What a powerful song sung by Whitney Houston – in an excellent film with Kevin Costner!
You have to wonder if things worked out between them in the movie, don’t you? Too often, things don’t work out, I suppose.
The same can be said about our clients. We invest so much into attracting them. We make promises, give gifts and put our best foot forward in hopes of being liked back. Sometimes we have to do this with many, many people in order to make a match.
So what happens next? In business as in life, we may get comfortable, maybe start to take them for granted a little bit. We forget how hard and costly it was to win them over in. And we fail to realize that with small, consistent expressions that we care, we could extend that relationship perpetually – or likely longer than if we put it on cruise control. This is much more cost effective than starting from scratch.
Wouldn’t it be great if you could quantify the value of the business relationship over its lifetime? This is probably not something you’d do with your significant other – it might be a little weird!
But this could give you a way of quantifying how much you could invest in maintaining the relationship to retain the customer, thus extending the relationship even further. Happy customers are the best promoters through word of mouth and referrals, which could be a multiplier effect on top.
So what do you do? Easy – you calculate the customer’s Lifetime Value (LTV). By the way, you can do this for your entire customer base if you like to give you more global figures. I’ve included the basic steps below.
Who knew Marketing Analytics could be so romantic, right?? Have fun!