<a href="../../google/The-5-Biggest-Social-Media-Sites-And-How-They-Can-Help-Your-Brand.html">The 5 Biggest Social Media Sites And How They Can Help Your Brand</a><br />
<a href="/google/How-On-site-Chatbots-Can-Make-Your-Marketing-Plans-Even-Easier.html">How On-site Chatbots Can Make Your Marketing Plans Even Easier</a><br />
<a href="/google/3-Things-to-do-Before-You-Start-Your-Marketing-Campaign.html">3 Things to do Before You Start Your Marketing Campaign</a><br/>
<a href="/successful-health-fitness-website.html">How To Start A Successful Health & Fitness Website</a>
<br>
<a href="../../making-money-on-the-side-a-guide.html">Making Money on the Side: A Guide </a></p>
</section>
<!-- Footer -->
<section id="footer"> </section>
<section id="footer"> </section>
<section id="footer">
<ul class="icons">
<li><a href="https://twitter.com/webmarketingcom?lang=en-gb" target="_blank" class="fa-twitter"><span class="label">Twitter</span></a></li>
<li><a href="https://www.facebook.com/internetmarketing4you/" target="_blank" class="fa-facebook"><span class="label">Facebook</span></a></li>
<li><a href="https://www.instagram.com/webprofits/" target="_blank" class="fa-instagram"><span class="label">Instagram</span></a></li>
</ul>
<p class="copyright">�Webmarketing+ 2024 | Will Brown, The Glass House, 187 Arthur Road London SW19 8AE | Tel: +44 (0)20 8405 6418 <a href="http://www.iconsulting.org.uk/" title="Institute of Consulting" target="_blank">Institute of Consulting </a> | <a href="/contact.html">Contact</a> | SEO consultant london 2024 <a href="https://www.mattsscripts.co.uk/" target="_blank">Designed by matt</a> |</p>
<p class="copyright"> </p>
</section>
</section>
</div>
<!-- Scripts -->
<script src="/assets/js/jquery.min.js"></script>
<script src="/assets/js/skel.min.js"></script>
<script src="/assets/js/util.js"></script>
<!--[if lte IE 8]><script src="assets/js/ie/respond.min.js"></script><![endif]-->
<script src="/assets/js/main.js"></script>
</body>
<!-- InstanceEnd --></html>